Buying a home is likely the largest financial decision you will make. Getting the right home loan – the right interest rate, the right features, the right structure – can save you tens of thousands of dollars over the life of the loan. A mortgage broker’s job is to find that loan for you. But how do they work, do they cost you anything, and when are they worth using? Here is everything you need to know.
What Does a Mortgage Broker Do?
A mortgage broker acts as an intermediary between you and lenders. Rather than going directly to one bank, a broker searches across their panel of lenders – which typically includes the major banks, second-tier lenders, and specialist lenders – to find the home loan that best suits your financial situation and goals.
Their services typically include:
- Assessing your borrowing capacity and financial position
- Comparing loan products across multiple lenders
- Explaining the differences between loan types (variable, fixed, split, offset, redraw)
- Preparing and submitting your loan application
- Managing the approval process and liaising with lenders on your behalf
- Assisting with refinancing if your circumstances change
How Are Mortgage Brokers Paid?
Most mortgage brokers in Australia do not charge you a direct fee. Instead, they are paid commissions by the lender when your loan settles. The upfront commission is typically 0.5% to 0.65% of the loan amount. There is also usually a trail commission of 0.1% to 0.15% per year for as long as the loan remains active.
Following banking royal commission reforms, brokers are required to act in your best interest (the best interest duty) rather than recommending loans that pay them higher commissions. This has improved broker conduct significantly, but it is still worth asking which lenders are on their panel and how their remuneration works.
Mortgage Broker vs Going Direct to a Bank
Going directly to a bank gives you access to that bank’s products only. A broker gives you access to potentially 30 or more lenders at once, often including products not available directly through the bank’s branch network. For most borrowers, especially those with complex situations (self-employed, multiple investment properties, non-standard income), a broker typically achieves a better outcome.
When Is a Mortgage Broker Most Useful?
- First home buyers – navigating stamp duty concessions, First Home Guarantee, and LMI can be complex. A broker simplifies the process.
- Self-employed borrowers – lenders assess self-employed applicants differently. A broker knows which lenders are most flexible.
- Property investors – structuring loans across multiple properties requires careful planning. An experienced investment property broker adds real value.
- Refinancers – if you have not reviewed your home loan in two or more years, a broker can quickly tell you whether you are paying too much.
- Low deposit buyers – brokers know which lenders have the most competitive LMI terms and which participate in government guarantee schemes.
Questions to Ask a Mortgage Broker
- How many lenders are on your panel?
- Are you a member of the MFAA or FBAA?
- How do you get paid and will you disclose your commission in writing?
- What is the comparison rate (not just the advertised rate) for any loan you recommend?
- What loan features do you recommend for my situation and why?
Find a Mortgage Broker Near You
FIZO lists accredited mortgage brokers and finance specialists across Australia. Find a mortgage broker near you on FIZO and compare your options before your next property purchase or refinance.