Is a Mortgage Broker Worth It in Australia?
Is a mortgage broker worth it in Australia? Many people ask this question before they buy a home, refinance or start investing. The honest answer is that a mortgage broker is worth it for many borrowers, but not for everyone. This guide explains what a mortgage broker does, how brokers get paid, the pros and cons, and when a broker helps most.
A mortgage broker is a licensed professional who compares home loans from many lenders on your behalf. Instead of selling one bank’s products, a mortgage broker looks across the market for the loan that matches your income, goals and budget. That wider view is the main reason people use a mortgage broker and one of the first things to weigh up.
At Everest Home Loans, we help clients with this decision every day. Since 2015 we have helped more than 1,500 clients across Australia. We work with more than 40 lenders and offer advice in English, Nepali and Hindi. This article explains the mortgage broker process in plain English, so you can decide with confidence.
Key Takeaways
A mortgage broker compares loans from many lenders, not just one bank.
Brokers must act in the borrower’s best interests, so the loan they recommend should suit you.
For most standard home loans, the borrower does not pay the mortgage broker a fee. The lender pays the broker.
A mortgage broker adds the most value for first home buyers, property investors and borrowers who want to refinance.
A bank can still be the right choice for some borrowers, so compare both options before you decide.
What Does a Mortgage Broker Actually Do?
A mortgage broker sits between the borrower and the lender. The mortgage broker collects your financial details, assesses your borrowing power, shortlists suitable loans and manages the application. A bank employee works for the bank. A mortgage broker works to find the right loan for you.
A good mortgage broker looks at your income, expenses, existing debts, savings, credit history, visa status and future plans. The mortgage broker then compares the loan options, explains the pros and cons of each and helps you choose.
The usual process looks like this:
An initial consultation to clarify your goals and check your borrowing power.
Research across more than 40 lenders to shortlist loans that fit your situation.
Clear advice on features such as offset accounts, redraw and fixed or variable interest rates.
Application management. The mortgage broker gathers documents, completes forms and deals with the lender for you.
Support through approval and settlement, and later help with reviews or refinancing.
A mortgage broker also explains the loan application process, so you know what to expect at each stage. Many borrowers find this support is the most valuable part of using a broker.
How Do Mortgage Brokers Get Paid?
Cost is one of the first questions people ask. For standard home loans, most borrowers do not pay a mortgage broker a fee. The lender pays the mortgage broker an upfront commission and, in many cases, an ongoing commission after settlement. This is part of the lender’s normal business costs.
The Australian Securities and Investments Commission (ASIC) and Moneysmart explain that brokers are generally paid by lenders. Some mortgage brokers may charge a direct fee for certain services, but only under a written agreement. Always ask how the mortgage broker is paid and get the terms in writing before you agree to anything.
The Pros of Using a Mortgage Broker
The pros of using a mortgage broker go beyond a lower interest rate. For many borrowers, the biggest benefit is choice and clarity.
Access to more lenders. A single bank offers only its own loans. A mortgage broker compares products from more than 40 lenders, so you are more likely to find a loan that fits your income pattern and goals. This can also help you find a better deal than the first offer you receive.
Advice under a legal duty. Brokers must act in your best interests and make sure the loan they recommend is suitable for you. A mortgage broker should be able to explain, in plain English, why a loan suits you and what the trade-offs are.
Time and stress saved. Comparing loans, reading the fine print and chasing paperwork can take many hours. A mortgage broker handles most of these steps and keeps you updated at every stage.
Help with complex cases. A mortgage broker can help first home buyers understand deposit options, help self-employed borrowers present their income and help families combine unsecured debts, such as credit cards, into one home loan.
Support in your language. Everest Home Loans supports clients in English, Nepali and Hindi, which makes it easier to ask questions and understand every step of the loan.
The Cons of Using a Mortgage Broker
A mortgage broker is not the right choice for everyone, so it helps to understand the cons of using a mortgage broker too.
Panel limits. A mortgage broker can only recommend lenders on its panel. Even with more than 40 lenders, not every loan on the market is covered, so ask which lenders are included.
Commission questions. Because lenders pay brokers, some borrowers worry about bias. Ask how the mortgage broker is paid and how they choose between lenders.
Possible direct fees. Some mortgage brokers charge a fee for certain services. Check the written terms before you sign.
