How to Use a Mortgage Broker in Australia: What They Do, How They're Paid and When to Use One

A mortgage broker acts as an intermediary between you and home loan lenders. Rather than approaching a single bank, a broker assesses your financial situation and searches across their lender panel - typically 20–40 lenders - to identify loan products that match your needs, borrowing capacity, and goals.

Brokers handle the application process on your behalf: gathering your financial documents (payslips, tax returns, bank statements, existing loan statements), preparing the application, lodging it with the lender, and managing the approval process through to settlement. For complex applications - self-employed borrowers, low-deposit loans, non-standard income - a broker's experience with lender-specific credit policies can be the difference between approval and decline.

Brokers are licensed under the National Consumer Credit Protection Act (NCCP) and must hold an Australian Credit Licence (ACL) or be a credit representative of an ACL holder. Since 1 January 2021, all mortgage brokers in Australia are legally required to act in the best interests of the consumer - the best interests duty introduced following the Banking Royal Commission.

The vast majority of Australian mortgage brokers do not charge fees to borrowers - they are paid by lenders via commissions. Understanding the commission structure helps you evaluate broker recommendations.

Upfront commission: paid by the lender when a loan settles, typically 0.55–0.65% of the loan amount (plus GST). On a $600,000 loan, this is approximately $3,300–$3,900. The upfront commission is not deducted from your loan - it is paid by the lender from their margin.

Trail commission: an ongoing annual commission paid by the lender for as long as the loan remains on their books, typically 0.15–0.20% per annum of the outstanding balance. Trail commission creates an incentive for brokers to maintain loan books (keeping clients happy and not churning them unnecessarily), but also creates a potential conflict of interest if a broker avoids recommending a refinance that would benefit the client.

Fee-for-service brokers: a small number of brokers charge the borrower directly (typically $2,000–$4,000) and rebate any lender commissions received. This model eliminates commission conflict of interest but is less common. For large or complex loans where the commission would be high, a fee-for-service broker may offer a hybrid arrangement.

Disclosure requirements: brokers must disclose their commission arrangements in writing in a Credit Guide before providing credit assistance. The Credit Guide must specify estimated upfront commission amounts and how trail commission is calculated. Review this document - you are entitled to receive it.

Since 1 January 2021, mortgage brokers in Australia are legally required to act in the best interests of the consumer - not in their own interests or the interests of a lender. This best interests duty (BID) was introduced following the Hayne Banking Royal Commission, which found that some broker recommendations were influenced by higher commission products.

Under BID, a broker must: prioritise your interests over their own; not recommend a product that conflicts with your interests unless they can demonstrate it is still in your best interests; and consider a reasonable range of products from their lender panel, not just those paying higher commissions.

BID does not mean a broker must find the absolute cheapest rate in the market - it means the recommendation must be genuinely suitable for your situation, considering your goals, financial circumstances, and the features of the loan (not just the interest rate). A slightly higher-rate loan from a lender with a more flexible credit policy may be legitimately recommended under BID if it better meets your needs.

If you believe a broker has not acted in your best interests, you can lodge a complaint with the Australian Financial Complaints Authority (AFCA) - a free external dispute resolution service for consumers.

A broker can only recommend lenders on their approved panel - they cannot access every lender in the market. Most broker groups (aggregators) have panels of 20–40 lenders including the major banks (ANZ, CBA, NAB, Westpac), second-tier banks (Suncorp, Bankwest, ME Bank), non-bank lenders (Pepper Money, Liberty, La Trobe), and credit unions.

The broker's panel determines the competitive range of products available to you. Ask any broker upfront: 'How many lenders are on your panel?' and 'Do you have access to lenders like [specific lenders you're interested in]?' A larger panel generally means broader market coverage, but even a 20-lender panel covers most competitive products.

Some lenders do not work through brokers - they offer direct-only products. ING, RAMS, and Ubank distribute primarily direct. These direct-only lenders sometimes offer their most competitive rates exclusively through direct channels to avoid paying broker commissions. It is worth checking direct-only lenders' rates alongside broker recommendations.

Major banks also offer direct applications - you can apply directly to CBA, ANZ, NAB, or Westpac without using a broker. Going direct may be appropriate if you have an existing banking relationship, straightforward employment, and a clear idea of the product you want.

Use a broker when: your situation is complex (self-employed, variable income, multiple income streams, low deposit, previous credit issues, unusual property type); you want to compare multiple lenders without making multiple credit applications; you do not have time to research the market yourself; or you are buying your first home and want guidance through the application process.

Going direct may be better when: you have a simple, straightforward application (PAYG employee, 20%+ deposit, clean credit history); you already have a strong existing relationship with a bank that is offering you a competitive rate; or you want to access a direct-only lender not available through brokers.

For refinancing, a broker is often particularly valuable - they can assess your existing loan against the full market without you having to shop around individually, and the best interests duty means they must recommend a refinance if your current rate is materially uncompetitive. Many borrowers who contact a broker for a refinance assessment discover they are paying 0.5–1.0% more than necessary.

There is no cost to getting a broker assessment - because brokers are paid by lenders, an initial consultation and market comparison costs you nothing. The downside risk of using a broker is low; the upside (a better rate, better product, or expert guidance through a complex application) can be substantial.

Before committing to a loan through a broker, ask: How many lenders are on your panel? Which lenders are you recommending and why? What is your commission on this product compared to alternatives you considered? Is there a lower-rate product that you chose not to recommend, and why? Can you show me the comparison between your top three recommendations?

A good broker will answer these questions openly. Transparency about the reason for a recommendation - including any commission differential between options - is a hallmark of a broker acting under best interests duty.

After the loan settles, your broker relationship should be ongoing - they should contact you annually to review your rate and alert you if refinancing would benefit you. If a broker disappears after settlement, that is a signal they were primarily commission-motivated. Build your broker relationship like any other professional relationship: expect ongoing service.

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Use this checklist when working with a mortgage broker:

• Ask for the broker's Credit Guide before any application - it must disclose estimated commission amounts
• Confirm how many lenders are on the broker's panel - a larger panel means broader market coverage
• Ask the broker to show you comparisons across their top three recommendations, not just the preferred option
• Check that the recommended loan's features match your needs - offset account, extra repayment flexibility, redraw, portability
• For self-employed borrowers, ask which lenders have the most favourable credit policies for your income documentation type
• After receiving a broker recommendation, spot-check direct-only lenders (ING, Ubank) to compare rates
• For refinancing, ask the broker to compare your existing loan's rate against current market - you are entitled to an honest assessment
• If the broker recommends a higher-rate product, ask specifically why it is in your best interests over lower-rate alternatives
• Confirm post-settlement service expectations - a good broker reviews your rate annually and alerts you to refinancing opportunities
• Lodge any concerns about broker conduct with AFCA (Australian Financial Complaints Authority) - free and independent

A broker saves time, provides market breadth, and is legally obligated to act in your best interests - but asking the right questions ensures you get the most from the relationship.