What Does a Mortgage Broker Do? Broker vs Bank

A mortgage broker compares home loans across a panel of lenders, recommends one, and runs the application through to settlement. The lender usually pays for it, not you. Mortgage brokers now write the vast majority of home loans in Australia: 81.0% of new residential loans in the March 2026 quarter, by the industry body’s count. Whether you should use one is a separate question, and the honest answer is “usually, but not always”.

What does a mortgage broker do, step by step

Think of a mortgage broker as the go-between for you and multiple lenders, with a legal duty to you rather than to them. The legwork is the job.

The first meeting with a mortgage broker is mostly questions. Income, debts, deposit, what you’re buying and when, and how you’d feel if rates rose. Honest answers help here. From that, a broker works out roughly what you can borrow and which lenders’ rules suit your situation, because each lender reads the same payslip, business income or rental figure a little differently. Then comes the comparison of loan options from different lenders: interest rate, upfront fees and ongoing fees, features like an offset account, and how the lender assesses you, which matters more than the headline rate when you’re near the edge of what you can borrow.

Once you choose, the mortgage broker prepares the application, collects the documents, lodges it and deals with the lender’s credit team. Most of the value of using a mortgage broker sits here. A credit assessor who asks a question gets an answer the same day from someone who knows your file, instead of a request that sits in your inbox.

After approval the broker coordinates valuation, loan documents and settlement with your conveyancer. A good mortgage broker stays in touch afterwards and gives ongoing support, because the loan that was right two years ago often isn’t now.

If you haven’t found a property yet, most of this happens twice. A broker gets you pre-approval first, so you know your budget before you bid, then does the formal application once you’ve signed a contract. Pre-approval isn’t a guarantee, and the lender will check everything again against the actual property and your circumstances at the time.

How mortgage brokers get paid

Most mortgage brokers are paid by the lender, and the commission structure has two parts. Moneysmart describes it as a percentage of the loan amount, typically an upfront payment when the loan settles and an ongoing payment for as long as the loan runs. ASIC’s review of mortgage broker remuneration put the typical upfront commission at about 0.61% of the loan, with trail commissions of about 0.18% a year. On a $500,000 loan that’s roughly $3,100 at settlement and $900 a year after it. Those were ASIC’s figures from its review, not a quote from us.

Mortgage brokers can also charge you a fee directly. When they do, they must tell you clearly and give you a written quote you sign before any work starts. Some brokers charge fees for small loans or complex commercial work where the commission doesn’t cover the hours. Ask before the first meeting, not after.

We don’t charge a fee for standard home loans, and the broker commissions each lender would pay us are disclosed in writing before you commit. Ask any broker for that disclosure. If commission differs between the lenders on your shortlist, you’re entitled to see it, and a broker who hesitates to show you has told you something.

The best interests duty

Since 1 January 2021, mortgage brokers have been legally required to act in your best interests and to put your interests first when they conflict with ours. It came out of the banking royal commission. In practice it means a broker has to be able to show why the loan they recommended suits you, and keep records that ASIC can check. That’s a real change.

It doesn’t mean the broker has found the cheapest loan in Australia. No broker has every lender, and the duty covers the options a broker actually has access to, so the size and shape of the panel still matters. It also doesn’t cover whether you should buy the property at all.

Mortgage broker vs bank: more than the interest rate

A bank’s loan officer can only sell that one lender’s loan products. That’s not a criticism; the person at the branch may be excellent, and if their bank’s policy fits you and the rate is sharp, you’ll get a good loan. What they can’t tell you is that another lender would lend you more on the same income, or would count your bonus in full where theirs counts half. A broker can.

Here’s the thing a broker can’t change. Every bank, building society and credit union assesses whether you can repay at your rate plus a serviceability buffer of 3 percentage points set by APRA, and banks now face a cap on how much of their new lending goes to borrowers who owe six times their income or more. Using a broker doesn’t get you around either; what it changes is which lender’s version of the rest of the rules you’re assessed under, and on an unusual income that gap can be large.

Going direct is fine in plenty of cases. If you earn a single salary, you’re buying a standard house or unit, and your bank has already offered you a rate you’ve checked against the market, go direct and save yourself the meetings. We’ve written more on that in choosing a mortgage broker in Sydney. A broker earns their keep when there’s something to compare.

Where a good mortgage broker makes the biggest difference

Self-employed income is the obvious one. Lenders disagree more about business income than about almost anything else, and our self-employed lending page goes through why the same tax returns can be approved at one lender and declined at another. First home buyers juggling schemes are the second: the First Home Guarantee, stamp duty concessions and the super saver scheme all have rules that interact, and the order matters. Anyone who has been declined once is the third, because another decline shows up on your credit file. In each case, the choice of lender is the decision.

Our view, which plenty of people selling direct loans will argue with: the rate is rarely where a broker earns their money. Structure is. Splits, offsets, which lender will let you move the loan with you when you upgrade, and whether the policy that suits you today will still suit you in three years. A rate can be matched later, while a bad structure costs you every month until you refinance.

The downsides of using a mortgage broker

Commission creates potential conflicts, and the best interests duty manages them rather than removing them. Some lenders deal directly with borrowers only, so no mortgage broker can offer them. Brokers vary enormously in experience, and a new broker working through an unfamiliar lender’s policy can take longer than going direct would have. And some borrowers simply prefer to deal with their bank, face to face, with the same person who handles their everyday accounts. That’s fine.

Reading online reviews helps, but read the detail rather than the star count, because a review about speed says little about whether the loan was right.

If something goes wrong, you can complain to the broker’s licensee and then, for free, to the Australian Financial Complaints Authority. Every broker has to tell you who their licensee is. Ours is Buyers Choice Licencing, and the credit representative numbers for Ansa, Sina and Charlie sit in the footer of every page on this site.

Questions worth asking any broker

Moneysmart suggests most of these, and we’ve added the second half of the first one. Ask them in the first meeting:

• How many lenders are on your panel, and which ones did you use most last year?
• How are you paid? Does the commission change depending on the lender?
• Why is this loan the one you’re recommending, and what was your second choice?
• Will you charge me any fees? Can I see that in writing?
• Can you show me the lowest-cost option that fits, even if it’s not the one you’re recommending?

A broker who answers all five without hedging is worth your time. If you want to put them to us, Ansa and the team are in West Pymble. We’re happy to be tested on it. Bring your own list too.