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Neither a mortgage broker nor a bank is automatically the better choice in Australia. A broker can compare and arrange loans from lenders on their panel and help manage an application; a bank can explain and offer its own products. The right route depends on the actual loan offers, their total costs and features, and how well they fit your circumstances. Compare offers from at least two lenders using Key Fact Sheets, and if you speak with a broker, ask which lenders they cannot access, how they are paid, and why they recommend a particular loan.
At a glance
| Name | Best for | Scope | Checked |
|---|---|---|---|
| Mortgage broker | Borrowers who want help comparing options from multiple lenders or support with an application | Loans from lenders on the broker’s panel; ask which lenders are excluded | Nov 2026 |
| Bank direct | Borrowers who want to discuss a particular bank’s products directly with that lender | That bank’s own lending products | Nov 2026 |
What is the difference between a mortgage broker and a bank?
A broker is an intermediary who works with borrowers and lenders; a bank is a lender that can offer its own home loans. That difference determines what each can compare, but it does not tell you which offer is better.
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A broker may help identify suitable options, explain loan costs and features, and assist with an application through to settlement. The available choices depend on the broker’s lender panel. A broker does not necessarily compare every lender in Australia, so ask for the panel’s limits and whether a lender you are interested in is included. The Australian Government’s Moneysmart guide to using a mortgage broker recommends asking which lenders the broker works with and which they cannot access.
When you go directly to a bank, you can discuss your circumstances and the bank’s own products with the lender. That conversation does not, by itself, compare the bank’s offer with the rest of the market. You need comparable offers from other lenders to judge whether it is competitive. A broker’s broader panel can make comparison more convenient, but the panel is still a limit, not the whole market.
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You do not have to treat the routes as mutually exclusive. You can ask a broker for options and also obtain an offer directly from a bank—including a bank you already prefer—then compare them using the same likely loan amount and repayment assumptions. Moneysmart says a broker should also show options from other lenders when a borrower has a preferred bank.
How should I compare the actual loan offers?
Compare the likely total cost and the value of the features, not just the headline interest rate. Moneysmart recommends getting Key Fact Sheets from at least two lenders for the loan amount you expect to borrow, then examining repayments, fees, the personalised comparison rate, and the total amount repayable.
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A Key Fact Sheet gives you a consistent basis for reviewing offers. Ask each lender or broker for one using the same borrowing amount and assumptions. Then check:
- Personalised comparison rate: Use the rate shown for your likely loan, rather than relying only on an advertised headline rate.
- Total amount repayable and repayments: Look at the estimated overall amount and regular repayment figures for each offer. Confirm that you are comparing the same loan amount and repayment assumptions.
- Upfront and ongoing fees: Include establishment and ongoing fees, along with other charges listed in the offer. A lower interest rate does not necessarily mean a lower total cost.
- Loan features and their cost: Check whether the offer includes an offset account, redraw, extra repayments, or other features you value—and whether they cost more.
- What happens later: Ask about break costs, refinancing, early repayment, and what happens when a fixed or introductory rate ends.
Use the Moneysmart home-loan guidance and its calculator with your own loan amount, interest rate, term, and repayment type to estimate repayments and total cost. Moneysmart notes that even a 0.2 percentage-point lower interest rate could save thousands over time. That is an illustration, not a forecast for your loan: the result depends on the amount, term, rate, fees, and other details.
Do not pay extra for a feature simply because it sounds useful. An offset account may reduce the balance on which interest is charged, but a small balance may not justify paying more for the feature. Redraw and extra-repayment options may also have limits or costs; ask how they work on the specific loan rather than assuming the feature is free or unrestricted.
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Compare the loan structure as well as the rate. Ask whether the offer is fixed, variable, or split between the two, and what features and restrictions apply to that structure. For a fixed or introductory rate, find out what happens when the period ends and whether making extra repayments or refinancing could involve break costs. Your preferred flexibility matters only if the loan actually provides it on terms you can use.
