When you're looking for a home loan, it's tempting to believe the smartest approach is simply to find the lowest advertised interest rate and apply directly. After all, comparing loans online has never been easier.
But a home loan isn't just an interest rate. The right loan needs to fit your income, deposit, borrowing capacity, financial goals, preferred features and tolerance for repayment risk. That's where the decision between shopping for a loan yourself and using a mortgage broker becomes more important.
There isn't one right answer for everyone. If you have a straightforward financial position and enjoy doing your own research, comparing loans yourself can make sense. If your circumstances are more complex, or you want someone to compare lenders and manage the application process, a broker can provide significant value.
What does a mortgage broker actually do?
A mortgage broker acts as an intermediary between you and lenders.
Rather than approaching one bank, a broker can assess your circumstances and compare suitable loan products from multiple lenders. According to ASIC's Moneysmart, brokers can help borrowers understand their needs, assess borrowing capacity, compare options and manage the application through to settlement.
For example, you might approach your existing bank and receive an offer of 6.2%. That doesn't necessarily mean 6.2% is the best loan available to you.
Another lender may offer a different rate, lower fees or features that better suit your circumstances. Alternatively, the slightly higher rate may actually be more appropriate because the loan has features you value, such as an offset account or greater repayment flexibility.
A broker's job is to look beyond the headline number, they are legally required to act in the best interest of the consumer! A mortgage broker owes you a statutory best interests duty under the National Consumer Credit Protection Act 2009 (Cth). A bank's own lender does not, because that duty attaches to people who arrange credit from more than one credit provider.
What are the advantages of comparing loans yourself?
DIY research has some genuine advantages.
You remain in control. You can research lenders, compare features and make your own decision. It's easy to get started. Comparison websites and lender websites allow you to see advertised rates, fees and features within minutes. You can learn a lot.
Understanding how homeloans work can help you make better financial decisions in the long term. It may suit a straightforward application. If you have stable employment, strong savings, a straightforward income structure and a clear idea of what you want, you may feel comfortable doing there search yourself.
But there is an important limitation: comparison websites don't necessarily show you the entire market. Moneysmart notes that comparison websites may make money through promoted links and may not cover all available options.
What are the advantages of using a mortgage broker?
The biggest advantage is not simply access to more interest rates.
It's expertise and comparison. A good broker starts with your circumstances rather than starting with a particular bank. They can consider your income and employment, existing debts, deposit and savings, borrowing capacity, property goals, investment plans, loan features, repayment structure and broader financial position.
This can be particularly valuable if your situation isn't completely straightforward.
What does a mortgage broker cost?
In many cases, the lender pays the broker a commission rather than the borrower paying the broker directly. However, brokers must disclose commissions they may receive, and some brokers may charge a direct fee.
That means you shouldn't assume that "free" means there is no commercial relationship involved.
A good question to ask is: How are you paid, and does that influence the loans you recommend?
Don't compare interest rates alone
Imagine two loans:
- Loan A: Interest rate 6.10%, annual fee$395, offset account, flexible additional repayments.
- Loan B: Interest rate 5.95%, annual fee$995, no offset, limited additional repayments.
Loan B looks cheaper at first glance.
But if you keep substantial savings in an offset account, Loan A could potentially produce a better overall outcome for you. That's why the comparison rate, fees, features and total loan structure matter alongside the advertised interest rate.
So, should you use a mortgage broker?
Consider doing the research yourself if your financial situation is straightforward, you enjoy comparing financial products, you understand loan terminology, you have time to research multiple lenders and you're comfortable managing the application process.
A broker may be particularly useful if you're unsure how much you can borrow, you're self-employed, you have multiple debts, you're buying an investment property, you're refinancing, you have complex income or you simply don't want to spend hours researching lenders.
Ultimately, the question shouldn't be "What's the lowest rate?"
It should be: "Which loan structure makes the most sense for my financial situation?"
Remember:
A mortgage broker owes you a statutory best interests duty under the National Consumer Credit Protection Act 2009 (Cth). A bank's own lender does not, because that duty attaches to people who arrange credit from more than one credit provider.
Start with the numbers
Before speaking with a lender or broker, it's useful to understand your own numbers. Use the Stanford Financial Calculators to explore repayments, borrowing scenarios and the potential impact of different loan structures.
If you'd prefer professional guidance, Stanford Financial provides personalised finance solutions and access to more than 60 lenders.
The right home loan isn't necessarily the one with the lowest advertised rate. It's the one that makes sense for you.
Talk to a Stanford Financial broker now.
Frequently asked questions
Does a mortgage broker cost me anything?
Usually not on a standard residential loan. The lender pays the broker at settlement, typically 0.55% to 0.70% of the drawn amount plus GST upfront and 0.15% to 0.20% a year in trail. Any fee charged to you must be disclosed in writing first.
Do banks have to act in my best interests?
Not under the statutory best interests duty. It attaches to mortgage brokers as defined in s 15B of the NCCP Act and to credit representatives, which excludes staff selling their own institution's products. A bank lender still owes responsible lending obligations under Chapter 3 of the NCCP Act and must still comply with the National Credit Code.
What is clawback, and can it be charged to me?
Clawback is the lender recovering upfront commission from the broker when a loan is repaid or refinanced inside a set window, typically around two years and often tiered. The broker bears it. It cannot be passed to you unless a fee-for-service arrangement was disclosed to you in writing inadvance.
Will a broker get me a lower rate than going direct?
Nobody can promise that, and a guaranteed outcome should worry you. A broker can put your file in front of lenders whose policy fits it and request pricing through the broker channel. A lender's own staff can apply that lender's full discretion.
How Stanford Financial can help
Stanford Financial is a mortgage broking business in Springfield Central, working with buyers and refinancers across Ipswich, Greater Springfield and Greater Brisbane. If you want the trade-off explained before you choose your route, we will walk you through the credit guide and what a lenderis likely to assess, and say plainly where going direct may suit you better.Call 0483 980 002, or start at Stanford Financial.
General information only. Your lending options depend on your individual circumstances, lender criteria and applicable laws.
Credit. Stanford Financial Pty Ltd ACN 641 775 242 is authorised under Australian Credit Licence 541480.
