Why use a mortgage broker instead of going straight to your bank?

Why most people still start with their bank

For most borrowers, the default move is simple: “I’ll just talk to my bank.” Your salary lands there, the app is on your phone, and you might already have a credit card or savings account. It feels like the path of least resistance.

The catch is that banks only offer their own products. A lender might have a solid range, but you’re still looking through a single shop window. That matters more in 2025 than it did ten or fifteen years ago because:

• There are dozens of active home loan lenders in Australia, not just the big four.
• Policies and pricing can change quickly, especially in a higher-rate environment.
• Credit decisions are more sensitive to things like overtime, bonuses and self-employed income.

If you go straight to one bank, you’re relying on that bank’s view of your situation and that bank’s appetite on the day. Sometimes that works out fine. Other times it means a “computer says no” outcome when another lender might have taken a different view.

For a deeper dive into structures, features and how different loans actually work, the Rate Challenge Home Loan Guide gives a plain-English overview you can read alongside this opinion piece.

What a good mortgage broker actually does

A good broker’s job is not to “beat the bank” for the sake of it. The real work is pulling your numbers, your goals and the current lending environment together in a way that makes sense. That starts by understanding what you’re trying to do in the next three to ten years, not just what you can borrow today.

In practice, that usually means:

• Translating policy into human language – for example, how different lenders treat overtime, bonuses, family tax benefit, boarders or self-employed income.
• Mapping your short- and medium-term plans – first home, upgrade, downsizing, rentvesting or adding an investment – so today’s structure doesn’t block tomorrow’s move.
• Looking beyond just the rate – offset access, fixed vs variable mix, cash-out rules, extra repayment and redraw flexibility, and how easy it is to move later.
• Actually doing the heavy lifting – comparing lenders, packaging the application and running point with the bank so you aren’t chasing documents on your lunch break.

Done properly, working with a broker feels less like shopping for a product and more like having a guide for a specific season of your financial life. The conversation is about trade-offs and options, not just “here’s the lowest headline rate on the page”.

How mortgage brokers get paid – and why that matters

It’s reasonable to ask: “If I don’t pay you directly, how do you get paid?” In most standard home loan scenarios, the lender pays the broker a commission when your loan settles and a smaller trailing commission while the loan remains in place. Rate Challenge does not charge a broker fee on standard home loans.

That can create a worry in people’s minds: will the broker recommend the loan that pays them the most? This is where two things matter:

• The broker’s own ethics and how clearly they explain their panel and commissions.
• The legal obligations that sit around the advice they give you.

A good broker will tell you, up front, how they get paid, which lenders they work with and whether there are any situations where a fee might apply. They should also be comfortable if you want to double-check their explanation against independent sources such as ASIC’s Moneysmart guide to using a mortgage broker.

Best interests duty vs a bank’s sales target

One of the biggest shifts in recent years is the introduction of a formal best interests duty for mortgage brokers. In plain English, that means a broker must act in the best interests of the borrower when providing credit assistance. If there’s a conflict between what’s good for the client and what’s good for the broker, the client has to come first.

That duty does not apply in the same way to bank staff recommending their own products. A banker can absolutely act ethically and do a great job, but they’re ultimately employed to sell that bank’s loans.

For borrowers, the practical difference shows up in the conversation. A broker should be able to explain:

• Which lenders were considered and why some were ruled out.
• Why a particular structure (e.g. 80% LVR vs 90% with LMI) is being recommended.
• How the recommended product fits your goals, not just your maximum borrowing capacity.

If that explanation is missing or vague, you’re entitled to slow things down and ask more questions before signing anything.

Who tends to benefit most from using a broker

Almost anyone can benefit from a second set of eyes on their home loan, but some groups see a particularly strong payoff from using a broker instead of going it alone:

• First-home buyers who need to line up schemes, grants, LMI, genuine savings rules and family-guarantor options without missing something important.
• Self-employed borrowers whose income doesn’t fit neatly into a PAYG payslip and where lender policies on add-backs, company profits and trust distributions can vary wildly.
• Refinancers who want more than a quick discount – for example, a complete “rate challenge” across multiple lenders, using tools like the Rate Challenge rate review calculator to see how different scenarios stack up.
• Investors and rentvesters who care about what today’s structure does to tomorrow’s borrowing capacity across multiple properties.

In all of those cases, the broker is not just finding “a loan”. They’re helping you put the pieces together – borrowing power, cash buffer, tax advice from your accountant and the practical realities of your life – so you can move forward without nasty surprises.

When going direct to your bank can still make sense

There are still situations where talking directly to your bank first is completely reasonable. For example:

• You already have a simple, well-priced home loan and just need a small top-up for a one-off renovation.
• You’re a long-term customer with a strong relationship manager on the business side and want to sense-check something quickly.
• You’re in a niche scenario where only one or two lenders will work and your bank happens to be one of them.

Even then, it can be worth running the numbers through an independent lens. A broker can often confirm whether your bank’s “loyalty offer” is genuinely sharp or just good enough that most people won’t ask further questions.

Government resources like Moneysmart’s guide to choosing a home loan can be useful reading alongside any conversation you have with a bank or broker.

How to sanity-check any recommendation

Whether you’re talking to a bank, a broker or both, it helps to have a simple checklist so you can sanity-check what’s being put in front of you. A few practical questions:

• “What other options did you consider?” – not just the one you’re being shown.
• “What does this do to my borrowing capacity for the next move?” – especially if you plan to upgrade or invest.
• “How easy is it to get out later if my situation changes?” – fees, cash-out rules and refinance appetite matter.
• “Where will my repayments sit if rates move 1–2% either way?” – so you aren’t only planning around today’s number.

It’s also worth running your own numbers in parallel. Even a simple calculator can help you feel the difference between “looks fine” and “this will be tight in a few years”. The Rate Challenge rate review calculator is designed to give a quick sense of how your current or proposed rate compares across multiple lenders.

How Rate Challenge approaches the broker role

At Rate Challenge, we see the broker role as part translator, part strategist and part project manager. The job is to help you understand your options, structure your loan in a way that fits your plans, and then do the legwork with the lender so you can get on with your life.

Practically, that means:

• Comparing options from 35+ lenders rather than just the one bank you happened to walk into.
• Explaining, in plain English, why certain lenders or products suit your situation – and why some don’t.
• Keeping your accountant in the loop where appropriate, especially for investors and self-employed clients.
• Reviewing your position over time rather than setting and forgetting your loan for the next thirty years.

Location matters too. The conversation for a Melbourne inner-north upgrader isn’t the same as a Geelong rentvester or a Ballarat first-home buyer, which is why Rate Challenge has dedicated location pages such as the Mortgage Broker Melbourne page alongside regional guides.

When you’re ready to talk through your own numbers, you can use the form at the top of this page or go straight to the Contact Rate Challenge page. A short conversation with a broker and your accountant can quickly confirm whether you’re on the right track with your current lender or whether it’s time to run a proper “rate challenge”.

General information only – not personal advice. Accurate as at 20/11/2025; policies, products and credit criteria may change.