Should you choose a mortgage broker or go with a bank? | Finder

Mortgage brokers versus banks

While a mortgage broker can help you sort through all the lenders in the market, there may also be advantages to going directly to a lender. Which one should you choose?

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BrokersBanks
ServiceA broker guides you through various mortgage options and helps you compare rates, fees and features.

The broker can advise you on every step of the home loan process but will ultimately connect you with a bank or non-bank mortgage lender.

A bank will explain their mortgage offers and find one that suits your needs.

A lending specialist from the bank will help with your application.

Mortgage optionsBrokers have access to hundreds of loans from a panel of 20-30 lenders.Banks have their own set of mortgages. Bigger banks have loans for almost every borrower, while smaller ones may have less options.
BenefitsYou can get expert help from a professional who has their eye across a large section of the market.

Compare rates from an entire panel of lenders.

The broker works for you and their service is usually free.

Many banks have a large selection of products.

Lending specialists from a bank can provide detailed advice similar to a mortgage broker.

Banks can offer you package deals on other financial products, like credit cards and savings accounts.

DrawbacksYou need to apply with a lender anyway. A broker just adds another step to the whole process.

Some of the lowest rates are only offered by smaller non-bank lenders who aren't always on broker panels.

Brokers work for you but they get commissions from the lender you choose via their service.

Borrowers in unique or complex circumstances may have a tougher time getting finance directly with a bank.

Banks want your business and obviously won't tell you that there's a similar or better product offered elsewhere.

Commissions and feesBrokers receive a commission from lenders, not borrowers. They don't charge fees either.

But the lender you eventually choose may have their own fees.

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

  1. A mortgage broker assesses your situation and your creditworthiness to develop a better picture of your chances of qualifying for a home loan.
  2. They take your information and work to find a loan that meets your needs as closely as possible.
  3. 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 first thing a broker will do is check your credit score: check it for free now

The pros and cons of using a mortgage broker

  • Brokers offer choice to a wide range of lenders, and a good broker is well practiced in finding the best deals. They will know the nuances of lenders' credit policies, and should be able to direct you to lenders best suited to your circumstances.
  • When it comes to seeking a mortgage via a bank, the broker can also advocate on your behalf, increasing your chances of success with the process.
  • Mortgage applications can confuse people. A broker helps you get your application paperwork together with a minimum of confusion.
  • Due to the sheer number of 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, it can also be difficult to judge what is a good deal, or when you might do better visiting a local lender. Using a mortgage broker requires a bit of personal research and understanding, although it’s certainly possible to gain this information.

Learn more about how brokers work

Compare more brokers in the table below

Data updated regularly
Name Product Upfront consultation fee Variable rates from Comparison rates from Lenders on panel Apply Now
eChoice
$0
3.03%
3.04%
25
eChoice has a network of brokers Australia-wide and convenient online service. They work with lenders large and small.
Finsure
$0
3.03%
3.04%
35
Finsure has a large panel of lenders and offers flexible mortgage solutions for borrowers.
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What does a bank loan officer do?

Bank loan officers work for one specific bank or lender, and often receive volume incentives when providing clients with loans.

If you already have great credit, are a customer of the bank, and have a stable income, you will most likely find a good rate through your bank. A loan officer can match you to the best loan product available within that specific bank. If you choose this option, and you are already a customer of the bank, don't be afraid to probe for a better deal on your mortgage.

The pros and cons of going directly to a bank

  • Going through a bank loan officer can allow you to access a direct line to the very best deals at the bank or lender you choose to work with. Bank loan officers are also extensively experienced in working with the lender, their policies and their loans.
  • If you're already a customer, they can often structure a loan to work with other bank-provided products you have already.
  • Another advantage of going through a bank loan officer is dealing directly with your lender. This means any questions you have or any additional information the lender needs can be addressed without taking the time to go through an intermediary.
  • A bank loan officer has access only to the loans offered by the bank or lender through which they are employed. This can seriously restrict the options available to those who are not a direct customer of the lender already.
  • 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 who can.

