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 realised our bank was offering us a rate nearly half a percent higher than what was available elsewhere. On a $600,000 loan, that difference would have cost us over $50,000 in extra interest over the life of the loan.
We weren't alone in learning this the hard way. 77% of all Australian home loans are now written through a mortgage broker rather than directly with a bank (MFAA data, December quarter 2024) — an all-time high. A decade ago that number was under 50%. The shift has happened because brokers consistently find borrowers cheaper, faster-approving, and better-fitting loans than they'd get walking into a branch.
Here's why you should talk to a broker before you talk to your bank — and the honest pros and cons of going either way.
What Does a Mortgage Broker Actually Do?
A mortgage broker is a licensed professional who acts as a middleman between you and the lenders. Instead of you approaching one bank and hoping for the best, your broker compares home loans from 30+ lenders — including the big four banks, smaller banks, credit unions, and specialist lenders — to find the right loan for your situation.
They handle the paperwork, submit your application, negotiate with lenders on your behalf, and guide you through the entire approval process. Think of them as your personal loan shopper.
How Do Brokers Get Paid? (It's Not What You Think)
Here's the part that surprises most first home buyers: you don't pay your mortgage broker. The lender pays them a commission when your loan settles. This is called an upfront commission (usually 0.5%–0.7% of the loan amount) plus a smaller trailing commission paid annually.
This means you get professional advice, access to dozens of lenders, and someone managing your application — all at no direct cost to you. The broker has a financial incentive to get your loan approved, and under Australian law, they have a best interest duty to recommend a loan that genuinely suits your needs, not just the one that pays them the highest commission.
The best interest duty was introduced in 2021 and is legally binding. If a broker recommends a product that isn't in your best interest, they're breaking the law.
Broker vs Bank — The Real Comparison
Let's break down the key differences:
| Factor | Your Bank | Mortgage Broker |
|---|---|---|
| Products available | Their own products only | 30+ lenders, hundreds of products |
| Cost to you | Free | Free (lender pays) |
| Best interest duty | No (they sell their own products) | Yes (legally required) |
| Rate negotiation | Limited — take it or leave it | Can negotiate on your behalf |
| First home buyer expertise | Varies by branch | Many specialise in first home buyers |
| Grant and scheme knowledge | Basic awareness | Deep knowledge of all available schemes |
| After-hours availability | Branch hours only | Many work evenings and weekends |
Banks are great at many things, but when it comes to home loans, they can only offer you what's on their shelf. A broker shops the entire market for you.
What About Online Lenders and Comparison Sites?
You might be thinking, "Can't I just compare rates online myself?" You can — and you should look at comparison sites to get a feel for what's out there. But there's a catch: the advertised rate isn't always the rate you'll get. Your actual rate depends 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. They know which lenders are slow, which ones are rejecting certain postcodes, and which ones have unadvertised specials. That insider knowledge is worth more than any comparison table.
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 10 questions to ask in the first meeting and the 6 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, respond to messages 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 their commission structure and why they're recommending a specific lender.
What to Ask Your Broker in Your First Meeting
Your first meeting with a broker should feel like a conversation, not a sales pitch. Come prepared with these questions:
- "How many lenders do you have access to?" — You want breadth. More lenders means more options.
- "What's my realistic borrowing capacity?" — Not the maximum, but what you can comfortably afford. A good broker will talk about both numbers. You can also check this yourself with NestPath's free borrowing calculator before the meeting.
- "Which government grants and schemes am I eligible for?" — They should know about the First Home Owner Grant, First Home Guarantee, stamp duty concessions, and state-specific schemes without having to look them up.
- "What documents do I need to prepare?" — Typically: 3 months of payslips, 3 months of bank statements, tax returns if self-employed, ID, and a summary of your debts and expenses.
- "How long will pre-approval take?" — Most brokers can get pre-approval within 1–3 business days.
- "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/BNPL 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 ideal time to speak to a broker is 3–6 months before you plan to start seriously looking.
This gives you time to get pre-approved, fix any issues with your application (credit score, savings pattern, employment history), and understand your true budget before you fall in love with something you can't afford.
Frequently Asked Questions
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 are significantly better off using a broker. Brokers compare 30+ lenders in one conversation, know which lenders are approving low-deposit and First Home Guarantee applications right now, and have a legal best interest duty your bank doesn't. The service is free to you (the lender pays them), so there's no downside beyond spending an hour in an initial meeting. If you have a complex income (self-employed, contractor, multiple jobs), a low deposit, HECS debt, or want to use a government scheme, you almost certainly need a broker.
Should I use a mortgage broker or go direct to my bank?
For most borrowers, a broker. Your bank can only offer you their own products at whatever rate their system spits out — they have no duty to tell you another lender is cheaper, because they literally can't offer you that other lender. A broker compares your existing bank against 30+ others and negotiates on your behalf. The only cases where going direct makes sense are: (a) you have a private bank relationship that offers preferential rates, (b) you're refinancing with your existing lender and they've already matched the market, or (c) your situation is so straightforward and your deposit so large that rate differences are minor.
Do mortgage brokers charge first home buyers a fee?
No. Mortgage brokers are paid by the lender when your loan settles. There is no cost to you as the borrower. If a broker tries to charge you a fee, find a different broker.
Is a mortgage broker better than going to my bank?
For most first home buyers, yes. A broker compares 30+ lenders while your bank can only offer their own products. Brokers also have a legal best interest duty to recommend loans that suit your needs.
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 interest duty, they must demonstrate the recommendation suits your circumstances. You can also compare their recommendation against online comparison sites as a sanity check.
Decided a broker is the right call? Next step: know how to choose a mortgage broker — the 10 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.
