Mortgage broker vs bank: which is right for you?
Neither is better for everyone. A bank can only offer its own loans. A broker can compare several lenders, but is usually paid by the lender you end up with. The right choice depends on how simple your situation is and how much comparing you want to do yourself.
The key differences
- Choice: a bank offers its own products, while a broker can compare the lenders on its panel. A panel is not the whole market, so ask which lenders it includes.
- Duty: mortgage brokers must act in your best interests when suggesting a loan. Lenders must meet responsible lending obligations, which is a different test.
- Payment: bank staff are paid by the bank. Brokers are usually paid commission by the lender, so you typically do not pay them directly.
- Paperwork: with a bank, you deal with one lender's process. With a broker, one person can run the comparison and manage the application, including when you change lender.
How brokers get paid, and why you should ask
Commission is usually a percentage of the loan, with an upfront part and an ongoing part. Brokers must tell you about the commissions they may receive. If a broker charges you a fee, it should be set out in a written quote that you sign before any service starts.
This does create a possible conflict. Commission can be larger on bigger loans and can differ between lenders. The best interests duty exists to manage that, but it is still fair to ask a broker why they recommend a particular loan over the alternatives.
When going direct to a bank can make sense
- Your situation is simple, and you already know which loan you want.
- You have a strong relationship with your bank, and it has offered you a rate you are happy with.
- You prefer dealing with a branch, or the loan you want is only sold directly.
Even then, it can be worth checking one or two other quotes. Moneysmart's comparison tools and our calculators can help you test the numbers yourself.
verifiedWant a second opinion on your loan?
Tell us what you are trying to do. A broker will call you back within 12 hours, with no obligation to proceed. 我们提供普通话/粤语服务。
When a broker tends to help most
- You are self-employed, or your income runs through a company or trust.
- A bank has already said no, or your borrowing figure came back lower than expected.
- You are building, subdividing or buying before you sell.
- You are building a property portfolio and need the loans structured with the next purchase in mind.
- You would rather work in Mandarin, Cantonese or Vietnamese.
Lenders can assess the same income in very different ways, which is where comparing policies matters more than comparing advertised rates.
Five questions to ask any broker, including us
- Which lenders are on your panel, and which do you use most often?
- How much commission would you receive on this loan, and on the alternatives?
- Why are you recommending this loan over the others you compared?
- Do you charge me any fees? Can I see your credit guide?
- Have you worked on situations like mine before?
A good broker will answer all five without hesitation. If the answers are vague, it is reasonable to keep looking.
Frequently asked questions
Is a mortgage broker free?
Often, because lenders usually pay brokers a commission. Some brokers do charge fees, which should be set out in a written quote that you sign before any services start.
Can a broker get a better rate than the bank?
Sometimes, but it is not guaranteed. A broker can compare lenders and may be able to request pricing, while going direct gives you one lender's offer. Compare the rate, fees and features together.
Does using a broker hurt my credit score?
Talking to a broker does not by itself affect your file. A formal application normally appears on it, whether it is lodged by you or a broker.
Can I use a broker and still choose my own bank?
Yes, if your bank is on the broker's panel and suits your situation. The final decision is always yours, and every loan is subject to lender approval.
Helpful tools & guides
This article is general information only and does not take into account your objectives, financial situation or needs. All loans are subject to lender approval. Sources: Moneysmart (ASIC), using a mortgage broker, accessed November 2026.