Should You Use a Mortgage Broker? Pros, Cons & How They Get Paid

When we bought our first home, we went straight to our bank. It seemed like the obvious move — we'd banked with them since we were teenagers. They knew us. Surely they'd give us the best deal.

They didn't. Not even close.

It wasn't until we spoke to a mortgage broker that we found out our bank was offering us a rate nearly half a percent higher than what was available elsewhere. On a $600,000 loan, that gap would have cost us over $50,000 in extra interest over the life of the loan.

We weren't the only ones to learn this the hard way. More than three-quarters of all new home loans in Australia now go through a mortgage broker rather than straight to a bank — a record 77.6% in the June 2025 quarter, and 76.7% in the December 2025 quarter (MFAA quarterly market share data, compiled by Cotality). A decade ago broker share was already over half the market, and it was sitting in the mid-50s by 2018; go back to the early 2010s and it was under half. That shift has happened because brokers, more often than not, find borrowers cheaper, faster-approving, better-fitting loans than they'd get walking into one branch.

But "most people use a broker" isn't the same as "a broker is always the right call for you." So here are both sides, honestly: what a broker actually does, how they really get paid (including the bit nobody mentions — clawback), how a broker stacks up against going straight to your bank, and the real downsides. We're a free, independent guide built for Australian first home buyers. We don't sell broker leads, so we've got no reason to talk you into anything.

What does a mortgage broker actually do?

A mortgage broker is a licensed credit professional who sits between you and the lenders. Instead of you approaching one bank and hoping for the best, a broker compares home loans across a panel of lenders — usually the big four banks, smaller banks, customer-owned banks, credit unions and specialist lenders — and helps you land on the loan that fits your situation. Here's what that looks like, step by step:

• They assess your situation. Income, deposit, debts, HECS, employment type, the kind of property you're after, and whether you qualify for any government schemes. This is where a good broker tells you your realistic budget, not just your maximum.
• They compare the panel. They run your numbers against the lenders they can access and shortlist the ones likely to approve you at a competitive rate — taking in things you'd never see on a comparison site, like which lender is currently slow, fussy about your postcode, or quietly running an unadvertised special.
• They recommend. They explain why a particular loan suits you and what the trade-offs are (rate vs fees, fixed vs variable, offset, redraw).
• They package and submit. They prepare and lodge the application, structure it to give it the best shot at approval, and chase the documents the lender wants.
• They manage it to settlement. They deal with the lender, the valuer and often your conveyancer, and keep you posted until the loan settles and you've got the keys.
• They check in afterwards. Many brokers will review your loan every year or two to make sure your rate is still competitive, and help you refinance if it isn't.

Think of them as your personal loan shopper — except their shopping list is dozens of lenders deep instead of one. Panel size varies a fair bit: many brokers have access to 30–60 lenders, but it's worth asking, because more options usually means a better fit. If you'd rather we matched you with someone, NestPath can connect you with a trusted first-home-buyer broker.

How do mortgage brokers get paid?

This surprises most first home buyers: in the vast majority of cases, you don't pay your mortgage broker anything. The lender pays them a commission when your loan settles.

That commission comes in two parts. There's an upfront commission — roughly 0.6%–0.7% of the loan amount plus GST, paid once when the loan settles — and a smaller trail commission of around 0.15% a year plus GST, paid for as long as you keep the loan. So on a $600,000 loan, a broker might earn somewhere around $3,600–$4,200 upfront from the lender, then a few hundred dollars a year in trail. The key thing: that money comes out of the lender's pocket, not yours, and it's the same whether you found the loan through a broker or walked into the branch yourself.

This is why a broker can give you professional advice, access to a panel of lenders, and someone managing your application — all at no direct cost. And because brokers fall under a legally binding best interests duty (in force since 1 January 2021, under the National Consumer Credit Protection Act and ASIC's Regulatory Guide 273), they have to recommend a loan that genuinely suits you — not just the one paying the fattest commission. Bank staff selling their own products don't carry that duty.

What about clawback? (The bit nobody mentions)

Here's the wrinkle worth understanding, because it can quietly shape the advice you get. If you repay, sell or refinance your loan within roughly the first one to two years, the lender "claws back" some or all of that upfront commission — meaning the broker has to hand it back. With the big four banks, it's usually 100% in the first year, then tapering off across the second year, though the exact window varies by lender.

What does that mean for you? Mostly nothing — clawback is between the lender and the broker, not something you're billed for. But it does create a quiet incentive worth knowing about: a broker may gently nudge you to stay put for the first couple of years rather than chase a slightly better rate, because refinancing you early costs them money. That's not necessarily bad advice — refinancing too soon often isn't worth the switching costs anyway — but it's a reason to ask "is staying genuinely best for me, or best for your commission?" if you're itching to move within the first year or two.

Do any brokers charge a fee?

