Mortgage Broker vs Bank: Which Is Better?

When you're getting a home loan, you have two main options: go direct to a bank, or use a mortgage broker who shops around for you.

Brokers are free (the lender pays them), but does that mean they're always the better choice? Here's what you need to know.

What does a mortgage broker do?

A broker compares loans from multiple lenders and helps you apply. They handle:

• Shopping around (30-40+ lenders)
• Paperwork and applications
• Pre-approval and settlement
• Negotiations with lenders

Cost to you: $0 (lender pays them 0.6-0.7% commission)

Pros of using a broker

• Access to more lenders — 30-40+ banks vs the 1-2 you'd call yourself
• They do the work — Handle paperwork, compare rates, chase approvals
• Better rates (sometimes) — Can negotiate or find better deals
• Experience — Know which lenders approve which situations
• Free for you — Lender pays the commission

Cons of using a broker

• Limited to their panel — They only work with certain lenders (might miss some direct-only deals)
• Bias risk — Might steer you to lenders who pay higher commissions
• Quality varies — Some brokers are great, some are average
• Less control — You're trusting them to find the best option

Going direct to a bank

Pros:

• No middleman — You control everything
• Direct-only deals — Some banks offer better rates direct (rare)
• Existing relationship — Your bank might give you a discount

Cons:

• Time-consuming — You have to call/compare multiple banks yourself
• Limited view — Hard to compare 30+ lenders manually
• Less negotiation power — Banks know you're shopping around but might not budge

When to use a broker

Brokers make sense if:

• You're time-poor and want someone to handle everything
• Your situation is complex (self-employed, low deposit, bad credit)
• You don't know which lenders to approach
• You want access to 30+ lenders without doing the legwork

When to go direct

Going direct makes sense if:

• You like doing research and comparing yourself
• You have an existing relationship with a bank (might get loyalty discounts)
• You're refinancing and know exactly what you want
• You're targeting a specific lender's unique product

How to choose a good broker

Not all brokers are equal. Look for:

• MFAA or FBAA accredited (industry bodies)
• Large lender panel (30+ lenders minimum)
• Good reviews (Google, ProductReview.com.au)
• Transparent (tells you commission, explains options)
• Responsive (returns calls, answers questions)

Do brokers get you better rates?

Sometimes. Brokers have negotiating relationships with lenders and can sometimes get you 0.1-0.2% better than the advertised rate.

But this isn't guaranteed. The rate depends more on your situation (income, deposit, credit score) than who applies for you.

Can you use both?

Yes. Here's a smart strategy:

1. Use a broker to see what's available
2. Check a few banks direct yourself (especially your current bank)
3. Compare both options and pick the best one

Brokers don't lock you in. You can walk away anytime before you sign loan docs.

The verdict

Use a broker if: You want someone to handle everything and compare 30+ lenders. It's free and usually gets you a good result.

Go direct if: You like control, enjoy research, or have a specific lender in mind.

There's no wrong answer. Both work. Pick what suits your style.