Mortgage Broker vs Going Direct

When it comes to finding a home loan, you essentially have two paths: use a mortgage broker or go directly to a lender. Each approach has distinct advantages and drawbacks, and the right choice depends on your personal circumstances, how much research you are willing to do, and how complex your financial situation is. The broker model exists in most major markets — Australia, the USA, the UK, Canada, and New Zealand — though the way brokers operate and are paid varies by country. Understanding both options will help you make an informed decision.

A mortgage broker is a licensed professional who acts as an intermediary between you and multiple lenders. They assess your financial situation, research loan products across their panel of lenders, and recommend options that suit your needs. A broker handles much of the paperwork and communication with the lender, guiding you through the process from application to settlement.

Going direct means approaching a lender yourself — whether that is a major bank, a smaller regional bank, a credit union, or an online lender. In Australia, the major banks include Commonwealth Bank, ANZ, Westpac, and NAB. In the USA, major lenders include Wells Fargo, JPMorgan Chase, and Bank of America. In the UK, major lenders include Barclays, HSBC, and NatWest. You deal with the lender's own staff, who can only offer you their own products. You are responsible for researching and comparing alternatives on your own, though the lender's loan officers will guide you through their application process.

Neither approach is inherently better than the other. Some borrowers get excellent outcomes going direct, particularly if they have a strong existing relationship with their bank or if the lender offers exclusive products that are not available through brokers. Others benefit enormously from a broker's expertise and access to a wide range of products. The sections below will help you weigh up the factors that matter most to your situation.

A mortgage broker's job is to find the right loan for your specific situation. They start by conducting a detailed assessment of your financial position — your income, expenses, debts, assets, employment type, and property goals. Based on this assessment, they search their panel of lenders (which can include 20 to 40 or more lenders) to identify products that match your criteria and that you are likely to be approved for.

A good broker does more than just find a low rate. They consider the full picture: whether you need an offset account, how important extra repayment flexibility is, whether a fixed, variable, or split loan suits your risk profile, and whether your employment type or income structure requires a specialist lender. For borrowers with complex situations — such as self-employed individuals, those with irregular income, or buyers using family guarantees — a broker's expertise can be particularly valuable.

Once you have chosen a product, the broker prepares and submits your application, ensuring all documentation is complete and presented in the way the lender expects. They follow up on the application, manage any requests for additional information, coordinate the valuation, and liaise with your conveyancer or solicitor. Many brokers also handle the settlement process and check in with you periodically after settlement to ensure your loan remains competitive.

• Assesses your financial situation and borrowing capacity in detail
• Searches across 20–40+ lenders to find suitable products
• Handles paperwork, application submission, and follow-up
• Provides guidance on loan structure (fixed, variable, split, offset)
• Coordinates with conveyancers, valuers, and the lender during settlement
• Reviews your loan periodically to check it remains competitive

Mortgage brokers are regulated in all major markets, though the specific requirements vary. In Australia, brokers must hold an Australian Credit Licence (ACL) and are subject to the Best Interests Duty (BID), which legally requires them to act in your best interests. In the USA, brokers must be licensed under the Nationwide Multistate Licensing System (NMLS) and comply with the Real Estate Settlement Procedures Act (RESPA). In the UK, brokers are regulated by the Financial Conduct Authority (FCA) and must provide suitable advice. In Canada, licensing is handled at the provincial level. These consumer protection frameworks are designed to ensure brokers recommend loans that genuinely suit your needs.

Going direct means approaching a bank or lender yourself, either online, over the phone, or in a branch. You will typically deal with a loan officer or mobile lender who works exclusively for that institution. They can explain the lender's products in detail, help you determine which product suits your needs, and guide you through the application process — but they can only offer you their own products.

One of the main advantages of going direct is access to exclusive products and pricing that may not be available through brokers. Some lenders, particularly online-only lenders, offer "direct-only" rates that are lower than what they offer through the broker channel. This is because the lender saves on broker commissions and can pass some of that saving to the borrower. However, the rate difference is typically small — often 0.05% to 0.15%.

Going direct also appeals to borrowers who have a strong relationship with their existing bank. If you have held your transaction accounts, savings, and other products with the same bank for years, they may offer you a relationship discount or a package deal that bundles your home loan with other products at a reduced price. Some borrowers also prefer the continuity of having all their finances under one roof.