Some do, and it isn't automatically a red flag. Most brokers charge you nothing because the lender's commission covers their work. But a minority charge a broker fee directly — usually for complex cases, commercial lending, or loans where the lender's commission is small. The rules are strict and on your side: a broker has to set out any fee in a written quote that you sign before they start work, and they can't ask you to pay anything before they've actually provided the service (per MoneySmart). So you'll always see a fee coming. If a broker is upfront about it in writing and the fee is reasonable for what they're doing, that's normal. What's not okay is a surprise charge, or being asked to pay before they've done anything.

Mortgage broker vs bank — the real comparison

This is the heart of the "mortgage broker vs bank" question, and it's where most first home buyers get stuck. Your bank isn't being sneaky — it just can only sell you what's on its own shelf. A broker shops the whole market. The honest side-by-side:

Banks do plenty of things well, but on home loans they can only offer what's on their shelf. A broker shops a much wider market for you — with one genuine blind spot we'll get to next. Before any of these conversations, it's worth knowing roughly what you can borrow, so you're not leaning on anyone else's number. Our free borrowing power calculator gives you a ballpark in a couple of minutes.

The honest downsides of using a broker

The title of this article promises cons, and a lot of broker content quietly skips them. We won't. A broker is the right call for most first home buyers — but here are the real downsides, so you're going in with eyes open.

• Not every lender is on every panel. Some of the cheapest online-only lenders — Unloan is the clearest example, dealing straight with customers and paying no broker commission — so a broker literally can't access them. If a market-leading online rate is on your radar, a broker may not be able to get it for you. It's worth doing a quick comparison-site sanity check yourself alongside a broker.
• Panel size and quality vary. A broker with 15 lenders is shopping a much smaller shelf than one with 50. Two brokers can give you genuinely different recommendations. Ask how many lenders they work with, and which ones they actually placed loans with last year.
• Commission is a built-in conflict — that's why the rules exist. The best interests duty was brought in precisely because brokers are paid by the lenders they recommend. The duty manages the conflict well, but it doesn't erase it. You should still ask "why this lender, specifically?" and expect a clear answer.
• Clawback can make a broker reluctant to refinance you early. As above — if switching you within a year or two costs the broker their commission, the incentive to help you move quickly isn't there. Keep an eye out for it if your circumstances change soon after settling.
• Sometimes going direct genuinely wins. If you're refinancing with your existing lender and they've already matched the market, or your situation is simple and your deposit large enough that rate differences are minor, the broker step can add time without adding much value.

None of this should scare you off. The point is that a good broker welcomes these questions — a broker who gets defensive when you ask "why this lender?" or "what's your panel?" is telling you something useful.

What about online lenders and comparison sites?

You might be thinking, "Can't I just compare rates online myself?" You can — and you should, both to get a feel for the market and to catch those direct-only lenders a broker can't reach. But there's a catch: the advertised rate often isn't the rate you'll get. Your actual rate hangs on your deposit size, employment type, credit history, location and the property itself.

A broker knows which lenders are actually approving loans for people in your situation right now — which ones are slow, which are knocking back certain postcodes, and which have specials that never make it onto a comparison table. The sweet spot is using both: a comparison site (plus a couple of direct online lenders) to set your benchmark, and a broker to do the legwork and tell you which of those rates you can realistically get.

How to choose a good broker

Not all brokers are equal. Here's what to look for at a glance — for the full checklist (including the questions to ask in your first meeting and the red flags that should make you walk away), see our dedicated guide on how to choose a mortgage broker.

• First home buyer experience: Ask how many first home buyers they've helped in the past year. You want someone who understands grants, guarantor loans, the First Home Guarantee and low-deposit options.
• Panel size: A broker with access to 30+ lenders gives you more options than one with 15.
• Communication style: Your broker should explain things in plain English, get back to you within a day, and never make you feel stupid for asking questions.
• Reviews and referrals: Check Google reviews. Ask friends or family who they used. A good broker has a trail of happy clients.
• Transparency: They should clearly explain how they're paid, whether any fee applies, and why they're recommending a specific lender.

What to ask your broker in your first meeting

Your first meeting should feel like a conversation, not a sales pitch. Come prepared with these questions:

1. "How many lenders do you have access to, and which did you place loans with last year?" — You want breadth, and proof they actually use the panel.
2. "What's my realistic borrowing capacity?" — Not the maximum, but what you can comfortably afford. A good broker talks about both numbers. You can also check this yourself with our free borrowing power calculator before the meeting.
3. "Which government grants and schemes am I eligible for?" — They should know about the First Home Owner Grant, First Home Guarantee and stamp duty concessions without having to look them up. You can also get a quick read on your eligibility with our first home buyer eligibility checker.
4. "How are you paid on my loan — and is there any fee to me?" — A good broker answers this happily and in writing. There's usually no fee, but you want to hear it confirmed.
5. "What documents do I need to prepare?" — Typically: three months of payslips, three months of bank statements, tax returns if self-employed, ID, and a summary of your debts and expenses.
6. "How long will pre-approval take?" — Often within 1–3 business days, though it can take longer in busy periods. (Here's how pre-approval works.)
7. "What should I avoid doing while my application is being processed?" — The answer should include: no new credit cards, no large purchases, no job changes, and no Afterpay or buy-now-pay-later activity.

When should you speak to a broker?

