Brokers are paid by lenders, not by you. That single fact explains when a broker earns their fee — and when going direct to your bank is the better call.
Mortgage brokers are paid by lenders, not by you. That one fact explains almost everything about when to use one and when going direct to a bank makes more sense.
A broker is valuable when the lender landscape is complex — which it now is, with government guarantees, shared equity products and dozens of lenders each offering slightly different low-deposit criteria. They are less useful when a mainstream lender will clearly give you a standard loan at a competitive rate.
When a broker earns their fee
- You need a 5% Deposit Scheme or Family Home Guarantee loan and most branches don't handle them well
- Your credit file has a default, or your income is unusual (casual, contract, self-employed)
- You're buying off the plan with a non-standard payment structure
- You genuinely cannot spend 20 hours comparing 40 lenders
- You need access to lenders that don't advertise to the public
When going direct is fine
- You have a stable full-time income and a clean credit file
- You're buying an established property below the 5% scheme price cap
- You want a straight answer and a straightforward product
- Your bank already has your records and can price you competitively
- You value a single point of contact over choice
The cost question
Broker commissions are paid by the lender, typically 0.55–0.75% of the loan amount. On a $600,000 loan that is roughly $3,300–$4,500 — built into the lender's pricing, not charged to you separately. You should not be asked to pay a broker fee directly. If you are, that is a red flag.
| Route | Who pays | Cost to you | LVR options |
|---|---|---|---|
| Bank branch | Bank (originates) | Lender fees only | Often 80–95% depending on the bank's policy |
| Bank, direct online | Bank | Lender fees only | Varies; many banks restrict LVR above 80% |
| Mortgage broker | Bank or lender (commission) | Nil to you | Full access, including 90–95% LVR and scheme products |
| Credit union | Mutual (no commission) | Lender fees only | Often more flexible on serviceability |
| State lender (Keystart, HomeStart) | Government-backed | Lender fees only | 2% deposit, no LMI, income caps apply |
Where brokers are structurally weak
Three genuine problems worth knowing, none of which make brokers useless but all of which mean you should verify independently:
- They are paid a volume commission, not a savings commission. A broker paid 0.65% of a $600K loan earns the same whether you get 6.1% or 6.4%. There's no financial incentive to run the numbers that might save you $10,000 over 30 years. Ask them to run a rate comparison anyway — a good broker will.
- Some brokers are volume-limited to a panel. Ask directly: how many lenders are on your panel? If it's three, you're paying for the appearance of choice. Genuine access is typically 30–40 lenders.
- Scheme lending is a specialist skill. Because 5% scheme, Family Home Guarantee and Help to Buy are all different products with different documentation, a generalist broker may not know which lender suits you. Ask how many of their clients used a government guarantee in the last year.
Use a broker, but verify the rate yourself
After a broker gives you a rate, spend twenty minutes checking that specific lender's advertised rate on their own website. If they quoted worse than the lender's own sign-up rate, ask why. That question ends most problematic relationships immediately.
How to find a good one
Ask for a credit-registered broker (required by law) and check their membership with a professional body such as the MFAA or the Australian Mortgage and Finance Association. Then ask three questions:
- "How many lenders are on your panel?" Anything under twenty suggests limited access.
- "How many of your clients have used a 5% Deposit Scheme or Family Home Guarantee in the last year?" If the answer is a vague number, find a specialist.
- "What will you charge me?" The correct answer is nothing. Brokers are paid by the lender.
The direct-bank route, done properly
Going direct is entirely reasonable — but you need to understand that a bank's "comparison rate" is not your rate. The advertised comparison rate assumes an 80% LVR over 25 years. Ask instead for the basic advertised rate at your actual LVR, which is typically 0.05–0.15% higher, and ask what the comparison rate becomes at 95% LVR.
If you go direct, you also need to be the one checking scheme eligibility. This is the single biggest advantage brokers have for low-deposit buyers: a broker can tell you which of forty lenders actually offers the 5% scheme in your postcode, in minutes. Doing it alone takes a fortnight.
The honest summary
For a first home buyer using a government guarantee, a specialist broker is usually worth it. For a first home buyer buying a straightforward established property with a clean file and no scheme, going direct to your existing bank is fine and often faster. The question isn't "broker or bank" — it's "does my situation have enough complexity to justify someone else's product knowledge".
We publish general information, not legal or financial advice. Off-the-plan contracts, conveyancing and settlement law vary by state and by individual circumstances. Always have your own independent legal adviser review any contract before you sign — the cost is trivial against the risk. Found something wrong? Tell us.