What does a mortgage broker actually do?
A mortgage broker is a licensed credit professional who compares home loans across 30+ Australian lenders on your behalf, recommends the right loan for your situation, handles the paperwork, and liaises with the lender all the way through to settlement.
In Australia, every broker must hold an Australian Credit Licence (ACL) issued by ASIC or operate as a credit representative under one. Since January 2021 they are legally bound by the Best Interests Duty to recommend the loan that’s right for you, not the one that pays them the most commission.
How much does a mortgage broker cost? (Fees and commission, honestly)
Most mortgage brokers in Australia don’t charge you anything. They earn a commission from the lender when your loan settles: typically 0.5% to 0.7% of the loan amount upfront, plus an ongoing trail commission of around 0.15% per year for the life of the loan.
On a $500,000 home loan that means the broker earns roughly $2,500 to $3,500 upfront and around $750 per year ongoing, paid by the lender, not by you. MFAA members are required to disclose these figures to you in writing under the MFAA Code of Practice.
Can mortgage brokers rip you off? The honest answer: before 2021, yes. A broker could steer you to a higher-commission lender even if a cheaper option existed. That changed with the Best Interests Duty (BID), enforced by ASIC. Brokers must now legally recommend the loan that’s right for you, not the one that pays them most. If you want to verify, ask any broker to disclose all commissions in writing; they’re required to.
Some brokers charge a fee for service in complex cases (self-employed, bad credit, commercial loans). They must disclose this upfront. For standard first home buyer loans, the service should be completely free.
Mortgage broker vs bank: which is better for first home buyers?
A bank can only offer you their own products. A mortgage broker compares dozens of lenders to find the best rate and structure for your situation. According to the MFAA, a record 81% of new Australian home loans were written through brokers in the March 2026 quarter. For first home buyers, this matters because:
- Access to 30+ lenders: Brokers compare rates from major banks, regional banks, credit unions, and non-bank lenders, many of which you’d never find on your own.
- HECS/HELP debt handling: Some lenders treat HECS more favourably than others. A broker knows which ones.
- Government scheme expertise: The 5% Deposit Scheme, state grants, stamp duty exemptions: a good broker navigates all of these for you.
- One credit enquiry, not many: The broker assesses your situation as a soft check and only submits one formal application, protecting your credit score.
The short answer: for first home buyers, a broker almost always gets you a better deal than walking into a single bank.
How to find (and choose) the right mortgage broker
Not all brokers are equal. Here’s a five-step vetting checklist before you commit to one:
- Verify their ACL. Every broker must hold an Australian Credit Licence or be a credit representative under one. Look them up on ASIC’s Professional Registers.
- Check MFAA or FBAA membership. Both are industry bodies that require ongoing education and a code of practice. Either is a strong trust signal.
- Ask for their lender panel. 25+ lenders minimum, and a reputable broker will email you the list without hesitation.
- Ask about first home buyer volume. How many FHBs have they helped in the last 12 months? You want someone who does this regularly, not occasionally.
- Test for plain-English communication. If they can’t explain LMI in one sentence, find someone else. If they push one specific lender hard, ask why.
NestPath matches you with brokers who’ve already cleared this checklist, for free. Use the match button and we’ll connect you with a vetted broker in your state.
For the full list of questions to ask at your first meeting and red flags to watch for, read our how to choose a mortgage broker guide.
Frequently asked questions
What does a mortgage broker do?
A mortgage broker is a licensed credit professional who compares home loans across 30+ lenders on your behalf, recommends the right loan for your situation, handles all the paperwork, and liaises with the lender through to settlement. In Australia, brokers must hold an Australian Credit Licence (ACL) issued by ASIC or operate as a credit representative under one, and most are members of the MFAA or FBAA.
Is using a mortgage broker free?
Yes. Mortgage brokers are free for the borrower. Lenders pay the broker a commission when your loan settles, typically around 0.5% to 0.7% upfront plus a small ongoing trail commission. You pay zero fees directly. This has been the industry standard in Australia since the Royal Commission reforms, and the broker has a legal Best Interests Duty to recommend the loan that suits you, not the one that pays the highest commission.
How much commission does a mortgage broker make?
In Australia, a mortgage broker typically earns 0.5% to 0.7% of the loan amount as upfront commission (paid by the lender when the loan settles), plus around 0.15% per year as trail commission for the life of the loan. On a $500,000 home loan, that is roughly $2,500 to $3,500 upfront and around $750 per year ongoing, paid by the lender, not by you. MFAA members must disclose all commission figures to you in writing.
How much does a mortgage broker cost? Who pays them?
For most residential home loans you do not pay the broker directly; the lender pays them a commission once your loan settles. This includes an upfront commission (a one-off payment when the loan funds) and trail commission (a smaller ongoing payment for the life of the loan). MFAA members are required to disclose all commissions to you in writing under the MFAA Code of Practice. Some brokers charge a fee for service in complex cases and must disclose this upfront. The NestPath partner brokers charge no fee to first home buyers.
What is a trail commission?
A trail commission is an ongoing payment from the lender to the broker, typically around 0.15% per year of the outstanding loan balance, paid for the life of the loan as long as the loan stays with that lender. It was originally designed to incentivise brokers to stay engaged with the borrower after settlement and discourage churning loans for upfront commission. It is paid by the lender, not added to your interest rate. Trail commissions are disclosed in your broker’s credit proposal.
Mortgage broker vs going direct to a bank: which is better?
