Are mortgage brokers free?
Who pays, when a fee applies, and what to ask.
Mortgage Broker vs Bank: Which Should You Use?
We are brokers, so treat our view accordingly. What follows includes the cases where going straight to a bank is the better decision, because those cases are real.
A bank can only offer you its own products and assesses you against its own single set of rules. A broker compares many lenders, knows which will accept your circumstances, and is legally required to act in your best interests. Going direct makes sense when you have a straightforward application and an existing relationship with a bank offering competitive pricing. For anything unusual, a broker is almost always the better route.
The genuine difference is not service quality or price. It is breadth of policy. One lender says no; another says yes to the identical application. Knowing which is which is the whole job.
One rule book versus sixty
Every lender has its own credit policy, and they diverge far more than most borrowers realise. How much of your overtime or bonus counts. Whether casual income needs six months or two years of history. How rental income is treated. What happens to a HECS balance. How a default from four years ago is viewed. Whether a company director is assessed on salary or on business profit.
A bank employee is measuring you against one rule book, and if you fall outside it the answer is no. They have no visibility of, and no incentive to mention, the lender down the road whose rules you fit comfortably.
This is why the same person can be declined at one bank and approved at another the following week with no change in circumstances. It is not that one assessed them wrongly; they simply have different rules.
What a bank does better
There are real advantages to going direct and it would be dishonest to skip them.
An existing relationship can be worth money. If you have banked somewhere for years, hold your savings there and have a clean history, the retention pricing they will offer to keep you is sometimes genuinely sharp. It costs nothing to ask before you do anything else.
Some products never reach brokers. A handful of lenders operate direct-only, and occasional promotional rates are branch-exclusive.
Simple cases are simple. Two PAYG salaries, a 20% deposit, no debts and a straightforward property: most lenders will approve that, so the value of comparing sixty of them is smaller. It is not zero, because pricing still varies, but it is smaller.
Where a broker earns their place
The value rises sharply the further you sit from a textbook application. If you are self-employed, on casual or contract income, carrying a HECS debt, working through a separation, buying with a small deposit, or you have anything on your credit file, lender choice stops being a pricing question and becomes an approval question.
It also matters when you are building a property portfolio. The lender you use for your first investment determines how easily you finance the second, because lenders differ enormously in how they treat existing debt and rental income. Choosing the most generous lender first, when you did not need them, is a mistake you only discover later.
The credit file argument
There is a practical reason to avoid applying to banks one after another. Every application leaves an enquiry on your credit file, and a cluster of enquiries in a short window looks like distress to the next lender assessing you.
A broker assesses which lender is likely to approve you before an application is lodged. One enquiry rather than four. On a marginal application that difference alone can decide the outcome.
Best Interests Duty
Since 2021 Australian mortgage brokers have been subject to a legal Best Interests Duty: we must act in your interests, not our own. Breaching it carries consequences under our Australian Credit Licence.
That duty does not apply to a bank's own lending staff. They are not acting against you, but their obligation is to sell their employer's products suitably, which is a lower bar than acting in your best interests. It is the single clearest structural difference between the two, and it is rarely mentioned in the branch.
What it costs
Nothing, in almost all residential cases. The lender pays the broker a commission on settlement out of its own margin, and the rate you are offered is the same as going direct. We set that out fully on are mortgage brokers free and in our Credit Guide.
Our honest suggestion: ask your own bank for their best offer first. Then let us compare it. If they have already given you something we cannot beat, we will tell you so, and you will have lost nothing but a phone call.
Common questions
Often, though not always. Brokers can compare pricing across lenders and can move an application elsewhere, which is leverage a walk-in customer does not have. Where your own bank has already offered sharp retention pricing, sometimes they cannot be beaten, and we will say so.
No. Lenders maintain broker channels deliberately and assess those applications on the same credit policy. A well-prepared broker submission is often processed faster because it arrives complete.
No, and be wary of anyone claiming otherwise. Brokers are accredited with a panel, and a few lenders are direct-only. We work with more than 60, and our accreditations are listed in our Credit Guide.
It still usually helps for pricing, but the advantage is smaller. Ask your bank first. If their offer is good and your application is straightforward, taking it is a perfectly sensible decision.
Then stay. We can still compare, and if your bank remains the best answer we will tell you. Plenty of our reviews end that way.
Get a second opinion before you sign
Ask your bank for their best rate, then let us compare it against sixty others. No fee either way.
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