The way Australians shop for home loans has shifted dramatically over the past decade. Where buyers once walked into their local bank branch and accepted whatever rate was offered, today’s borrowers are far more likely to explore the market before committing.
Mortgage brokers now handle well over two-thirds of all residential home loans settled in Australia. That number has been climbing steadily, and for good reason. In a market with dozens of lenders and hundreds of products, having someone who can navigate the options on your behalf is a genuine advantage.
The Problem With Going Direct
Walking into a single bank and applying for a home loan feels like the straightforward approach. You already have a savings account there, maybe a credit card too, and the relationship feels familiar. But familiarity doesn’t always translate into the best deal.
A bank can only offer you its own products. That means you’re choosing from a limited menu, and the person sitting across from you has no obligation to tell you whether a competitor has something better suited to your situation. They’re working for the bank, not for you.
This is the fundamental difference that drives so many buyers toward brokers. A broker’s job is to match you with a loan from across the market, not to sell you a specific product. That distinction matters more than most people realise, especially when a fraction of a percentage point on your interest rate can translate to tens of thousands of dollars over the life of a loan.
What a Good Broker Actually Does
There’s a common misconception that mortgage brokers just fill in paperwork. In reality, the best brokers function more like financial strategists for your home purchase.
Before recommending any product, a good broker will take time to understand your full financial picture. That includes your income, expenses, existing debts, savings patterns, employment type, and long-term goals. A first-home buyer looking at a modest apartment needs a very different loan structure than a self-employed investor purchasing their third property.
Once they understand your situation, they’ll search across their panel of lenders to identify products that fit. Some brokers have access to 30 or more lenders, including major banks, smaller banks, credit unions, and non-bank lenders. This breadth of access is something you simply can’t replicate by visiting branches one at a time.
They also handle the heavy lifting of the application process. From gathering documentation to liaising with the lender’s credit team, a broker manages the moving parts so you can focus on finding the right property. For buyers on Sydney’s lower north shore who want guidance from someone who understands the local market, taking the time to find mortgage brokers with strong local knowledge can make the process considerably smoother.
How Brokers Get Paid
One of the most common questions buyers ask is how brokers make their money, and whether there’s a catch. It’s a fair question, and the answer is more straightforward than most people expect.
In Australia, mortgage brokers are typically paid a commission by the lender once your loan settles. This means you, as the borrower, generally don’t pay the broker directly for their service. The lender pays a small upfront commission (usually around 0.6% to 0.7% of the loan amount) and a smaller trailing commission for as long as the loan remains active.
This model has attracted some scrutiny over the years, and rightly so. The concern is that brokers might be incentivised to recommend larger loans or steer clients toward lenders that pay higher commissions. In response, industry regulation has tightened significantly. Brokers are now required by law to act in the best interests of the borrower, not the lender. This “best interests duty” was introduced in 2021 and has added an important layer of accountability to the profession.
If you’re ever unsure about how a broker is compensated, ask them directly. A trustworthy broker will be completely transparent about their fee structure and happy to explain how their recommendations align with your interests.
Choosing the Right Broker for Your Situation
Not all brokers are the same, and finding the right one can make a significant difference to your experience. There are a few things worth considering before you commit to working with someone.
First, check their qualifications and licensing. Every mortgage broker in Australia must hold an Australian Credit Licence or be an authorised credit representative under one. This is non-negotiable, and you can verify it through ASIC’s professional register.
Second, look at the size of their lender panel. A broker with access to a wide range of lenders gives you more options. If someone only works with a handful of lenders, the scope of what they can offer you is limited, even if they’re technically independent.
Third, consider whether they have experience with buyers in your situation. A broker who specialises in first-home buyers will bring different expertise than one who primarily works with property investors or self-employed borrowers. Local expertise matters too. If you’re buying in Sydney’s western suburbs, for example, working with a mortgage broker Liverpool locals trust means you’re getting advice from someone who understands the specific market conditions, property types, and lending nuances of that area.
Finally, pay attention to how they communicate. The best brokers are responsive, proactive, and willing to explain things in plain language. If someone makes you feel rushed or confused during the initial conversation, that’s unlikely to improve once the pressure of an actual application kicks in.
When to Engage a Broker
Timing matters. Many buyers make the mistake of only reaching out to a broker once they’ve found a property and need to move fast. By that point, you’re already under pressure, and there’s less room to negotiate or explore alternatives.
The smarter approach is to engage a broker early, ideally before you start seriously inspecting properties. A good broker can assess your borrowing capacity, help you get pre-approved, and give you a realistic budget to work with. That way, when you do find the right property, you can move with confidence and speed.
Pre-approval also signals to sellers and agents that you’re a serious buyer. In competitive markets, having your finance sorted before making an offer can be the difference between securing the property and missing out.
Interest Rates and Why Product Selection Matters
It’s tempting to focus exclusively on the interest rate when comparing loans, but the rate is only one part of the equation. Two loans with identical rates can have very different overall costs depending on their fee structures, features, and flexibility.
For example, some loans offer an offset account that can significantly reduce the interest you pay over time. Others allow unlimited additional repayments without penalty, which gives you the flexibility to pay down your loan faster when cash flow allows. Some products come with redraw facilities, split loan options, or the ability to fix a portion of your rate while keeping the rest variable.
A broker’s value really shows up here. They can match the loan features to your actual lifestyle and financial habits, rather than just chasing the lowest advertised rate. Someone who regularly receives bonuses or irregular income might benefit enormously from a full offset account, while a buyer on a stable salary might prefer the certainty of a competitive fixed rate.
The Bigger Financial Picture
Buying property doesn’t happen in isolation. It sits within the broader context of interest rate cycles, housing supply, employment trends, and government policy. Understanding these dynamics helps you make better timing decisions and set realistic expectations about what you can afford.
For up-to-date analysis of how economic conditions and rate movements are shaping the lending environment, the financial markets coverage on FinancialContent provides a useful lens for buyers who want to stay informed. Keeping an eye on the macro picture doesn’t mean trying to time the market perfectly, but it does help you avoid making decisions based on outdated assumptions.
Making the Process Work for You
The home loan process doesn’t need to be overwhelming. With the right preparation and the right people in your corner, it can be structured and even straightforward.
Start by getting clear on your budget. Know what you earn, what you owe, and what you can comfortably afford to repay each month without stretching yourself thin. Then find a broker who takes the time to understand your goals and communicates openly about your options.
The buyers who have the smoothest experience are almost always the ones who planned ahead, asked the right questions, and surrounded themselves with professionals who genuinely had their best interests at heart. In a market as competitive as Australia’s, that kind of preparation isn’t optional. It’s essential.
