Mortgage Broker vs Bank: What’s the Difference?

Buying a home is one of the biggest financial decisions most Australians will ever make – but before you even start house-hunting, you’re faced with a smaller, crucial choice: should you get your loan through a bank, or go through a mortgage broker?

It sounds like a simple question, but the answer can have long-term consequences. The two paths may look similar – both end with a mortgage – yet how you get there, how much flexibility you have, and even how much you pay over time can differ significantly. Understanding those differences isn’t just about rates and fees; it’s about how the system itself works, and who it’s built to serve.

What Banks Offer – Familiarity and Simplicity

The bank’s promise is simplicity. You walk into an institution you may already know, perhaps your everyday bank. You like the branch environment, you trust the brand, you have your savings and super there. The bank says: “Here’s our set of home-loans. Pick one. Submit. And we’ll do the rest.” For many borrowers – especially those with stable employment, clean credit, strong deposit, and a relatively conventional purchase—this pathway is familiar, streamlined, and reassuring. As several consumer guides note, if your situation is straightforward then dealing directly with a bank can indeed be efficient.

The Broker’s Advantage – Choice and Advocacy

But there’s a caveat: that table of offerings is limited to that bank’s products. Your choices are those the bank has designed, approved and prefers. Some niche loans, some alternative lenders, some rate specials might not appear. The bank naturally slices proposals to suit their risk framework – max loan-to-value, borrowing power, deposit size—all calibrated to protect their portfolio. In short, when you go direct you are working within a system built around the bank’s interests.

Contrast that with the broker’s terrain, which is more open-field. A mortgage broker acts as intermediary: licensed to introduce you to lenders across a panel rather than being fixed to one. In the Australian context brokers dominate much of the flow of new home-loans – estimates put the share at around three-quarters of new loans written through brokers.

What this means is that if your situation is more complex – self-employment, low deposit, less traditional income, multiple investment interests – a good broker will likely surface options you may not have found by digging into a single bank’s website. They bring comparative ability, market knowledge, and often a level of advocacy: they understand how lenders speak, how to package your case, how to negotiate quirks.

Yet – and this is crucial – brokers are not magic. They work through panels of lenders, which may exclude niche lenders or the absolute lowest-rate specials. If a broker reviews 30 lenders or less, it can be considerably less than the DIY-bank path where you might compare 100+ lenders yourself.

Moreover, transparent disclosure matters: a broker’s duty of “best interests” applies, meaning they must act in your interest.

But the interplay of commissions, lender panel priorities and broker business dynamics can make outcomes variable.

Making the Choice – What’s Right for You?

Which route then is “better”? The simple answer is: it depends. But the more sophisticated answer is: it depends on how confident you are, how complex your circumstances are, and how much effort you are willing to invest. If you are a borrower with a textbook profile – steady job, clean credit, large deposit, purchasing a standard dwelling with no complicating factors – then going direct to a bank might save you time, perhaps give you a modest sense of control, and rely on an institution you know. If instead you are self-employed, your income stream is variable, you’re purchasing an investment property or non-standard dwelling, or you simply want someone to interpret the loan-market’s nuances on your behalf—then a broker offers real value. This dichotomy is confirmed in industry commentary.

Another dimension worth exploring is cost and value. You may have heard that brokers “cost more”. That’s not quite accurate in the Australian context. Generally, brokers are paid by the lender (not the borrower) in the form of upfront and trailing commissions when a loan is settled.

For borrowers the fee may be zero (or minimal in specialist cases). But cost is not just headline; it is about interest rate, loan features, fees, and ease of execution. If a broker finds you a loan with a 0.35 % lower rate (as some figures suggest is possible) you could easily recoup any brokerage-related cost many times over.

Conversely, if you choose a bank blindly and never compare, you might lock into a higher rate, higher fees or less flexible features simply for the comfort of brand.

