Mortgage broker or bank?
A bank shows you its own loans; a broker shows you a panel of lenders and is legally bound to act in your best interests, at no cost to you. That is the whole case in one sentence, and it is why brokers now write about four in five Australian home loans. It is not the whole story: there are cases where the bank wins, and downsides on both sides. This guide puts the two routes side by side on what actually differs and tells you when each is the right call.
- Choice: a bank assesses you against its own products and policy; a broker compares a panel, on average 23 lenders and three presented options (MFAA)
- Duty: brokers must act in your best interests and put your interests first in a conflict; bank staff carry no such duty (MFAA, National Credit Act)
- Cost: the loan terms are identical either way; the lender pays the broker, and the ACCC found broker customers generally get equal or better pricing
- The bank wins when it will match the market for a simple profile, when you want a direct-only product, or when you value one relationship over choice
- The broker wins on non-standard income, small deposits, credit blemishes, discretionary pricing and repricing later (MFAA: average 0.35% cut on repricing)
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are based on a secured loan of $30,000 over 5 years for vehicle finance and $50,000 over 5 years for equipment finance, as required under the National Credit Code.
What is actually different?
Not the loan. The product, rate card and fees a lender offers through a broker are the ones it offers in the branch, and the lender pays the broker out of its own margin, so the price you pay is the same or, per the ACCC's home loan price inquiry, slightly better through a broker. What differs is who does the comparing, under what duty, and how many lenders are in the frame.
| What differs | Bank (direct) | Mortgage broker |
|---|---|---|
| Lenders considered | One: its own products under its own credit policy | A panel; the MFAA reports an average of 23 lender accreditations and three options presented |
| Legal duty to you | None beyond responsible lending; bank staff are not bound by the best interests duty (MFAA) | Best interests duty and conflict priority rule since 1 January 2021 (National Credit Act, ASIC RG 273) |
| Cost to you | Nothing, beyond the loan's own fees | Nothing in most cases; the lender pays upfront and trail commission; any fee to you must be disclosed and agreed in writing first (Moneysmart) |
| Rate | The card rate plus whatever discretionary discount you negotiate yourself | The same card rates across the panel, plus pricing requests the broker lodges; MFAA reports a 0.35% average cut on broker repricing |
| Approval odds | One policy; a decline means a fresh application and credit enquiry elsewhere | Lodged with the lender whose policy fits your income, deposit and security |
| Speed | Depends on the bank's queue; digital lenders can be fast for simple files | Depends on the chosen lender; the broker packages the file so it is assessed once |
| Ongoing service | Whatever the bank offers; repricing is on you to request | Trail commission pays the broker to keep you; annual reviews and repricing are part of the model |
| Blind spots | Every other lender | Lenders not on the panel, including some direct-only lenders (Canstar) |
| Who is accountable | The bank, via its complaints process and AFCA | The broker's licensee, via its complaints process and AFCA (Moneysmart) |
When the broker wins
- Your income is not a payslip. Self-employed under two years, casual, contract, bonus-heavy or parental leave income is accepted by some lenders and not others, and a broker knows which. The self-employed and casual income guides show how far policies differ.
- Your deposit is small or your credit file is not clean. Lenders' appetite for 5% deposits, scheme places, guarantors and past defaults varies; one decline at your own bank costs a credit enquiry.
- You want the discretionary discount. Lenders hold pricing below the card rate for requests, and brokers lodge those requests daily.
- You want someone paid to keep the loan competitive. Trail commission is the incentive; the MFAA's 0.35% average repricing cut is the result.
- You want a legal duty on your side. Only the broker has one.
When the bank wins
- It will match the market and you are simple. A salaried borrower with a 20% deposit and a standard house can get the bottom-of-market rate direct if the bank is prepared to match it, and then the broker adds convenience, not money.
- The product is direct-only. A few lenders and some digital brands do not pay brokers and sit outside every panel; if one of them has the loan you want, apply yourself.
- You value one relationship. Business owners with lending, transaction and merchant facilities at one bank sometimes get package pricing that a broker cannot replicate elsewhere.
- You already know the loan you want. If you have done the comparison and the bank's offer is the winner, the broker's panel is not adding anything.
The downsides, honestly
A broker's panel is a boundary: Canstar notes brokers do not work with every lender, and the duty does not require a broker to consider lenders they cannot lodge with, only to document why the panel options they chose serve you best. Brokers are paid on settlement and lose the commission to clawback if you leave within about two years, which is a structural preference for loans that settle and stay, and the reason to ask how the recommendation was reached. And quality varies; the duty is a floor. A bank's downside is simpler: one lender, one policy, no duty, and the comparison work is yours. Moneysmart's checklist works for either route: confirm the licence, ask for more than one option, ask why each is in your best interests, and ask how the adviser is paid and whether it differs between lenders.
Where we fit
Your Finance Guide is neither. We publish the guides and calculators, and when you ask, we refer you to one licensed broker partner who is paid by the lender on the rates set out in the how brokers are paid guide and who pays us a referral fee out of that commission, disclosed in our credit guide. We do not lend, assess or recommend loans. If your own bank's offer is the best one, the broker partner is bound to say so.
More on mortgage brokers
Pay, fees, the duty and the situations where a broker earns their keep.
Broker vs bank FAQs
Is it better to deal with a mortgage broker or a bank?
What are the disadvantages of using a mortgage broker?
What are the disadvantages of going direct to a bank?
Are mortgage brokers cheaper than banks?
Is it easier to get a home loan through a broker?
Can a broker get you a better interest rate?
Is a mortgage broker worth it?
Can I use a broker and still get my own bank’s loan?
Compare the panel, not one bank
One conversation with our licensed broker partner puts your own bank's offer up against the rest of the panel, with a legal duty to tell you which is better. Free for borrowers, no obligation.