The biggest drawback of going direct is limited choice. A bank's loan officer, no matter how helpful, can only recommend products from their own institution. They have no obligation to tell you that a competitor offers a better rate or a more suitable product for your circumstances. This means the research burden falls entirely on you. If you go direct, you should compare at least three to four lenders independently before making a decision. Understanding comparison rates is essential for this process.

Another consideration is that bank loan officers are not subject to the same Best Interests Duty that applies to mortgage brokers. While they must comply with responsible lending obligations, their primary incentive is to win your business for their employer. This does not mean they will give you bad advice, but it does mean their recommendations are inherently limited to what their institution offers.

One of the most common questions borrowers ask is whether using a broker costs more than going direct. In most countries, the answer is: no, not directly. In Australia, the UK, and Canada, mortgage brokers are typically paid by the lender through commissions, not by you. In the USA, the model varies — some brokers are paid by the lender, while others charge the borrower a fee (or a combination of both), and this must be disclosed upfront. You should always clarify how your broker is compensated. However, the way brokers are paid — whether through commissions or fees — is an indirect cost that is factored into the overall cost of lending.

Lenders set their interest rates and fees to cover their costs, including the cost of acquiring new customers. For broker-sourced loans, that cost is the commission paid to the broker. For direct loans, it is the cost of maintaining branches, employing loan officers, and running marketing campaigns. In practice, the total cost to the lender is similar across both channels, which is why most lenders offer broadly similar pricing whether you come through a broker or apply directly.

The cost difference, if any, between broker and direct channels tends to be marginal. Some direct-only products offer slightly lower rates, but these savings can be offset by the value a broker provides in finding the right product, negotiating on your behalf, and saving you time. For borrowers with simple, straightforward situations, going direct to a lender with a competitive direct-only rate can save a small amount. For everyone else, the broker channel typically provides better value.

The home loan market in most countries includes hundreds of products from dozens of lenders — major banks, regional banks, credit unions, building societies, non-bank lenders, and online-only lenders. Navigating this market on your own can be overwhelming, particularly if you are a first-time buyer or have a non-standard financial situation. This is where the difference between a broker and going direct becomes most apparent.

A mortgage broker typically has access to 20 to 40 or more lenders on their panel. This panel usually includes a mix of major banks, smaller banks, and non-bank lenders, giving the broker a broad view of the market. For most borrowers, this covers the vast majority of competitive products available. Some larger brokerages have panels of 50 or more lenders, while smaller operators may have a more limited selection.

However, not all lenders are on broker panels. Some lenders — particularly online-only lenders and some smaller institutions — operate exclusively through the direct channel and do not pay broker commissions. This means a broker cannot offer you their products, even if they are competitive. Similarly, some lenders offer "direct-only" products at lower rates than their broker-channel equivalents. If you are considering a lender that does not work with brokers, you will need to approach them directly.

For borrowers with complex situations, access to a wide range of products can be critical. Major banks tend to have strict lending criteria that may not accommodate self-employed borrowers, those with irregular income, or buyers seeking higher LVR loans. Non-bank lenders and specialist lenders often have more flexible criteria, and a broker with a broad panel can match you with a lender that fits your circumstances — saving you the frustration of applying to a lender that will decline you.

If you decide to go direct, invest time in researching lenders beyond the biggest names. Comparison websites can help: in Australia, try Canstar, RateCity, or Finder. In the USA, try Bankrate, NerdWallet, or LendingTree. In the UK, try MoneySupermarket or Compare the Market. In Canada, try Ratehub or RatesSpy. Use our borrowing power calculator to understand your budget, then shop around with that figure in mind.

Understanding how mortgage brokers are paid is important for assessing any potential conflicts of interest. The commission model varies by country, and knowing the structure in your market helps you evaluate your broker's recommendations.

In Australia, brokers receive an upfront commission when your loan settles, typically 0.50% to 0.70% of the loan amount (including GST). On a $600,000 loan, this equates to approximately $3,000 to $4,200. In the UK, some brokers charge a fee to the borrower (often around 500 to 1,000 pounds) while others receive commission from the lender — or a combination of both. In the USA, broker compensation is regulated under RESPA and Dodd-Frank, with typical compensation of 1% to 2% of the loan amount, paid by either the lender or borrower. In Canada, upfront commissions are similar to Australia, typically 0.50% to 1.10% of the loan amount.