When might a mortgage broker suit me better?
A broker may suit you if you want help comparing options from multiple lenders or support navigating the application and settlement process. The key is to establish the boundaries of the comparison and understand why each proposed loan fits you.
Ask the broker to identify the lenders on their panel and the lenders they cannot access. If you have a preferred bank, name it and ask whether it is on the panel; if it is not, you can seek a direct offer separately. Ask to see more than one option, including a lower-cost alternative where one is available, and request the Key Fact Sheets so you can compare costs and features rather than relying on a verbal summary.
Broker recommendations must meet a legal best-interests duty. ASIC’s Regulatory Guide 273 explains that the duty and the conflict priority rule have applied since 1 January 2021. If a conflict arises, the broker must give priority to the consumer’s interests. Relevant considerations include costs, repayments, features, preferences, and product availability.
This duty is important, but it is not a guarantee that the broker has access to every lender or that a recommendation will always be the cheapest loan. The lowest interest rate alone does not necessarily represent the lowest-cost or best-interest option for a borrower. A loan with a higher cost might offer features or other value that fit your circumstances; if that is the recommendation, ask for a clear explanation of the alternatives and why the additional cost is justified.
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ASIC’s 2026 review gives borrowers a reason to ask for that explanation, not to assume that every broker has failed their obligations. The review covered aggregator groups associated with approximately two-thirds of mortgage broker representatives in Australia and examined aggregator data from 1 April 2023 to 31 March 2025. ASIC said there was room to improve recommendation practices and complaint handling. It did not establish that any particular broker had failed their duty. ASIC Commissioner Alan Kirkland said consumers should be able to understand why a higher-cost recommendation delivers greater value for their circumstances. You can read the scope and findings in ASIC’s 2026 review announcement.
When might going directly to a bank suit me better?
Going directly to a bank can suit you if you want to discuss that lender’s products with the lender itself. It may be a useful source of an offer to compare, particularly if you already have a bank in mind. But a bank can present its own products; you will need other offers to assess the bank’s price and features against alternatives.
Request a Key Fact Sheet for the bank’s offer and ask the same questions you would ask a broker: what are the total costs, which features are included, what restrictions or fees apply, and what happens when a fixed or introductory rate ends? If you also have a broker’s recommendation, ask for the same likely borrowing amount and repayment assumptions on both sets of documents. Otherwise, differences in the assumptions can make the comparison misleading.
Neither channel removes your responsibility to understand the loan. A broker can assist with an application, and a bank can explain its products, but you should be able to describe why the offer suits your needs and what it will cost. If an explanation is unclear, ask for it in writing before deciding.
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Lenders generally pay brokers commissions for distributing their products, usually as an upfront and an ongoing amount. Brokers must disclose information about commissions they may receive. Some brokers may also charge the borrower a direct fee, so do not assume every broker’s service is free.
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Ask how the broker is paid, whether payment differs between lenders, and whether you will pay a fee directly. If there is a borrower-paid fee, Moneysmart says it should be explained in a written quote signed before the broker provides services and requests payment. Include any direct fee when comparing the overall cost of using that route.
A commission or fee does not by itself show whether a loan recommendation is suitable. The best-interests duty and conflict priority rule are designed to address conflicts, but you should still ask why the loan is recommended, which alternatives were considered, and how its cost and features fit your circumstances.
What should I ask before choosing?
Use the same core questions with a broker and a bank. The goal is to get enough detail to compare offers on equal terms and understand how the recommendation was reached.
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- Which lenders are on your panel, and which lenders can’t you access?
- Is my preferred bank on your panel? If not, how should I compare its direct offer with your options?
- How do you get paid? Does your payment differ between lenders, and do you charge me a fee?
- Why is this loan in my best interests? What alternatives did you consider, including a lower-cost option?
- Can I see Key Fact Sheets for the offers using the amount I expect to borrow?