The factor of time and complexity also deserves attention. Using a broker often means someone takes on the burden of comparing multiple lenders, filling out application forms, discussing with credit assessors, chasing paperwork, and guiding you through to settlement. For busy professionals, first-home buyers who already feel anxious, or investors juggling a portfolio, that service is more than convenience – it’s a strategic buffer. MATLAB says that in fast-moving markets, or where settlement deadlines are tight, the advantage of a broker may be magnified.

On the other hand, if you enjoy spreadsheets, you like negotiating yourself, you have the time and you relish understanding the fine print – you might prefer the hands-on bank route.

What about loyalty and existing relationships? If you have banked with the same institution for years, hold your salary account, credit card, superannuation all there, then the bank may give you loyalty benefits – discounts, product bundles, or faster processing. Some borrowers prefer that familiarity. Using your own bank also means dealing with the people you know, in the branch you trust. It’s clean. But it also means you may miss the “market-wide” view. A broker will ask: “Which lender suits you best?” rather than just “Which of our products suits you?” That difference in viewpoint can matter over the long term – especially when refinancing or branching into investment property.

Yet there is no “one-size-fits-all” prescription. The point is to choose with intent. Ask yourself: How stable is my income? Am I self-employed or earning salary? Do I have a large deposit or will I need a low-deposit loan? Am I buying an investment or an owner-occupier? Do I need approval fast? How comfortable am I navigating forms and processes on my own? If the answers lean toward complexity, unfamiliarity, time pressure or risk, then the broker’s path begins to look compelling. If the answers point toward steadiness, clarity and simplicity, then the bank route is legitimate.

Questions to ask a mortgage broker

But here’s the strategic piece many overlook: Choosing a broker doesn’t relieve you of due diligence. It doesn’t supply a guarantee of rate greatness. Even if you use a broker, you should ask: What lenders are on your panel? What happens if I find a better rate not on your panel? Who are you accountable to? Are you getting genuine advice or just the path of least resistance? As one consumer guide warns: “Pick a broker… but do your own research.”

Similarly, if you go directly with a bank, do more than walk in – they have negotiation capacity, they have discretionary offers, they may value your broader banking relationship. Ask questions. Use rate comparison tools. Look under the hood.

Refinancing is another sphere where this decision plays out. Over time interest rates shift, your equity grows (or shrinks), your property doesn’t remain static, your financial goals may change. At that point whether you originally came via a bank or broker is less relevant – the question becomes: Are you staying locked into a sub-optimal loan because you’re comfortable? Are you ignoring a better offer because you don’t want to switch? Good brokers highlight these triggers; banks may rely on inertia. The landscape is dynamic.

In essence, the difference between a mortgage broker and a bank is not simply a choice of channel. It is a choice of perspective, scope, and flexibility. The bank offers a known universe; the broker offers a comparative cosmos. The bank may offer comfort; the broker may offer possibility. Neither is intrinsically “better” in every scenario – but one may be markedly more aligned with you.

For designers, creators, travellers – people whose incomes may not always read like a clean salary line, or whose ambitions extend beyond “buy-and-hold for 30 years” – the broker route often offers the architectural framework for flexibility. For borrowers who value predictability, who already have a solid banking relationship, who prefer one-stop, the bank route remains valid.

Whatever pathway you choose, what matters most is intent, clarity and comprehension. Ask yourself: What are the rates? What are the fees? What is the fine print? What happens if I refinance in five years? Are there exit costs? Is the lender’s culture aligned with my future plans? Because the loan you choose today will not exist in a vacuum – its terms, features, and suitability will ripple across years of repayments, career shifts, market cycles and life transitions.

The bottom line

So when someone asks: “Mortgage broker or bank – which one?” you can answer: “Neither by default. It depends.” Understand your financial map, your timeline, your ambitions. Then let the loan pathway you choose reflect that – not just the convenience of a brand, but the architecture of your future. That kind of choice doesn’t just finance a property – it shapes how you move through the next decade of life.