Should I Use a Mortgage Broker or Go to the Bank Directly? (2026)
It's one of the most common questions Australians ask when they start thinking about a home loan: should I go straight to the bank, or talk to a mortgage broker first? The answer isn't as straightforward as either side would have you believe. Both options have genuine advantages — and real limitations. The right choice depends on your situation, not on marketing slogans.
This article breaks down how each option actually works, what the trade-offs are, and how to decide which path makes the most sense for you — without pressure or bias.
First, What Does a Mortgage Broker Actually Do?
A mortgage broker is a licensed intermediary who sits between you and the lenders. They don't lend money themselves. Instead, they compare home loan products across multiple banks and non-bank lenders to find options that suit your financial situation.
In Australia, mortgage brokers:
- Must hold an Australian Credit Licence (or be an authorised representative of one)
- Are legally required to act in your best interests under the Best Interests Duty (introduced in 2021)
- Typically have access to 20–40+ lenders on their panel
- Are paid a commission by the lender — not by you
As of 2026, mortgage brokers write over 70% of all new home loans in Australia. That's not an accident — it reflects genuine value for most borrowers.
What About Going Directly to the Bank?
Going to the bank means dealing directly with a lender — whether that's one of the Big Four (CommBank, ANZ, Westpac, NAB) or a smaller bank, credit union, or online lender.
When you go direct, you typically:
- Deal with a bank-employed loan officer or mobile lender
- Only see products from that one institution
- May access exclusive "direct-only" rates or packages
- Build a direct relationship with your lender
Some banks offer slightly lower rates to direct customers to avoid paying broker commissions — but this isn't always the case, and the difference is often marginal.
Mortgage Broker vs Bank: The Honest Comparison
Here's where most people get confused. Both brokers and banks will tell you they're the better option. The truth is more nuanced.
Mortgage Broker Advantages
- Access to 20–40+ lenders in one place
- Free for you (lender pays commission)
- Legally required to act in your best interests
- Can match complex situations to the right lender
- Handles paperwork and follows up with the bank
- Useful for self-employed, unusual income, or low-deposit buyers
Going Direct Advantages
- May access exclusive direct-only rates
- Direct relationship with your lender
- Faster if you already bank there and know what you want
- Package deals if you bundle products (offset, credit card, etc.)
- No middleman — direct communication on your application
- Good if you have a strong, simple application
Mortgage Broker Limitations
- Not all lenders are on every broker's panel
- Commission-based model can create conflicts (though regulated)
- Quality varies — a poor broker adds no value
- May not have access to direct-only bank rates
Going Direct Limitations
- You only see one lender's products
- Bank staff are employed to sell their products, not compare
- No obligation to act in your best interests
- You do all the comparison work yourself
How Broker Commissions Work (And Why It Matters)
One of the biggest concerns people have about brokers is the commission model. It's worth understanding how this actually works.
Upfront commission
Typically 0.5%–0.7% of the loan amount, paid by the lender to the broker when your loan settles.
On a $500,000 loan, that's roughly $2,500–$3,500.
Trail commission
An ongoing fee (around 0.15%–0.2% per year) paid to the broker for the life of the loan.
This incentivises brokers to keep you happy as a client and to regularly review your loan.
Clawback provisions
If you refinance within the first 1–2 years, the lender claws back some or all of the upfront commission from the broker. This means brokers are financially motivated to find you a loan you'll actually stick with.
The key point: you don't pay the broker directly.
The commission is built into the lender's cost model — whether you use a broker or not.
When a Mortgage Broker Makes the Most Sense
Not everyone needs a broker. But there are situations where using one can genuinely save you time, money, or both.
You're a first home buyer — brokers can guide you through government schemes like the 5% Deposit Scheme, First Home Owner Grant, and stamp duty concessions
You're self-employed or have irregular income — different lenders assess self-employed income differently, and a broker knows which ones are more favourable
You have a smaller deposit — some lenders are more flexible with LVR (Loan-to-Value Ratio) requirements, and a broker can steer you to those
Your situation is complex — multiple income sources, existing debts, credit issues, or buying with a partner who has different financials
You don't have time to shop around — a broker does the legwork of comparing products and negotiating on your behalf
When Going Direct to the Bank Might Be Better
There are genuine reasons to go straight to a bank, too.
You have an existing relationship — if you've banked with the same institution for years and they offer loyalty pricing or rate discounts
Your application is straightforward — stable PAYG income, 20%+ deposit, clean credit history. In this case, you're an attractive borrower and can negotiate directly
You've done the research — you know exactly which product you want and the rate you're targeting
The bank has a direct-only offer — some lenders occasionally offer sharper rates to direct applicants to bypass broker commissions
Going direct works best when you already know what you want and have the confidence to negotiate. If you're not sure, a broker can help you get to that point.
