Mortgage broker or bank: What’s the better option?
Applying for a home loan can be confusing, which is where mortgage brokers can help. But if you're confident, you might want to apply directly to your chosen lender.
To help decide between applying for a home loan directly with a bank or lender versus using a mortgage broker, we've broken down the main benefits and drawbacks of both.
There's really no wrong answer. A broker can make the mortgage experience easier but they don't have access to every lender. Doing it yourself takes more time, but when you've found the right loan and lender, you might end up with a better deal.
|Service||A broker works on your behalf through a multitude of mortgage options, comparing rates, fees and features. |
They can guide you on every step of the home loan process, ultimately connecting you with a bank or non-bank mortgage lender and overseeing the application process itself.
A good broker will also continue their service long after the loan has settled, doing regular checks to ensure the loan is still the right fit for you down the track.
|A lender will explain its own mortgage offers and find one that suits your needs.|
A lending specialist from the bank will help with your application, but you will be expected to do most of the work.
|Mortgage options||Brokers have access to hundreds of loans from a panel of 20–30 lenders. The options range from Australia's biggest banks to more niche non-bank lenders. This should mean that they can find a solution for most borrower circumstances.||Lenders have their own set of mortgages. Bigger banks have loans for almost every borrower, while smaller ones may have fewer options.|
If you are researching lenders, you theoretically have access to any lender and loan, widening your options significantly.
|Commissions and fees||Brokers receive a commission from lenders, not borrowers. It does not impact the cost of the loan. Most brokers don't charge fees either, but you will still need to pay any fees applicable to the lender you eventually choose.||Banks will typically charge some form of application or settlement fee, plus several other fees.|
Keep in mind that some banks charge very few fees, and some products have more fees than others.
The mortgage broker process explained
- A mortgage broker assesses your situation and your creditworthiness to develop a better picture of your chances of qualifying for a home loan.
- They take your information and come up with a selection of loans for you to choose from.
- You make your choice and the broker will guide you through the application process.
If you have questions about your mortgage options, contacting a broker can be very effective.
The pros and cons of using a mortgage broker
- A good broker is well-practised in finding the best deals from lenders in their panel. They will know the nuances of lenders' credit policies, and should be able to direct you to lenders best-suited to your circumstances.
- When seeking a mortgage via a bank, the broker can also advocate on your behalf, increasing your chances of success with the process.
- If you have a complicated borrowing situation, a broker is well-placed to help you navigate your options and minimise your chance of rejection.
- Brokers will stay in touch and reassess your loan every couple of years to make sure you're still on the best rate.
- Due to the sheer number of mortgage brokers out there, it can be difficult to determine which brokers are highly experienced, and which brokers are new.
- If you don't have a solid understanding of the finance and mortgage industry, you are relying entirely on the broker.
- There are lenders that don't work with brokers. The perfect loan for you might be one that a broker can't get for you.
- Brokers work for you, but they get commissions from the lender you choose via their service.
The pros and cons of going directly to a bank for a home loan
- Some lenders are not in any broker's panel. This includes smaller online lenders which often have the market's lowest rates.
- If you're already a customer with a bank, it can often structure a loan to work with other bank-provided products you have already.
- You deal directly with lending specialists. Any questions you have or any additional information the lender needs can be addressed without taking the time to go through an intermediary.
- You can focus on a few select products, with the larger banks still offering good variety for different borrowers.
- You only have access to the loans offered by the bank or lender. They won't tell you if you can get a better offer elsewhere.
- Banks likely won't maintain the long-term service where they tell you if you can move to a lower interest rate.
- If you are rushing to get a loan approved quickly, you might have a problem if your lender is slow or has a big backlog of applications. Brokers often know which lenders are currently able to approve loans faster.
- If you're self-employed or have bad credit, a lot of banks are unlikely to approve your application. A broker will help you find a lender that can.
Speak to a mortgage broker and get home loan help
Once you’ve entered your details, an Aussie broker will be in touch to start supporting you on your home loan journey.
- Our panel of 25+ lenders will allow you to compare 100’s of rates
- Get access to free suburb and property reports
- Have expert guidance through the entire application process.
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