Today's home loan rates

Data updated regularly
$
years
Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Westpac Flexi First Option Home Loan
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
$577.55
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
St.George Fixed Rate Advantage Package
1.84%
3.38%
$0
$395 p.a.
80%
$543.64
Up to $4,000 refinance cashback
Borrowers with 20% deposits or equity can get this competitive fixed rate loan. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
HSBC Fixed Rate Home Loan Package
1.88%
2.86%
$0
$390 p.a.
80%
$546.6
$3,288 refinance cashback offer
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.
UBank UHomeLoan Fixed
1.75%
2.22%
$0
$0 p.a.
80%
$537
This very low fixed rate is only available until 29 April 2021. Other conditions apply. A competitive fixed rate loan with no ongoing fees. Requires a 20% deposit
Westpac Fixed Option Home Loan Premier Advantage Package
1.89%
3.46%
$0
$395 p.a.
95%
$547.35
Up to $3,000 refinance cashback.
Eligible borrowers refinancing $250,000 or more can get up to $3,000 cashback. Other conditions apply.
St.George Basic Home Loan
2.49%
2.51%
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
Get this low-rate variable loan with a 20% deposit and pay $0 application fee. Borrow from $150k (or $250k to be eligible for the cashback offer) (terms, conditions & exclusions apply).
Suncorp Home Package Plus Fixed
1.89%
2.85%
$0
$0 p.a.
80%
$547.35
Lock in a low fixed rate loan for two years and get the annual package fee waived in the first year. Available for borrowers with 20% deposits.
Athena Variable Home  Loan
2.19%
2.19%
$0
$0 p.a.
60%
$569.91
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.
loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47%
$0
$0 p.a.
80%
$554.81
Home buyers can get a very low discounted variable rate for the first year. This loan has a revert rate of 2.48%. Requires a 20% deposit. Add an offset account for an additional 0.10% on your interest rate.
AMP Bank Professional Package Fixed Loan
1.99%
3.1%
$0
$0 p.a.
80%
$554.81
Get a low fixed rate package with no application or settlement fee, that's available with a 20% deposit. Other fees and charges apply.
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12 Responses

    Default Gravatar
    MarkusMay 9, 2016

    Hi,

    Do mortgage brokers use mainly the “big 4” or do they look at smaller type lenders too, like ubank, loans.com, mortgage house and so on?
    If only some brokers use these how do I find out?

      Default Gravatar
      JodieMay 9, 2016

      Hi Markus,

      Thank you for contacting finder.com.au we are a financial comparison website and general information service.

      Mortgage brokers work with a range of lenders you can check their panel of lenders by visiting the below provider pages on finder.com.au, also, you can check the mortgage brokers websites directly.

      Regards
      Jodie

      Default Gravatar
      markusMay 9, 2016

      Hi Jodie,

      Thanks for the reply.
      Ok so if say a mortgage broker workes with NAB, woud that mean if ubank is affiliated with NAB that the broker will automatically work with that lender too?

      Default Gravatar
      JodieMay 9, 2016

      Hi Markus,

      Apologies I forgot to mention that the three lenders you pointed out, loans.com.au, UBank and Mortgage House, are not offered through any mortgage broker they only offer their home loans direct to the public.

      Mortgage broker still work with a great range of lenders there are just some specific online lenders that choose to only offer their loans direct.

      Regards
      Jodie

    Default Gravatar
    DrewJanuary 25, 2016

    If a customer was considered by a lender to be a “Good Borrower”; can the customer get as good of a deal going direct to a bank, as a broker could through their channels?

    In other words, does a broker have more bargaining power than a customer, if they were to approach to same lender.

      Avatarfinder Customer Care
      MarcJanuary 27, 2016Staff

      Hi Drew,
      thanks for the question.

      It’s definitely possible for borrowers acting independently of a broker to get a great deal. Sometimes, some of the lowest rates are offered by lenders who do not work with brokers at all to keep their costs lower.

      A broker has a distinct benefit when your situation isn’t clear cut e.g temporary visas, unusual income types, or you don’t have the time to properly evaluate your options. They’re also invaluable if you don’t really understand the home loan industry and products but want a good deal.

      We’ve seen some great broker rates on offer too, so it’s helpful to compare home loans in the market regardless of which way you go to make sure you’re informed.

      I hope this helps,
      Marc.

    Default Gravatar
    BeatriceApril 8, 2015

    A broker has given me 45, 000 I can borrow from a private investor however he wants the insurance up front is this normal

      Avatarfinder Customer Care
      MarcApril 9, 2015Staff

      Hi Beatrice,

      Thanks for the question.

      If you are referring to Lender’s Mortgage Insurance (LMI), this is normal to be required upfront. If you are ever in doubt about a particular deal, please seek the services of another mortgage broker or speak to a financial advisor.

      Cheers,
      Marc

    Default Gravatar
    HelenMarch 20, 2015

    Hi Shirley,

    Thanks for your reply.

    I mean what sort of things are out of a mortgage broker’s authority? is there anything a mortgage broker not authorised to do in terms of advising or services?

      Avatarfinder Customer Care
      ShirleyMarch 23, 2015Staff

      Hi Helen,

      Thanks for your question.

      Mortgage brokers can not assist with investment and financial advice, this includes tax matters.

      I recommend getting in touch with a licensed mortgage broker. A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that’s more inclined to review your application.

      Cheers,
      Shirley

    Default Gravatar
    HelenMarch 17, 2015

    what limits a mortgage broker’s authority?

      Avatarfinder Customer Care
      ShirleyMarch 18, 2015Staff

      Hi Helen,

      Thanks for your question.

      Could you please provide some further clarification to your question?

      Cheers,
      Shirley