Mortgage broker vs bank: which should you use?
By Nathan Ellis · Updated 2026-06-30
A mortgage broker compares home loans from a panel of lenders and must, by law, act in your best interests. A bank’s lending staff can only offer that bank’s loans, and the best interests duty does not apply to them. Most Australians now use a broker: brokers facilitated 81.6% of new residential home loans in the June 2026 quarter, according to Cotality data commissioned by the Mortgage and Finance Association of Australia (MFAA).
Neither route guarantees the lowest rate. The ACCC found that a broker can estimate what a lender will offer but generally cannot give you an exact final figure, which only the lender can quote once it has assessed your application.
Mortgage broker vs bank: the key differences
The main difference between a mortgage broker and a bank is how many lenders you see. A broker compares loans from several lenders on its panel. A bank’s lending team compares only that bank’s own home loans.
| Mortgage broker | Going direct to a bank | |
|---|---|---|
| Lenders compared | Several, from the broker’s panel | 1 |
| Legal duty to you | Best interests duty, plus responsible lending | Responsible lending only |
| Who pays | Usually the lender, by commission | No broker is involved |
| Fee to you | Only with a written quote you sign first | Lender fees only |
| Who manages the application | The broker, through to settlement | You and the bank |
| If something goes wrong | Complain to the broker, then AFCA | Complain to the bank, then AFCA |
Sources: Moneysmart, National Consumer Credit Protection Act, sections 15B and 158LA, ASIC RG 209.
Do mortgage brokers get better rates than banks?
Mortgage brokers do not automatically get better rates than banks. Many lenders set your final rate with discretionary discounts, decided case by case. The ACCC’s Home Loan Price Inquiry found brokers may have some non-public insight into those discount policies and can help you work through the market. It also found a broker generally cannot give an exact final price, so in most cases you still need to apply to a lender to learn the actual rate (ACCC final report, 2020).
What a broker changes is how many of those quotes you see. Moneysmart says the broker should present more than one option, and should show you loans from other lenders even if you prefer your current bank. Ask for the lowest-cost option as well.
Small rate gaps matter on a home loan. On a $600,000 principal and interest loan over 30 years, calculated by Compare A Broker at illustrative rates:
| Interest rate | Monthly repayment | Total interest over 30 years |
|---|---|---|
| 6.10% | $3,635.97 | $708,948.74 |
| 6.35% | $3,733.41 | $744,029.12 |
| 6.60% | $3,831.95 | $779,503.05 |
A gap of 0.25 of a percentage point costs about $97 a month, or $35,080 over the full term. That is why Moneysmart says even a small difference in the overall cost of a home loan adds up over time.
Best interests duty: brokers yes, bank staff no
A mortgage broker must act in your best interests when giving you credit assistance, and must put your interests first where they conflict with the broker’s (National Consumer Credit Protection Act, sections 158LA and 158LB). The duty has applied since 1 January 2021.
A bank’s own lending staff are not covered. The Act defines a mortgage broker as a business giving credit assistance on home loans offered by more than 1 credit provider, which it does not itself provide (section 15B). A bank selling its own loans fails that test.
Banks still have obligations. ASIC’s responsible lending guidance applies to all credit licensees, including banks. A lender must not give you an unsuitable loan: one you could not repay, could only repay with substantial hardship, or that does not meet your requirements (ASIC RG 209).
How a mortgage broker is paid
A mortgage broker is usually paid by the lender, not by you. Moneysmart says lenders generally pay brokers a commission as a percentage of the loan amount, with an upfront and an ongoing payment, and brokers must give you information about the commissions they may receive. Our guide to how mortgage brokers get paid sets out the typical rates.
A broker can also charge you a fee directly. Moneysmart says you must sign a written quote before the broker provides services and asks for payment, and a broker cannot ask for the fee before providing the service.
Commission is a conflict of interest, and the best interests duty exists to manage it. Moneysmart suggests asking the broker how they are paid and whether that differs between lenders.
Broker panels do not cover every lender
A broker’s panel is a list of lenders the broker can arrange loans with, and it does not include every lender in the market. Moneysmart suggests asking a broker which lenders they work with, and what kind of lenders they cannot access. A broker’s credit guide must list the 6 lenders they do the most business with (ASIC), so read it before you commit. Our glossary explains the lender’s panel.
When to go directly to a bank
Going directly to a bank is usually simplest when your situation is straightforward. That means stable PAYG income, a solid deposit, a clean credit history and a bank that already knows you. It also makes sense if you are happy to gather 2 or 3 quotes yourself and compare them on the comparison rate and fees.
If you already have a home loan, check your rate. The ACCC found that as at September 2020, borrowers with loans 3 to 5 years old were paying around 0.58 of a percentage point more, on average, than the average rate on new loans. The figure is dated, but the pattern of older loans paying more is why checking your rate matters. Ask your current lender for a better rate before you switch, whether you go through a broker or not. Our guide on whether refinancing is worth it covers the costs and break-even maths.
