Free mortgage broker vs bank: which is better in Australia?
If you’re deciding between a free mortgage broker (lender‑paid) and going direct to a bank, the right choice depends on your goals, your approval risk and how much comparison you want. This guide shows the real trade‑offs: choice, pricing, speed, policy fit, fees and what to ask before you commit.
By Rate Challenge • Last updated 23 February 2026
General information only; it doesn’t consider your objectives, financial situation or needs. Final pricing and approval depend on a full application and lender assessment.
Quick answer
A free mortgage broker is usually best when you want a real comparison (not just one bank), your situation needs policy matching (self‑employed, variable income, tighter borrowing power, unusual property), or you want help negotiating and managing the process end‑to‑end.
Going direct to a bank can make sense if you already know exactly which lender/product you want, you have a strong pre‑existing relationship with a bank (and they can prove the pricing), or your loan is simple and you’re comfortable doing the admin yourself.
✅ The safest approach
If you’re unsure, do a broker comparison first (to map the best lenders for your situation), then decide whether to proceed through the broker or go direct. Just avoid lodging multiple full applications at once, because it can complicate the credit enquiry trail.
Related cluster pages: Free mortgage broker service • How brokers get paid • Mortgage broker fees
Free mortgage broker vs bank: side‑by‑side comparison
Use this table to compare what actually changes between the two paths.
| Factor | Free mortgage broker (lender‑paid) | Going direct to a bank |
|---|---|---|
| Choice | Compares multiple lenders and policy sets (e.g., income shading, postcode rules, property types). | One lender’s products and one lender’s policy. |
| Approval fit | Targets lenders most likely to approve your scenario before lodging. | You find out fit by applying to that one bank (or doing your own policy research). |
| Pricing | Can compare rates + fees across lenders and sometimes negotiate within ranges. | You can negotiate with your bank, but you’re still limited to their offer. |
| Fees | Often $0 broker fee on standard home loans (lender pays commission). Lender fees may still apply. | No broker, but lender fees may still apply (same types of fees). |
| Admin & stress | Broker manages docs, lender questions, valuations, conditions, settlement handover. | You manage most of it (or rely on the bank’s process and timelines). |
| Speed | Can be fast when the broker targets the right lender and submits a clean package. | Can be fast if the bank has capacity and your file is straightforward. |
| Aftercare | Good brokers review your rate over time and help refinance if you’re on a “loyalty tax”. | You monitor and renegotiate/refinance yourself. |
What matters most for most borrowers
If your approval is even slightly “non‑vanilla” (self‑employed, multiple incomes, high‑density apartment, regional postcode, higher debts), policy fit usually matters more than chasing one headline rate.
Does a “free” broker cost more than going direct?
Usually, not in any simple “broker = higher rate” way. Lenders spend money to originate loans through multiple channels (branches, call centres, online, brokers). Broker commission is typically part of that distribution cost.
The protection is transparency + comparison: compare the true total cost (rate + fees + features) and ask for the reason a lender is recommended. If you want the deeper explanation of lender‑paid commission, read How mortgage brokers get paid.
💭Myth: “If the lender pays, the broker will push the highest commission lender.”
You should expect your broker to document why the recommended option suits your needs (policy fit, structure, risk, total cost), not just “lowest rate”. Brokers also operate under a Best Interests Duty and must be able to justify the recommendation.
💭Myth: “Going direct means there are no fees.”
Banks can still charge lender fees (package fees, settlement/admin fees, valuation fees, discharge fees). The best comparison is always “total cost” over time, not just who you spoke to.
💭Myth: “A broker is always free.”
Many standard home loans are fee‑free to you. In some complex or non‑standard scenarios, a broker may quote an advice fee. If so, it should be confirmed upfront in writing. More detail: Mortgage broker fees explained.
Is it faster to go direct?
Sometimes—but “direct = faster” is not guaranteed. Speed usually depends on:
- How clean the file is: documents, liabilities, living expenses, and property details.
- Lender capacity: some lenders have backlogs (direct and broker channels).
- Policy fit: the wrong lender can waste weeks before a “no” (or conditions that change your plan).
Brokers can be fast because they submit to the most suitable lender first and help you package the application properly. Banks can be fast if your scenario is simple and their team has capacity.
Approval risk beats speed
A fast “no” is still a loss. If your situation has any complexity, your best move is usually picking the lender that fits your policy profile first.
Questions to ask before you choose broker vs bank
Ask a broker:
- Which 2–3 lenders are the best policy fit for me—and why?
- What’s the total cost (rate + fees) for each option in year 1?
- What are the approval “watch-outs” (income shading, property, postcode, debts, buffers)?
- Will any broker advice fee apply in my scenario? If yes, confirm it upfront in writing.
Ask a bank:
- Can you confirm pricing in writing (rate + fees + package costs) and how long it’s valid?
- If my file has complexity, can you confirm your policy position before I lodge?
- What are your current approval/settlement timeframes?
If you want the simplest decision
Use a broker when you want a clear comparison across lenders and policy fit. Go direct when you already know the exact bank and product you want and you’ve verified the total cost is genuinely better for your situation.
Tools & guides (cluster pages)
Free Mortgage Broker (Service Page)
What “free” means, how we compare 35+ lenders, and how we handle the paperwork end‑to‑end.
How Mortgage Brokers Get Paid
Understand lender‑paid commission (upfront + trail), disclosure, and how to compare properly.
Mortgage Broker Fees
When you pay $0, when a fee can apply, and how to avoid surprises.
Free broker vs bank FAQs
💸Is a free mortgage broker really free compared to a bank?
On many standard home loans, you pay $0 broker fee and the lender pays commission if the loan settles (disclosed to you). You may still pay lender fees and other costs either way. Full detail: how brokers get paid and broker fees.
📉Will a broker always get me a better rate?
Not always. The value is usually broader: comparing lenders, matching policy to your situation, and negotiating within available pricing ranges where possible. The best comparison is total cost (rate + fees + features), not just one headline rate.
⏱️Is it faster to go direct?
Sometimes, but not guaranteed. Speed depends on lender capacity and file quality. Brokers can be fast when they target the right lender first and submit a clean package.
🧾Can I talk to both a broker and a bank?
Yes—getting quotes is fine. Avoid lodging multiple full applications at once. A good approach is to compare first, then proceed with the strongest option.
⚖️Do brokers only recommend lenders that pay them more?
You should expect a broker to explain and document why the recommended option is in your best interests (policy fit, structure, risk, total cost), and disclose how they’re paid. Ask for the reasoning, not just “cheapest rate”.
🏦When is going direct to a bank a good idea?
If you already know the exact lender/product you want, your situation is simple, and the bank can confirm pricing and suitability in writing, going direct can be fine.
📄What should I prepare for the first chat?
Rough income details, existing debts, deposit amount, purchase price range (or current loan balance), and your target timeframe. If you’re refinancing, your current lender/rate helps too.
📞Can you tell me which path is best for me?
Yes—use the form above and tell us your goal and any complexity (self‑employed, multiple incomes, property type, timing). We’ll explain which route makes sense and why.
Information accurate as at 23/02/2026. Lender policies and pricing can change; please confirm details before acting.