The "Best Interests Duty" — What It Means for You
Since January 2021, Australian mortgage brokers have been legally required to act in your best interests — not the lender's, and not their own.
In practice, this means a broker must:
- Recommend a loan that is genuinely suitable for your situation
- Not prioritise lenders that pay higher commissions
- Document why they recommended a particular product
- Disclose conflicts of interest
Bank staff don't have this obligation.
They're employed to sell their employer's products — which may or may not be the best fit for you.
This is one of the most significant regulatory differences between the two options, and it's worth factoring into your decision.
Can You Use Both? (Yes — And Many People Do)
Here's something many Australians don't realise: you don't have to choose one or the other exclusively.
A common approach is:
Step 1: Talk to a broker first
Get a sense of what's available across the market. Understand your borrowing power, rate ranges, and which lenders suit your profile.
Step 2: Check your own bank
See if they can match or beat the broker's best offer. You now have a benchmark to negotiate from.
Step 3: Go with whoever gives you the best outcome
Compare the total cost, not just the headline rate. Consider fees, features, flexibility, and ongoing costs.
Using both gives you leverage. A broker's offer can push your bank to sharpen their rate — and vice versa.
What to Look for in a Good Mortgage Broker
If you decide to use a broker, quality matters. Not all brokers are the same. Here's what separates a good one from a mediocre one.
They listen before they recommend
A good broker asks detailed questions about your goals, timeline, and financial situation before suggesting anything. If they jump straight to a product recommendation, that's a red flag.
They explain the "why" behind their recommendation
Not just "this is the best rate" — but why a particular lender, product, and structure suits your specific circumstances.
They have a broad lender panel
A broker with access to 30+ lenders can genuinely shop the market. One with only 5–10 lenders may not give you the full picture.
They're responsive and proactive
The home loan process involves a lot of back-and-forth. A good broker keeps you updated, chases the bank when things stall, and doesn't disappear after you've signed.
Common Myths That Cloud the Decision
"Brokers always get you a better deal"
Not necessarily. Some banks offer sharp direct-only rates that brokers can't access. The best approach is to compare both options.
"The bank will always look after me because I've been a loyal customer"
Banks value new business highly. Existing customers are often on higher rates than new customers at the same bank — known as the "loyalty tax". Don't assume loyalty equals a good deal.
"Brokers just push the lender that pays the highest commission"
Under the Best Interests Duty, brokers must recommend what's genuinely best for you. Commission differences between lenders are typically small, and regulatory scrutiny has tightened significantly.
"Using a broker is slower"
In most cases, it's the opposite. Brokers submit complete, clean applications that reduce back-and-forth with the lender. A poorly prepared direct application can take longer than a well-managed broker application.
The Real Cost Difference: Rate vs Total Cost
When comparing broker vs bank, don't just compare the headline interest rate. The total cost of a home loan includes:
Interest rate — the annual rate applied to your loan balance
Comparison rate — includes most fees and charges, giving a more accurate picture of total cost
Ongoing fees — annual fees, package fees, offset account fees
Upfront fees — application fees, valuation fees, settlement fees
Features — offset accounts, redraw facilities, extra repayment options, portability
A loan with a 0.1% lower rate but a $395 annual fee might cost you more over 30 years than a slightly higher rate with no fees. Always compare the total package.
Understanding what your repayments look like under different scenarios is an essential part of this comparison.
Compare Your Repayments
See how different interest rates and loan amounts affect your monthly repayments before you speak to anyone.
Calculate Loan Repayments →Before You Talk to Anyone: Know Your Numbers
Whether you go to a broker or a bank, you'll have a much better experience if you arrive with a clear understanding of your own financial position.
Before your first conversation, know:
- Your approximate borrowing power
- What repayments look like at different loan sizes
- Your deposit amount and how it was saved
- Your existing debts (car loans, credit cards, HECS-HELP)
- Your monthly living expenses
Going in prepared means you can evaluate what you're being told — instead of just accepting it.
Check Your Borrowing Power
Get a realistic estimate of how much you could borrow based on current Australian lending rules — before you speak to a broker or bank.
Calculate Your Borrowing Power →The Takeaway
There's no universal right answer to "broker or bank". It depends on your situation, your confidence level, and how complex your application is.
But here's a useful rule of thumb:
Use a broker if...
- You're buying for the first time
- Your situation isn't straightforward
- You want someone to manage the process
- You don't have time to compare lenders yourself
Go direct if...
- You have a strong, simple application
- You know the product you want
- Your bank has a compelling direct offer
- You prefer handling things yourself
The smartest move? Know your numbers first.
Whether you end up with a broker or a bank, the person who walks in informed always gets a better outcome.
Start With Clarity Before You Start Conversations
Understand your borrowing power and repayments before you talk to a broker or walk into a bank. You'll ask better questions and make better decisions.
Broker or bank — the best choice is always an informed one.
Know your numbers first. The right path will become clear.
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