Banks only offer their own products, while brokers compare loans across 30+ lenders to find the right fit for your situation. According to the MFAA, a record 81% of new Australian home loans were written through brokers in the March 2026 quarter. The advantage with a broker is access to specialist lenders that do not deal directly with the public, plus negotiation leverage on rates and fees. The trade-off is that brokers earn commission from lenders, which is why the Best Interests Duty was introduced in 2021. By law, brokers must recommend the loan that is in your best interests, not the one that pays them the most.
Is it worth using a mortgage broker as a first home buyer?
Yes. First home buyers benefit most from a broker because you are navigating the 5% Deposit Scheme (formerly the First Home Guarantee), stamp duty concessions, LMI thresholds, and state-based grants for the first time. These interact with loan choice in ways that can save or cost you tens of thousands. A first-home-buyer specialist broker handles the paperwork, compares 30+ lenders, and guides you through pre-approval, contract signing, and settlement. The service is free to you, so the only cost is the 30 seconds to fill in the form.
How long does mortgage approval take through a broker?
Conditional pre-approval through a broker typically takes 3 to 10 business days from when you supply your documents (payslips, ID, expense summary). Full unconditional approval after you have signed a contract usually takes another 7 to 21 business days. Brokers can often be faster than going directly to a bank because they choose lenders with shorter assessment queues and know which lenders are turning around applications quickly that month.
Does applying through a broker affect my credit score?
No. The broker assessing your situation and shortlisting loans is a soft enquiry and does not affect your credit score. Only the formal loan application itself triggers a hard credit enquiry, which the broker submits to a single chosen lender, not all 30+. This is one practical advantage of using a broker: you avoid the multiple hard enquiries that can otherwise happen if you apply to several banks directly.
How many lenders can a broker access?
A typical Australian mortgage broker has access to 30 to 60+ lenders through their aggregator panel, covering the big four banks, regional banks, credit unions, non-bank lenders, and specialist first home buyer lenders. By contrast, your bank can only show you their own products. Ask any broker for their lender panel list; a reputable one will send it without hesitation, and 25+ is the minimum to look for.
How do I know my mortgage broker is licensed?
Every mortgage broker in Australia must hold an Australian Credit Licence (ACL) or operate as a credit representative under one. You can verify a broker’s status on ASIC’s Professional Registers by searching for their name or company. Most reputable brokers are also members of the MFAA or FBAA, which require ongoing professional development and adherence to a code of practice. Look for an ACL number, MFAA or FBAA membership, and verifiable Google reviews. Avoid any broker who cannot or will not show their licence details.
What is the difference between MFAA and FBAA membership?
Both the Mortgage and Finance Association of Australia (MFAA) and the Finance Brokers Association of Australasia (FBAA) are professional bodies that require members to meet ongoing education standards, follow a code of practice, and submit to a complaints process. MFAA is the larger of the two and members must hold a Diploma of Finance and Mortgage Broking Management. FBAA has a slightly different code emphasis. Membership in either is a strong trust signal; most reputable Australian mortgage brokers belong to one.
What is the Best Interests Duty and how does it protect me?
The Best Interests Duty (BID) became law on 1 January 2021 and applies to all mortgage brokers in Australia. By law, brokers must act in their client’s best interests when providing credit assistance, meaning they must recommend the loan that is right for you, not the one that pays them the most. ASIC enforces this duty. If a broker breaches BID, they can face penalties or licence suspension. This is a legal protection you do not get when going directly to a bank, where staff are only obligated to recommend their own employer’s products.
Can a mortgage broker help me with the 5% Deposit Scheme?
Yes. A mortgage broker can confirm your eligibility for the 5% Deposit Scheme (formerly the First Home Guarantee), check which lenders participate, and guide you through the application. Since 1 October 2025 the expanded scheme has no income caps and no limit on places, so eligibility now mostly comes down to being a first home buyer, living in the home, and staying under your city’s property price cap. Not all lenders participate, and a broker who works with multiple participating lenders can structure your application correctly the first time. Brokers can also help with state-based grants like the First Home Owner Grant (FHOG) and stamp duty concessions.
What questions should I ask a mortgage broker before choosing one?
Five worth asking: (1) What is your ACL number and which industry body are you a member of, MFAA or FBAA? (2) How many lenders do you compare, and which ones? (3) How are you paid (by lenders, by me, or both), and will you disclose all commissions in writing? (4) Have you helped first home buyers in my state, and can you walk me through the 5% Deposit Scheme and grants process? (5) What is your typical response time during the application? A confident, transparent broker will answer all five clearly. Hesitation on any of them is a warning sign.
What is the difference between independent, aggregator, and bank-aligned brokers?
Three broad models. Independent brokers operate under their own ACL and are not tied to any single lender or aggregator panel: most flexibility, smaller lender panels. Aggregator brokers operate as credit representatives under a larger group’s ACL (Connective, AFG, LMG and Finsure are the biggest Australian aggregators). They typically have access to 30 to 60 lenders and the aggregator handles compliance and back-office. Bank-aligned brokers are owned by or have exclusive arrangements with a specific bank: limited lender access, sometimes more favourable rates with that bank.
Major Australian aggregators
Most NestPath partner brokers operate as credit representatives under one of the major Australian aggregators:
- Connective: Australia’s largest aggregator with 5,000+ brokers (ACL 389328)
- AFG: Australian Finance Group, 30+ years and 3,000+ brokers, 80+ lenders
- LMG: Loan Market Group, parent of the Loan Market consumer brand
- Finsure: gold-medal commission processing per MPA’s 2024 broker survey
Verify any broker’s accreditation via the MFAA aggregator directory.
By Anish Puri · Founder, NestPath · Last reviewed 8 July 2026