- What are the total fees and costs, and what features are included?
- What happens if I make extra repayments, refinance, or repay early? Could break costs apply?
- What happens when any fixed or introductory rate ends?
Questions for a bank
- Can you provide a Key Fact Sheet for the loan amount and repayment assumptions I am considering?
- What are the personalised comparison rate, total amount repayable, repayments, and upfront and ongoing fees?
- What do the features cost, and what restrictions apply to offset, redraw, or extra repayments?
- What charges or break costs might apply if I repay early or refinance?
- What rate and repayment arrangements apply after a fixed or introductory period ends?
Before engaging a broker, check ASIC’s Professional Registers for the Credit Representative or Credit Licensee register to confirm that the broker is licensed or represents a licensee. This is a practical verification step; it does not replace comparing the loan or assessing whether the recommendation suits you.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How can I tell whether the repayments are affordable?
Estimate the repayments and total cost using your likely loan amount, rate, term, and repayment type, then check whether the loan remains manageable if rates rise. Moneysmart advises borrowers to test affordability with a 3% rate rise. Treat that as a stress test, not a prediction of what rates will do.
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Consider the effect of costs and features as well as the repayment estimate. A more expensive loan feature may not be worthwhile if you are unlikely to use it; conversely, the cheapest headline offer may not provide a feature you need. Ask the broker or bank to show the costs and explain how the loan works under the scenarios that matter to you, including a rate change, extra repayments, or the end of a fixed or introductory period.
Make the affordability check specific to your circumstances. A small change in rate can add up over the life of a loan, but Moneysmart’s 0.2 percentage-point illustration is not a personalised saving estimate. Compare the actual repayment and total-cost figures for the offers you have, and leave room in your budget for the possibility that repayments could rise.
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Use the broker or bank channel that gives you a loan you understand and can afford—not the one that sounds best in general. A broker’s panel and application support may help you compare and navigate options; a direct bank conversation may give you a useful offer from a lender you are considering. Neither is a substitute for comparing the actual products.
- Get at least two comparable offers. Include a broker-proposed loan and a direct bank offer if both routes are available to you.
- Match the assumptions. Use the same likely loan amount and repayment assumptions for the Key Fact Sheets.
- Compare total cost and useful features. Review personalised comparison rates, total amount repayable, repayments, fees, restrictions, and the cost of features.
- Check access and payment. If using a broker, confirm panel limits, commissions, and any direct fee.
- Ask for reasons and alternatives. Get a clear account of why the recommended loan suits your circumstances, particularly if it costs more than another available option.
- Stress-test affordability. Use your own loan details in the calculator and test repayments with the 3% rate rise Moneysmart advises.
More than 80% of home loans are now arranged through mortgage brokers, according to ASIC Commissioner Alan Kirkland in Moneysmart’s page updated 13 October 2026. That figure describes how common the channel is; it is not evidence that a broker will produce a better offer for every borrower. The decision still comes down to the loan, the costs, the fit, and the quality of the explanation.
Frequently Asked Questions
Does a broker’s best-interests duty mean they must find the cheapest loan?
No. The duty requires a borrower-specific recommendation, not simply the lowest interest rate or the lowest-cost product in every case. If a broker recommends an option that costs more than an available alternative, ask them to explain clearly what greater value it provides for your circumstances.
Can a mortgage broker charge a fee directly to the borrower?
Some brokers may charge a direct fee, even though lenders generally pay commissions. If a broker proposes a borrower-paid fee, ask for the written quote and check that it is signed before services are provided and payment is requested.
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Does ASIC’s 2026 mortgage-broker review mean brokers are not acting in borrowers’ interests?
No. ASIC’s review found room to improve practices across the aggregator groups it examined; it did not establish that every broker, or any particular broker, had failed their duty. Use the findings as a reason to request clear comparisons and reasons for a recommendation, not as a verdict on an individual.