Less direct control. Some borrowers prefer to research and apply for each loan themselves. A mortgage broker can help, but you still need to read the loan documents and understand what you sign.
Weigh these cons against the time and support a mortgage broker provides. For many people, the pros and cons point to a mortgage broker being worth the call.
Mortgage Broker vs Bank: Which Is Better?
A bank may be the right choice if you already know exactly which loan you want, you have a long relationship with one bank and your loan needs are simple. Going directly to a lender can work well in these cases.
A mortgage broker suits borrowers who want to compare loan options before committing. The table below shows the main differences between a mortgage broker and a bank.
| Feature | Bank direct | Mortgage broker |
|---|---|---|
| Choice of lenders | One bank | More than 40 lenders |
| Whose interests come first | The bank’s products | Your interests, under the best interests duty |
| Time and paperwork | You manage the research and forms | The mortgage broker manages the process |
| Cost to the borrower | No broker fee | Usually no direct fee for standard loans |
Brokers in Australia can also help you understand how a loan is structured, such as whether to split a loan between fixed and variable rates. A bank can explain its own loan structure, but a mortgage broker can compare several.
Who Benefits Most From a Mortgage Broker, and Is It Right for You?
A mortgage broker can help at many stages of the loan journey. The groups below often get the most value.
First home buyers, especially those from Nepali and Indian communities, who want clear help with deposits, lenders mortgage insurance and grants.
Property investors who need more than the lowest interest rate. A mortgage broker can help structure the loan and manage cash flow.
Borrowers who want to refinance. A mortgage broker compares their current loan with other lenders and manages the switch. See our refinancing services.
Families with several debts, such as credit cards and personal loans. A mortgage broker can show how consolidating those debts into one home loan changes interest and repayments.
Busy professionals who value their time. A mortgage broker collects documents, deals with lenders and keeps the application moving.
If you only want one product from one bank, going direct may suit you. A mortgage broker may still be worth a quick chat to check. Compare both options before you decide.
How to Choose a Good Mortgage Broker
If you decide to use a mortgage broker, check these points before you commit:
An Australian Credit Licence or credit representative number.
Membership of the Mortgage and Finance Association of Australia (MFAA).
How the mortgage broker is paid, and whether any direct fees apply.
Which lenders are on the mortgage broker’s panel.
Reviews from past clients.
Everest Home Loans is an MFAA member. We hold Platinum Broker status with Commonwealth Bank, Westpac and NAB, and we have over 460 five-star Google reviews. We have settled more than $400 million in home loans. You can learn more about our team or read our guide to what a mortgage broker does.
Is Using a Mortgage Broker Worth It? The Bottom Line
Is a mortgage broker worth it? For many Australian borrowers, yes. A mortgage broker gives access to more lenders, advice under a legal duty, support through each step and usually no direct cost for a standard loan. A bank may still suit some people, so weigh the pros and cons of each option.
Whatever you decide, make sure you understand the loan, the fees and the interest rate before you sign. If you want a clear view of your options, book a free, no-obligation chat with our mortgage broker team or try our loan comparison calculator.
Frequently Asked Questions About Mortgage Brokers
What is a mortgage broker?
A mortgage broker is a licensed professional who compares home loans from many lenders and helps you apply for the one that suits you. A mortgage broker works for the borrower, not the bank.
Is it worth using a mortgage broker in Australia?
For many people, yes. A mortgage broker compares many lenders, explains the loan terms in plain English and manages the application. Whether it suits you depends on your goals and circumstances.
Do mortgage brokers charge a fee?
For most standard home loans, the lender pays the mortgage broker, so the borrower does not pay a fee. Some brokers may charge a direct fee under a written agreement, so always ask first.
Do mortgage brokers get a better deal than a bank?
A mortgage broker can compare more lenders, which may help you find a better deal. A bank may still offer the best option for some borrowers, so compare both before you decide.
Can a mortgage broker help first home buyers?
Yes. Everest Home Loans supports clients in English, Nepali and Hindi, and we explain government support such as the First Home Owner Grant and the First Home Guarantee where it applies.
Everest Home Loans operates under the Australian Credit Licence of Connective Credit Services (ACL 389328).
General information only. This article does not consider your personal objectives, financial situation or needs. Consider whether the information suits your circumstances and seek professional advice before making a decision about a home loan.
