Mortgage broker vs bank – which is best?

Why use a mortgage broker when you can go direct to your bank? We explore the pros and cons of using a broker vs bank.

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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 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, 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

Name Product Upfront consultation fee Variable rates from Comparison rates from Lenders on panel Apply Now
eChoice has a network of brokers Australia-wide and convenient online service. They work with lenders large and small.
Finsure has a large panel of lenders and offers flexible mortgage solutions for borrowers.

Compare up to 4 providers

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 for a home loan

  • 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

Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Westpac Fixed Option Home Loan Premier Advantage Package
3.48% p.a.
$395 p.a.
Up to $3,000 refinance cashback.
Lock in a low fixed rate for 2 years and buy your home with a 5% deposit. Eligible borrowers refinancing $250,000 or more can get up to $3,000 cashback. Other conditions apply.
UBank UHomeLoan Fixed
2.31% p.a.
$0 p.a.
Limited time offer.
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees. Apply by 30 June 2021 and settle within 90 days to get this low rate.
St.George Fixed Rate Advantage Package
3.40% p.a.
$395 p.a.
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).
Athena Variable Home  Loan
1.99% p.a.
$0 p.a.
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.
HSBC Fixed Rate Home Loan Package
2.86% p.a.
$390 p.a.
$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.
Australian Unity Health, Wealth and Happiness Package Fixed Home Loan
2.77% p.a.
$399 p.a.
Up to $2,000 cashback.
With a 30% deposit or equity, get access to an 0.10% rate cut and big discounts on credit cards and health insurance. You may qualify for up to $2,000 cashback (Terms, conditions and exclusions apply). Smart Booster Discount Variable Home Loan
2.21% p.a.
$0 p.a.
Get a low discounted variable rate loan. Requires a 30% deposit. Get your loan processed fast and settle within 30 days.
Suncorp Home Package Plus Fixed
2.85% p.a.
$0 p.a.
Lock in a low fixed rate for 2 years. Available with a 20% deposit. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan.
Greater Bank Great Rate Fixed Home Loan
3.49% p.a.
$0 p.a.
Get one of the lowest rates on the market with this fixed rate mortgage. NSW, QLD and ACT residents only.
HSBC Home Value Loan
2.20% p.a.
$0 p.a.
$3,288 refinance cashback offer
This competitive variable rate loan is available for borrowers with 30% deposits. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.