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Mortgage broker vs bank: what a broker does and what to ask

Christian Tucker
Oct 21
6 min read

Updated: Oct 22

Insights from AGFB · Checked 2 October 2026 · About 6 minutes

In brief

  • A mortgage broker compares home loans from a panel of lenders and handles the application with you. A lender's own staff can only offer that lender's loans.

  • On home loans, brokers must act in your best interests and put your interests first if there is a conflict. Lenders and brokers must both meet responsible lending rules.

  • Brokers are usually paid commission by the lender, upfront and ongoing (trail). The Credit Guide and credit proposal must disclose it.

  • No broker's panel covers every lender. Going direct can suit you if you already know the lender and loan you want.

What does a mortgage broker do?

A mortgage broker matches you with a lender and helps arrange the loan. The law treats a mortgage broker as someone whose business is helping people with home loans from more than one lender, and who is not the lender on most of them.

In practice, a broker asks about your finances, goals and the loan features you want, then compares options from their panel. They explain what each option costs, lodge the application, answer the lender's questions and keep things moving through to settlement.

Most new home loans now go through a broker. In the June 2026 quarter, brokers facilitated 81.6% of new residential home loans, according to data commissioned by the Mortgage and Finance Association of Australia (MFAA), the broking industry body.

What does a bank's own lending specialist do?

When you go direct, you deal with a lending specialist employed by that lender. They know its products and policies in detail, including any packages for existing customers, and can handle your application from start to finish.

The difference is range. A lender's staff can only offer that lender's loans, so comparing other lenders is up to you.

Both lenders and brokers must make reasonable inquiries about your situation, verify your finances and not offer or arrange a loan that is unsuitable for you. The best interests duty below is an extra obligation that applies to mortgage brokers, not to a lender's own staff.

The best interests duty

Since 1 January 2021, mortgage brokers have had to act in the consumer's best interests when helping with a home loan. The National Consumer Credit Protection Act 2009 sets this out in section 158LA for credit licensees and section 158LE for credit representatives, such as AGFB.

A second rule covers conflicts of interest. If a broker knows, or reasonably ought to know, that your interests conflict with those of the broker, their licensee or people connected with them, they must give priority to yours. That rule sits in sections 158LB and 158LF.

In plain terms, a broker should be able to explain why a recommended loan suits your situation and goals, not just show that it was available.

How are brokers paid?

Lenders generally pay the broker a commission, so you don't pay it directly. It is a percentage of the loan amount, usually made up of an upfront payment and an ongoing payment called trail.

Some brokers also charge you a fee. If they do, they must first give you a written quote to sign, and can't provide the service or ask for payment until you have.

Two documents show this. The Credit Guide, given before the broker helps you, explains how commission works, lists the lenders the broker does the most business with and tells you how to complain. The credit proposal disclosure document, given when a loan is suggested, shows your fees and an estimate of the commission.

AGFB's Credit Guide explains the fees and commissions that may apply and what to do if you have a concern.

A broker's panel is not every lender

Each broker works with a panel, the group of lenders they can submit applications to. A panel can be wide, but no broker can offer every lender, and the options they compare come only from that panel.

That is normal, but worth knowing. Ask which lenders you can't reach through that broker, so you can decide whether to check any yourself.

When can going direct suit you?

Going straight to a lender can make sense when you've already compared loans and know the lender and product you want. It can also suit you if you value having your everyday banking and home loan in one place, or if the lender you want isn't on a broker's panel.

Whichever route you take, ask for a Key Fact Sheet, which shows the rate, comparison rate, repayments and fees in a standard format. Moneysmart suggests getting them from at least two lenders so you can compare like with like.

When a broker may help

A broker may be useful if you want several lenders compared without approaching each one yourself. It can also help when your income is less standard, such as self-employed, contract or bonus income, because lenders' policies differ.

Questions to ask any broker

  • Which lenders are on your panel, and which kinds of lenders can't you access?

  • How are you paid, and does the commission differ between the loans you are suggesting?

  • Do you charge me a fee, and if so, can I see the written quote first?

  • Why is this loan in my best interests, and can you show me a couple of other options, including a lower-cost one?

  • Are you a credit licensee or a credit representative? You can check either on ASIC's Professional Registers.

  • How do I make a complaint, and who handles it if we can't resolve it?

What if something goes wrong?

Start with the broker or lender, in writing. If it isn't resolved, or you don't hear back within a reasonable time, you can take it to the Australian Financial Complaints Authority (AFCA), an independent service that handles complaints about credit and loans and is free for consumers.

A checklist before you choose

  • Work out the repayment you are comfortable with before you talk to anyone.

  • Get Key Fact Sheets from at least two lenders, through a broker or direct.

  • Compare comparison rates and total fees, not just the headline rate, and get them in writing.

  • Read the Credit Guide and credit proposal before you agree to go ahead.

  • Ask for a copy of the written assessment that the loan is not unsuitable for you, if you want one.

  • Check the features you will use, and any costs to leave the loan early.

Common questions

Will a broker get me a different rate from the bank?

Not necessarily. The lender sets the rate it offers, whether you apply direct or through a broker, and it can depend on your loan size, deposit and situation. Get the rate and fees in writing either way and compare them on a Key Fact Sheet.

Can I use a broker and still talk to my own bank?

Yes. You can ask your bank what it would offer and compare that with the options a broker presents. If your bank is on the broker's panel, the broker may be able to include it in the comparison.

Try the numbers

Use our Borrowing Capacity calculator for an indicative figure before you speak with a broker or a lender, or start with Find Your Next Step, a short guided set of questions that points you to the right tool or enquiry. Our home loans page explains how Christian compares loans across AGFB's panel and manages the application.

Talk it through

If you'd like to see how a broker would approach your situation, Christian can walk you through AGFB's panel, how AGFB is paid and the options that may fit.

Sources

General information only. This article does not take into account your objectives, financial situation or needs. Your full financial situation and requirements must be considered before any offer or acceptance of a loan product. All lending is subject to the lender's assessment and criteria, and fees and charges apply. Figures and rules are correct as at the checked date shown and can change.

Avantgarde Financial Brokerage Pty Ltd, Corporate Credit Representative 580346, authorised under Australian Credit Licence 389328 held by Connective Credit Services Pty Ltd.

SEE WHY CLIENTS CHOOSE AGFB

Read why clients choose AGFB and their stories, then let Christian compare lenders for you. No credit check to enquire. Christian replies the same business day.

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