In Australia and New Zealand, brokers also receive a trailing commission — an ongoing payment for the life of the loan, usually around 0.15% to 0.20% of the outstanding loan balance per year. On a $600,000 loan, this starts at approximately $900 to $1,200 per year and gradually decreases as you pay down the loan. Trailing commissions are less common in the USA and UK. The trailing commission incentivises the broker to maintain a relationship with you and provide ongoing service, including periodic loan reviews.

Some borrowers worry that the commission model creates a conflict of interest — specifically, that a broker might recommend a larger loan or a product from a higher-paying lender. While this concern is valid in theory, regulatory oversight in most countries has significantly reduced this risk. In Australia, ASIC enforces the Best Interests Duty. In the USA, the Consumer Financial Protection Bureau (CFPB) oversees broker conduct. In the UK, the FCA monitors compliance. Commission rates between major lenders are broadly similar, so there is generally little financial incentive for a broker to steer you toward one lender over another based on commission alone.

If you are uncomfortable with the commission model, some brokers offer a fee-for-service arrangement where they charge you a flat fee and rebate any commissions they receive. This model is more common in the UK and USA than in Australia, but it is available in most markets and may appeal to borrowers who want complete transparency. Ask your broker whether they offer this option.

Not all mortgage brokers are created equal. The difference between a great broker and a mediocre one can be significant — not just in the rate you end up with, but in the quality of advice, the smoothness of the process, and the ongoing support you receive. Choosing the right broker is worth the same care you would put into choosing the right property.

Start with referrals. Ask friends, family, and colleagues who have recently bought a home or refinanced. Personal recommendations are valuable because they come with firsthand experience of the broker's communication style, responsiveness, and results. Online reviews on Google, ProductReview, and social media can also provide useful insights, though be wary of reviews that seem too polished — some brokers solicit positive reviews from clients.

When you meet with a potential broker, ask them several key questions. How many lenders are on their panel? How long have they been in the industry? Do they specialise in any particular type of lending (first home buyers, investors, self-employed)? What is their process, and what turnaround time can you expect? A good broker will answer these questions openly and without pressure.

• Verify their licence or registration: ASIC register in Australia, NMLS in the USA, FCA register in the UK, provincial regulator in Canada
• Ask how many lenders are on their panel — more is generally better
• Look for experience with your type of loan (first home buyer, refinancer, investor)
• Assess their communication — do they respond promptly and explain things clearly?
• Ask for a written disclosure of their commission or fee arrangements
• Check online reviews and ask for references from recent clients
• Check for industry body membership: MFAA/FBAA in Australia, NAMB in the USA, AMI in the UK, MPC in Canada

Pay attention to how the broker communicates throughout the process. A great broker keeps you informed at every stage, explains each step in plain language, and is proactive about flagging potential issues. They should never make you feel rushed or pressured into a decision. Remember, you are the client — a good broker works for you, not the other way around.

Ultimately, the choice between using a mortgage broker and going direct comes down to your personal preferences, the complexity of your situation, and how much time you are willing to invest in the process. Both paths can lead to a great outcome, and neither is universally better than the other. Here is a framework to help you decide.

There is also a hybrid approach that many savvy borrowers use: consult a broker to understand your options and get a recommendation, then check whether you can get a better deal by going direct to the recommended lender or to a direct-only lender. This gives you the benefit of the broker's research and expertise while also ensuring you are not missing out on direct-only pricing. Just be transparent with your broker about your approach — a good broker will welcome the comparison and be confident that their recommendation stands up to scrutiny.

Whatever path you choose, make sure you understand the loan you are signing up for. Read the Key Fact Sheet, understand the fees, check the comparison rate, and know the terms around extra repayments, rate locks, and offset accounts. If anything is unclear, ask questions until you are satisfied. A home loan is a decades-long commitment, and taking the time to get it right at the start saves you from costly corrections later.

Ready to explore your borrowing capacity? Use our free borrowing power calculator to get a bank-ready estimate in minutes. And if you are just starting your home-buying journey, our first home buyer guide covers everything you need to know from saving a deposit to getting the keys.