Earlier than you think. Many first home buyers wait until they've found a property before talking to a broker. By then you're already emotionally invested and under time pressure. The better time to speak to a broker is three to six months before you plan to start seriously looking.

That runway buys you a lot. It gives you time to get pre-approved so you can make an offer with confidence; to fix anything that might trip up your application (a thin credit file, an irregular savings pattern, a recent job change); and to learn your true budget before you fall in love with a place you can't actually afford. If you're not sure where a broker fits in the bigger picture, our first home buyer journey maps out every step from "what can I afford?" to keys in hand.

So — are mortgage brokers worth it?

For most first home buyers, yes. You get a wider market than any single bank, someone to handle the paperwork and the lender wrangling, a legal best interests duty, and it almost always costs you nothing. The honest exceptions are real but narrow: a simple application with a big deposit, or an existing-lender refinance that's already been matched to market. The smart move is to do a quick comparison-site check yourself, talk to a broker, and ask the blunt questions — why this lender, what's your panel, how are you paid. A good one will respect you for it.

Frequently asked questions

Are mortgage brokers worth it?

For most first home buyers, yes — and here's the honest exception. A broker compares a panel of lenders instead of one bank, handles the application and lender chasing, carries a legal best interests duty, and usually costs you nothing because the lender pays them. They're especially worth it if your income is complex, your deposit is low, or you're using a government scheme. The main case for going direct is a simple application with a large deposit, or refinancing with your current lender once they've matched the market.

Are mortgage brokers really free?

Usually, yes. In the vast majority of cases the lender pays the broker a commission when your loan settles, so you pay nothing directly — and the commission comes out of the lender's margin, not added to your rate. A minority of brokers do charge a fee for complex or commercial work, but they have to set it out in a written quote you sign before they start, and they can't ask for payment before providing the service. So a fee, if one applies, never comes as a surprise.

Do mortgage brokers charge first home buyers a fee?

Most don't — they're paid by the lender when your loan settles, so there's no cost to you as the borrower. Some brokers do charge a fee in certain cases, and that isn't automatically a red flag. The rules protect you: any fee must be disclosed up front in a written quote you sign before any work begins, and a broker can't request payment before providing the service. What you should never accept is a surprise charge or a request to pay before they've done anything.

What is clawback, and does it affect me?

Clawback is when a lender reclaims some or all of a broker's upfront commission if you repay, sell or refinance the loan within roughly the first one to two years (often 100% in year one with the big four, tapering after that). You're not billed for it — it's between the lender and the broker. But it's worth knowing because it gives a broker a quiet incentive to keep you with your current loan early on. If you want to refinance within the first couple of years, ask whether staying is genuinely best for you, or just best for their commission.

Can a mortgage broker give me financial advice?

Not in the formal sense. Mortgage brokers provide credit assistance — they help you choose and apply for a home loan — but they aren't financial advisers and can't give you personal financial product advice on things like superannuation, investments or insurance. A good broker will explain loan options clearly and flag when something is outside their lane and you should see a licensed financial adviser or accountant.

What are the downsides of using a broker?

A few real ones. Not every lender is on a broker's panel — some of the cheapest online-only lenders (Unloan is the clearest example) deal only with customers, so a broker can't access them. Panel size and quality vary between brokers. Commission creates a built-in conflict of interest, which the best interests duty manages but doesn't erase. And clawback can make a broker reluctant to refinance you in the first year or two. For most buyers the upsides outweigh these, but it's why you should still compare a couple of direct lenders yourself and ask a broker why they're recommending a specific lender.

Should I use a mortgage broker or go direct to my bank?

For most borrowers, a broker. Your bank can only offer its own products at whatever rate its system produces — it has no duty to tell you another lender is cheaper, because it can't offer you that lender anyway. A broker compares your existing bank against a panel of others and negotiates on your behalf. Going direct makes most sense when: you have a private-bank relationship with preferential rates; you're refinancing with your existing lender and they've already matched the market; or your situation is simple and your deposit large enough that rate differences are minor.

Do I need a mortgage broker as a first home buyer?

You don't strictly need one — you can apply directly with any bank — but most first home buyers come out ahead using a broker. Brokers compare a panel of lenders in one conversation, know which ones are approving low-deposit and First Home Guarantee applications right now, and carry a best interests duty your bank doesn't. The service is usually free to you. If you have complex income (self-employed, contractor, multiple jobs), a low deposit, HECS debt, or you want to use a government scheme, a broker is almost always worth the hour it takes.

How do I know if my broker is recommending the best loan?

Ask them to explain why they're recommending a specific lender and product. Under the best interests duty they have to be able to show the recommendation suits your circumstances. Ask how their panel compares, how they're paid on this loan, and whether any cheaper option exists that they can't access. Then sanity-check their pick against an online comparison site and a direct online lender or two. A good broker welcomes the scrutiny.

Decided a broker is the right call? Your next step is knowing how to choose a mortgage broker — the questions to ask in your first meeting and the red flags to walk away from. When you're ready, NestPath can connect you with a trusted first-home-buyer broker, or check your borrowing power first so you know what to expect before you sit down with anyone.