Mortgage Broker vs Bank: The Honest Australian Guide

💵 How mortgage brokers actually get paid🔗

🎯 The essential: Brokers are paid by lenders, not by you. It costs nothing to use one directly, but the commission is funded by the lender's margin, which ultimately comes from borrowers as a whole.

There are two types of commission involved:

• Upfront commission: typically 0.65–0.70% of the loan amount, paid by the lender at settlement.
• Trail commission: around 0.15% per annum on the outstanding loan balance, paid every year for the life of the loan, calculated net of any offset funds.

Here's something most broker explainers gloss over: clawback. If you exit your loan within two years of settlement, by refinancing, selling, or paying it off, the lender claws back the upfront commission from the broker. The typical structure is 100% clawback in year one, tapering in year two, with no clawback after 24 months (MFAA, March 2025). Critically, the broker can't pass that cost on to you.

What this means in practice: a broker has a financial incentive to put you in a loan you'll actually stay in. That discourages a broker from chasing a flashy cashback deal you'll refinance out of in 18 months. It's an imperfect alignment of interests, but it is an alignment.

🗂️ The panel limitation brokers don't lead with🔗

Every broker works from an accredited lender panel, a list of lenders they're approved to write loans with. Panels vary by broker and by aggregator (the wholesale platform brokers use). A large aggregator might have 50+ lenders on panel, a smaller one might have 20. No broker has access to every lender in Australia.

• CBA's Unloan is a direct-only digital home loan. You cannot get it through a broker, full stop.
• Virgin Money has, at various points including currently, paused new home loans through its broker channel as part of a wider strategic shift by its parent group, meaning you'd need to apply direct. Channel arrangements like this can change, so check current availability before ruling it out either way.
• All four Big Four banks (CBA, Westpac, NAB, ANZ) are available via brokers and direct, so you're not locked out of the majors by using a broker.

What to ask any broker before you commit: "How many lenders are on your panel, and which major lenders are you not accredited with?" A good broker will answer without flinching. And whichever way you go, the loan structure itself, fixed, variable, or a split, is a separate decision worth making deliberately rather than defaulting to whatever's offered first.

⚖️ Best Interests Duty: what it does and doesn't cover🔗

🎯 The essential: Since 1 January 2021, Australian mortgage brokers have been legally required to act in your best interests, not just recommend something "not unsuitable." Bank staff aren't held to the same standard.

This came out of the Hayne Royal Commission and was written into the National Consumer Credit Protection Act 2009 (sections 158LA and 158LE), with ASIC's guidance set out in Regulatory Guide 273. Before this reform, the standard was simply "not unsuitable", a much lower bar.

In practice, Best Interests Duty means:

• A broker must consider your individual circumstances, not just push a product.
• If there's a conflict between the broker's interests and yours, your interests win.
• The broker must be able to show their reasoning, it's not just a vibe.

🏦 When going direct to a bank is genuinely better🔗

• You have a strong existing relationship with a bank and significant assets there. A private banker or relationship manager can sometimes negotiate rates and terms a broker can't access through the standard channel.
• The best loan for your situation is with a direct-only lender, like Unloan, that isn't on any broker's panel.
• You're refinancing a simple, vanilla loan and you've already done your research. You know the market, you know the rate you want, and you just need to execute.
• You want to compare features yourself. Some borrowers prefer to dig into offset accounts, redraw facilities, and fee structures on their own terms. If that's you, our offset account vs redraw guide is a good place to start.

🤝 When a broker is genuinely more useful🔗

Brokers earn their keep when the lending decision is complicated, or when you simply don't have time to shop the market yourself.

• Self-employed or complex income. Lenders assess self-employed borrowers very differently, some are far more flexible than others on add-backs, trust distributions, or company income. A good broker knows which lenders suit your structure.
• Non-standard credit history. A missed payment from three years ago, a default, or a short credit history can kill an application at some lenders and sail through at others. Brokers know the credit policies.
• First home buyers. If you don't know lender policies, serviceability calculators, or what a genuine comparison rate means, a broker who explains the market clearly is worth a lot.
• Time-poor borrowers. Comparing 20+ lenders, lodging applications, chasing conditional approvals, a broker does that legwork. If your time is worth money, that's real value.
• You want multiple options compared at once. A broker can run your scenario across their panel and show you what comes back, hard to replicate on your own without multiple credit enquiries dinging your score.

🧭 Broker or bank? A quick decision checklist🔗

Use this as a starting point, not a final answer.

A few questions worth asking yourself before you decide:

• Do I know what rate I should be paying? If not, a broker comparison is useful.
• Is my income situation straightforward? If yes, going direct is simpler.
• Have I checked how much I can borrow first? A baseline number helps you negotiate from strength with either option.
• Am I interested in a lender that's direct-only? If so, you'll need to go direct for that product regardless.
• Do I have time to shop around myself? If not, a broker saves real hours.

❔ Questions worth asking any broker🔗

If you do use a broker, go in with these:

• How many lenders are on your panel? (And which major ones aren't?)
• Are you accredited with [specific lender]? Name the ones you've already researched.
• How are you paid, and what's the upfront commission on this loan? A good broker discloses this without being asked, they're legally required to.
• Has your recommendation changed because of clawback risk? You won't always get a straight answer, but the question signals you know how the system works.
• What's the comparison rate, and what fees are included?

❓ Frequently asked questions🔗