Mortgage broker vs going directly to the bank: which is better?
Quick answer: Neither is better for everyone. A bank can only offer you its own loans. A broker can compare loans from the lenders on their panel, but they are usually paid by the lender, and that is worth understanding. Since 1 January 2021, mortgage brokers have had a legal duty to act in your best interests when they give credit assistance. Whichever way you go, ask who is paid what, which lenders are being compared, and read the Credit Guide.
Key takeaways
A bank lender talks about its own products. A broker can talk about loans from several lenders, but only those on their panel.
Brokers are generally paid by the lender, often a commission based on the loan, so you may not pay the broker directly. Some brokers charge a fee, and that should be set out in writing.
Brokers must act in your best interests when giving credit assistance. ASIC says a signed notice or disclaimer cannot remove that duty.
Going direct can suit you if you already know the lender and product you want, or you value dealing with one institution.
Ask any broker which lenders they compare, how they are paid, and for their Credit Guide.
What does a mortgage broker do, and what does a bank do?
A bank (or other lender) provides the loan and can only offer you its own products. A mortgage broker is an intermediary. They help you work out what you need, compare loans, and prepare and lodge the application with a lender. MoneySmart has a page on using a mortgage broker that explains the basics from the borrower's side.
In credit law, helping you choose or apply for a loan is called "credit assistance". Brokers provide credit assistance. A bank employee describing the bank's own loan is dealing with you for a single lender.
Who pays a mortgage broker?
Generally the lender pays, not you. ASIC's review of broker remuneration found that lenders usually pay brokers a commission for bringing them loans, and that this commission is typically linked to the loan amount, paid partly upfront and partly over time (ASIC Report 516, March 2017). Lenders often pay through an aggregator or broker group, which keeps part of it. That report is several years old, so we don't quote its figures here, and the rules have changed since then. Ask your broker what they are paid on your loan.
Some brokers also charge you a fee. We didn't find official guidance setting a standard amount. If a fee applies, ask for it in writing before you start.
ASIC has also said that commission structures can create conflicts of interest. For example, a broker could be tempted to recommend a larger loan than you need. This is the reason for the best interests duty below.
What is the best interests duty?
Under the National Consumer Credit Protection Act, a mortgage broker must act in the consumer's best interests when providing credit assistance, and must prioritise the consumer's interests if there is a conflict. ASIC's Regulatory Guide 273 says the duty applies to each individual consumer, and that it cannot be avoided by a notice or disclaimer the consumer signs. ASIC's media release on the guidance gives 1 January 2021 as the start date. ASIC says that if a broker cannot act in your best interests, they must not provide the assistance.
The duty doesn't mean a broker will find you the cheapest loan on the market, and it doesn't mean the broker has looked at every lender. It is a legal standard of conduct, and ASIC also reviews how brokers follow it. It is still sensible to ask questions yourself.
We didn't find official guidance that applies the same broker-style duty to a bank's own staff describing the bank's own loans. Banks have other obligations, such as responsible lending. If you are unsure what applies, ask the lender.
What are the limits of a broker's panel?
A broker can only compare loans from lenders they are accredited with. This is often called their lender panel. Some lenders may not be on it, and some loans may not be available through brokers at all. ASIC's guidance (RG 273) discusses how a broker's panel should be considered when giving credit assistance, so it is reasonable to ask which lenders a broker uses, and whether a particular lender you are interested in is on the panel. If the lender you like is not on the panel, a broker should be able to tell you.
When might going directly to a bank suit you?
Going direct can make sense if you already know the lender and loan you want, if you have a long-standing relationship with a bank and are happy dealing with one place, or if you prefer to handle the application yourself. You can still compare loans yourself using the lenders' own pages and the MoneySmart tools. Whichever way you go, compare the comparison rate and the fees, not just the headline rate, and check the product's terms.
Broker or bank: a quick comparison
| | Mortgage broker | Going directly to a bank | |---|---|---| | Loans on offer | Loans from lenders on the broker's panel | That bank's own loans | | Who pays | Usually the lender pays the broker; some brokers charge a fee | You deal with the lender; you pay the loan's fees and costs | | Legal duty | Must act in your best interests when giving credit assistance | Other obligations apply, such as responsible lending | | Possible conflict | Commission can differ between lenders | The lender is selling its own product | | Worth checking | Panel, commission, fees, Credit Guide | Fees, features, comparison rate, terms |
What should you ask a broker?
Which lenders do you compare? Ask for the panel, and whether the lender you are interested in is on it.
How are you paid on my loan? Ask about commission and any fee you would pay, and whether it differs between lenders.
Can I see your Credit Guide? A credit provider must give you a Credit Guide that sets out information such as who they are and how they are paid. Marl's is at marl.com.au/credit-guide.
Which credit licensee are you a credit representative of? The licensee is responsible for the representative's credit activities.
Why are you recommending this loan? You should be able to get a clear reason, in plain language, linked to your needs.
What do I pay, and when? Ask about fees, and what happens to any commission if you repay or refinance early. We didn't find official guidance setting a standard rule on this, so ask.
Where can I complain? Ask about the firm's complaints process and external dispute resolution.
How Marl Finance can help
Marl Finance Pty Ltd (trading as Marl) is a Melbourne-based credit representative of Australian Finance Group Ltd (AFG). We provide credit assistance for home loans, with service in English and Chinese. Our Credit Guide explains who we are and how we are paid. You can read it at marl.com.au/credit-guide.
If you would like to talk through your situation, contact us at info@marl.com.au or on 03 8849 0131, 9:30am to 5:30pm, Monday to Friday. You are welcome to ask us every question in the list above.
Frequently asked questions
Does it cost more to use a broker? Generally a broker is paid by the lender, so you may not pay them directly. Some brokers charge a fee. Ask for the amount in writing before you start.
Will a broker find me the lowest-cost loan? Not necessarily. A broker can compare loans from the lenders on their panel, and must act in your best interests, but they can't compare lenders they don't deal with. Check the comparison rate and fees of any loan you are offered.
Can a broker be paid more by one lender than another? ASIC has said that commissions can differ between lenders and can create conflicts. Ask your broker how they are paid on your loan and how they manage that conflict.
Can I use a broker and still deal with my bank? Yes. You can ask a broker to compare your current lender with others, or you can talk to your bank first. We didn't find official guidance on any particular approach, so it is your choice.
Where can I complain about a broker? Start with the broker firm's complaints process. The Credit Guide should say where else you can go. We didn't find a single official page that we can summarise here, so check ASIC and MoneySmart for current options.
Sources
This article is general information published by Marl Finance Pty Ltd ABN 18 616 948 540 (trading as Marl), credit representative 000496273 of Australian Finance Group Ltd ACL 389087. It is general in nature and does not take into account your objectives, financial situation or needs. Our Credit Guide, available at https://www.marl.com.au/credit-guide, explains our credit assistance services. Last updated 4 November 2026.
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