When a mortgage broker makes sense
A mortgage broker usually adds the most when your situation is less simple or you are short on time. Common cases:
- Self-employed income, where lenders assess tax returns differently. See self-employed home loan declined.
- A small deposit, where lender rules on lenders mortgage insurance and guarantors vary.
- A first home, where a broker can check the grants and schemes you qualify for. See WA first home buyer grants and schemes.
- A construction loan, investment loan or refinance, where lender policies differ.
A broker also manages the application through to settlement, which helps on a tight settlement date. Approval still depends on your circumstances, not the channel you apply through, but a decline from 1 lender does not mean every lender will say no. Lenders assess income, deposits and credit history differently.
Applying to several banks yourself has a cost too. Moneysmart warns that applying for a lot of loans can hurt your credit score, so a broker who checks lender policies before you apply can help you avoid unnecessary applications.
Pros and cons of using a mortgage broker
The pros of using a mortgage broker are choice and help: several lenders compared, a legal duty to act in your best interests, the application managed through to settlement, and usually no direct fee. The cons are 4 drawbacks worth weighing:
- The panel does not include every lender, so you may not see every loan on the market.
- The broker is paid commission by the lender, which is a conflict of interest the law requires them to manage.
- Brokers differ in experience and the lenders they use, so quality varies. Check the broker’s credit licence before you share documents.
- A broker cannot guarantee the final rate, which the ACCC says only the lender can quote after assessing your application.
How to choose a mortgage broker in Perth
434 businesses are listed in our Perth mortgage broker directory. To choose a mortgage broker, check their credit licence, then ask the questions Moneysmart suggests:
- Which lenders do you work with, and which kinds of lender can you not access?
- How are you paid on this loan, and does that differ between lenders?
- Why is this loan in my best interests?
- What is the lowest-cost option, and how does it compare with the one you recommend?
Membership of an industry body such as the MFAA or FBAA is a supporting signal, not a substitute for the licence check. You do not have to take the first loan you are offered: Moneysmart says you can ask the broker to find alternatives. Before you commit, get at least 1 quote from a broker and 1 from your own bank, and compare them on the comparison rate and fees. For a first meeting, see what to expect from a first mortgage broker appointment.
Checked against the MFAA, the ACCC, Moneysmart, ASIC and the National Consumer Credit Protection Act on 26 September 2026. This is general information, not financial advice. It does not consider your objectives, financial situation or needs.
Frequently asked questions
Is a bank or mortgage broker better?
A mortgage broker is usually better if you want several lenders compared or your situation is complex, because the broker compares its panel and must act in your best interests. Going direct to a bank can suit a simple application with a bank that knows you. Brokers facilitated 81.6% of new home loans in the June 2026 quarter.
What are the disadvantages of using a mortgage broker?
A broker’s panel does not cover every lender, the lender pays the broker commission, broker quality varies, and a broker cannot guarantee the final rate. Check the broker’s credit licence and ask which lenders they cannot access.
Do mortgage brokers get better rates than banks?
Not automatically. The ACCC found brokers may understand lenders’ discount policies but generally cannot quote an exact final rate. A broker’s advantage is showing you offers from several lenders instead of 1.
Is a mortgage broker worth it?
A mortgage broker is often worth it for a home loan because the lender usually pays the broker, so you pay no direct fee. The value is in the comparison: on a $600,000 loan over 30 years, finding a rate 0.25 of a percentage point lower saves about $35,080 in interest.
Must bank lenders act in my best interests?
No. The best interests duty in section 158LA of the National Consumer Credit Protection Act applies to mortgage brokers. Bank lending staff must meet responsible lending obligations, which means not giving you an unsuitable loan.
Can I use a broker and my own bank?
Yes. Moneysmart says a broker should show you loans from other lenders even if you prefer your current bank, so you can compare. You can also ask your bank for its own quote and weigh the 2.
Frequently asked questions
- Is it cheaper to go directly to my bank?
- Not usually. A broker is paid by the lender, not by you, so using one doesn't add to your cost. Going direct doesn't get you a discount for skipping the broker either, since bank pricing isn't set up that way.
- Will a bank give me a better rate than a broker can get?
- Sometimes, and it depends on the lender and your relationship with that bank. A broker's advantage isn't beating every bank's best offer, it's comparing many lenders at once so you're not relying on one institution's current pricing.
- Do brokers only deal with smaller lenders?
- No. Most brokers have the major banks on their panel alongside smaller lenders and non-banks. What varies is which lenders any individual broker works with, so it's worth asking to see their panel list.
- Can I use a broker and still talk to my own bank?
- Yes. Nothing stops you comparing a broker's recommendation against your bank's own offer before deciding. Some people do exactly that as a sanity check.