The first decision most home buyers or investors must make before buying is who to use for their home loan: A mortgage broker vs a bank. While banks have been the traditional path, more and more Australians are now turning to mortgage brokers to secure loans.
Ultimately, there is not one right answer, just one that fits your situation better. This guide breaks down exactly how brokers and banks differ, what each option means for your wallet, and how to decide which route makes sense for you.
Key Insights
- A mortgage broker shops across multiple lenders on your behalf; a bank only offers its own products
- Brokers are legally required to act in your best interests under Australia’s Best Interests Duty (BID), while banks are not
- Brokers wrote nearly 77% of all new home loans in late 2025
- For complex situations, a broker almost always delivers better outcomes
- Going direct to a bank can work if you have a simple situation and an existing relationship with strong loyalty discounts
What’s the Difference Between a Mortgage Broker and a Bank?
A bank is a lender. When you walk in and ask for a home loan, a bank employee can only offer you that bank’s products. They’re not there to compare rates across the market; they’re there to sell you what their employer has on the shelf.
A mortgage broker is an independent professional who works across a panel of lenders, typically 20 or more banks and non-bank lenders. Their job is to match you with the right loan for your circumstances, not to sell you one specific product. Importantly, Australian mortgage brokers are bound by a legal obligation called Best Interests Duty (BID), which requires them to act in your interest when making a recommendation. Banks are not subject to this obligation.
Going to a bank for a home loan is like walking into a car dealership and buying whatever they have in stock. Working with a broker is like having someone visit every dealership in the city and negotiate the best deal for you.
Mortgage Broker vs Bank: Side-by-Side Comparison
| Feature | Mortgage Broker | Bank (Direct) |
| Lender access | 20+ lenders (on average) | 1 lender only (their own) |
| Acts in your best interests? | Yes – legally required (BID) | No – sells their own products |
| Cost to you | Usually free (paid by lender) | No broker fee |
| Rate negotiation | Yes – across multiple lenders | Limited to the bank’s discretion |
| Loan options | Wide range of products | Only that lender’s product suite |
| Suitable for complex situations | Yes – self-employed, investors, low deposit | Limited – stricter internal criteria |
| Ongoing support | Yes – typically monitors and reviews loan | Limited post-settlement support |
| Application process | One application, multiple lender options | One application, one lender |
| Turnaround | Varies by lender | Can be faster with existing customers |
The Benefits of Using a Mortgage Broker vs a Bank
Access to More Lenders and Better Rates
When you go directly to a bank, you’re working with whatever interest rate they’re willing to offer that day. A home loan broker in Brisbane can compare dozens of lenders side by side and negotiate on your behalf.
You’re Legally Protected
Since January 2021, all Australian mortgage brokers have been required to operate under Best Interests Duty (BID). BID is a legal obligation under the National Consumer Credit Protection Act 2009 that requires brokers to put your needs ahead of their own, including above any commission they might earn from a particular lender. Banks are not subject to BID.
One Application, Many Options
Applying for a home loan takes time. When you use a broker, you complete one application, and they do the legwork of finding the right fit across their lender panel. If the first option doesn’t work, they pivot without you having to start again from scratch.
Expert Guidance Throughout the Process
A good broker doesn’t just find you a rate. They help you understand your borrowing capacity, prepare your application to maximise your chances of approval, explain the features of different loan types (offset accounts, redraw, fixed vs variable), and support you through to settlement.
When Does Going to a Bank Make Sense?
There are certainly situations where going directly to your bank can work well.
If you have a long-standing relationship with a bank and they’re offering you loyalty discounts, it’s worth running those numbers. Some banks also process applications faster for existing customers with clean credit histories and straightforward income situations.
If your financial situation is simple, your application is unlikely to be tricky for any lender. In that case, it’s still worth having a broker compare options, but the advantage may be smaller.
The main scenarios where a bank might be the obvious call:
- You’ve been offered a competitive rate through an existing banking relationship
- You prefer to manage everything through one institution (loans, savings, everyday banking)
- Your application is completely straightforward, and you’re confident the bank’s rate is competitive
Which Option Suits Your Situation?
First Home Buyers
Buying your first home is complicated. There are government grants, stamp duty concessions, lender’s mortgage insurance (LMI) thresholds, First Home Guarantee scheme places, and more to navigate.
A first home buyer broker can help you access the right scheme, find a lender who’s flexible on deposit requirements, and guide you through the whole process from pre-approval to settlement. Going directly to a single bank limits your options significantly, especially if you’re working with a smaller deposit.
Refinancers
If you’ve been with the same lender for a few years, your rate is likely not competitive. A refinance home loan broker can compare your current rate against the full market and negotiate a better deal, without you having to do the legwork.
Property Investors
Investment lending involves different criteria from owner-occupier lending. Interest-only loan periods, debt serviceability calculations, rental income recognition, and portfolio lending all add complexity. Brokers who specialise in investment lending understand which lenders are most flexible with investor applications and can structure your finances in a way that supports future property purchases.
Self-Employed Borrowers
Banks often apply more conservative criteria to self-employed borrowers, particularly around income verification. A broker knows which lenders accept different income documentation (such as one year of tax returns, BAS statements, or business financials) and can position your application with the right lender from the start.
How Do Mortgage Brokers Get Paid?
Brokers receive an upfront commission from the lender when your loan settles, and an ongoing trail commission as long as your loan remains active. These commissions are paid by the lender, not by you.
Under Best Interests Duty, a broker can’t recommend a loan simply because it pays them a higher commission. They must be able to justify why the recommendation is in your best interest and document that reasoning. It’s worth knowing this, and it’s also absolutely fine to ask your broker how they’re paid and what commission different lenders offer.
Ready to Talk to a Brisbane Broker?
Whether you’re buying your first home, looking to refinance, or building an investment portfolio in Brisbane or the surrounding areas, the team at Woodrow Finance are here to help. We know the local market, we work with a wide panel of lenders, and we’re in your corner from the first conversation to settlement.
Get in touch with our team today for an obligation-free chat about your options.
FAQs
Which is cheaper: a mortgage broker or a bank?
Brokers are generally free for the borrower, as they’re paid by the lender. And because they compare rates across multiple lenders, they’ll typically find you a more competitive rate than a single bank can offer. Lower rate + no broker fee = cheaper in most cases.
Which is better for getting approved?
If your application is straightforward, both routes can work. But if you’re self-employed, have a smaller deposit, a complex income structure, or any credit history concerns, a broker is better placed to find a lender who’s a good match for your situation. Applying directly to a bank and getting declined can affect your credit file.
Who gets better rates: broker clients or bank customers?
Broker clients, more often than not. Brokers can negotiate across their lender panel and are incentivised to find you the best deal to maintain their reputation and trail commission. Banks typically reserve their sharpest rates for new customers and may let existing customers drift onto higher rates over time.
Are mortgage brokers better for first home buyers?
Yes, in most cases. The First Home Guarantee, stamp duty concessions, LMI waivers, and lender-specific first home buyer policies all vary between lenders. A broker who works with first home buyers regularly knows the landscape and can match you with the right product and scheme.
Is my broker obligated to work in my best interest?
Yes. Australian mortgage brokers have been legally required to meet Best Interests Duty since 1 January 2021. This means they must recommend what’s right for you, not what’s most profitable for them. Banks don’t have the same obligation.