Did you know that in the June 2024 quarter, mortgage brokers were responsible for 73.7 percent of all new home loans issued in Australia?
That’s a huge number!
When you’re looking for a home loan, you’ve got two main options: a mortgage broker vs a bank.
Both can get you the money you need, but they work differently.
This blog breaks down the pros and cons of mortgage brokers vs banks, helping you decide should you use a mortgage broker or bank for your financial plans—whether you’re a first home buyer broker or bank Australia shopper or eyeing an investment property.
What’s A Mortgage Broker?
A mortgage broker is a pro who connects you with lenders. They know the loan market inside out and work with lots of banks and companies to find you a deal.
Instead of you hunting around, they do the legwork. Brokers sorted nearly three-quarters of home loans last year because they save time and often snag better rates. Wondering do mortgage brokers get better rates than banks? They can—thanks to their wide network.
What’s A Bank?
A bank will lend borrowers directly and typically provide a limited range of home loan products. The Australian mortgage sector is dominated by the major banks known as the Big Four banks – Commonwealth Bank, Westpac, ANZ, and National Australia Bank (NAB).
Some borrowers are keen on banks because of their established relationships with them, because they are usually easier processes and can manage all of their savings/credit cards in one place.
Comparing Mortgage Brokers And Banks
To simplify your decision-making, here’s a side-by-side comparison of key factors:
| Category | Mortgage Broker | Bank |
|---|---|---|
| Loan Options | Access to a wide panel of lenders (30+ options). | Limited to the bank’s own loan products. |
| Service | Personalised advice and ongoing support throughout the loan process. | May offer less tailored advice, depending on the complexity of your situation. |
| Application Process | Brokers guide you through each step, reducing paperwork and follow-ups. | You’ll need to handle more of the process yourself, though bank specialists may assist with forms. |
| Fees | Typically, brokers don’t charge clients directly. | No extra fees beyond standard loan costs, but limited product variety could impact long-term savings. |
| Expertise | Brokers are familiar with various lenders’ policies, helping you avoid rejections. | Bank specialists focus on their own products but may offer perks for loyal customers. |
Key Advantages Of Mortgage Brokers
Access to a Broader Range of Loan Products
Mortgage brokers have access to many loan products. By comparing loans from various lenders, brokers can save you money, both in fees and interest rates and provide flexibility in the loan’s terms.
Support for Unique Borrowing Scenarios
If you are self-employed and have a lower credit score or you need a specialised lending product, the broker’s experience with complicated credit and lending policies will be helpful
No Direct Cost to Borrowers
Mortgage brokers are typically paid by lenders, through a commission structure. Their experience can help you save money, without you needing to pay them, the borrower, directly.
Ongoing Assistance
Brokers will also be beneficial in refinancing for you down the road or when your financial position changes or when better products become available to you.
Benefits Of Applying Directly With A Bank
Established Relationships
If you’ve established a long-standing relationship with your bank, they likely have your financial track record, which could streamline and expedite the approval process.
Bundled Financial Services
By applying directly with a bank, your bank will have access to all your financial details. This means that if you have an offset account, credit card, and a savings account, these can be linked with your home loan for complete financial management in one place.
Competitive Perks for Loyal Customers
Some banking institutions will offer benefits for clients that meet criteria, such as an eligible balance or an existing mortgage, meaning lower fees and even cashback offerings for loyal customers.
Downsides To Watch
Brokers aren’t perfect. A bad one might not know tricky loan rules and give dodgy advice, so ask smart questions before picking one. Banks? They only push their own stuff.
If your situation doesn’t fit their rules—like a low credit score—they might say no. Weighing should I use a mortgage broker or bank means spotting these hiccups.
Who Wins On Loan Rates?
Do mortgage brokers get better rates than banks? Often, yes—they shop around tons of lenders. Banks stick to their rates, but they’ll sometimes match a broker’s deal if you’re a loyal customer.
For bank mortgage vs broker fees in Australia, brokers might dodge some fees banks charge. It’s about who’s got the edge for your specific needs.
First Home Buyers And Investors
First home buyer broker or bank Australia? Brokers shine here—they hunt deals for newbies who don’t know the ropes. Banks work if you’ve got a big deposit and steady pay already sorted with them.
For mortgage brokers vs banks for investment loans, brokers often win—they find loans tailored to rental properties, where banks might limit you.
Why Mortgage Brokers Often Have The Upper Hand?
While banks offer the advantage of familiarity, mortgage brokers bring unmatched flexibility and choice to the table. They can guide you through complicated scenarios and negotiate with lenders on your behalf. This can be especially helpful if your financial situation doesn’t fit the traditional lending criteria.
For example, during the COVID-19 pandemic, some self-employed borrowers faced difficulties securing loans directly from banks. However, with the right broker advocating for them, they were able to access lending solutions personalised to their circumstances.
Find Your Perfect Loan With Firstsource Finance Today!
Still confused between a mortgage broker vs bank? Firstsource Finance, your expert mortgage broker, makes it easy! We shop tons of lenders to get you the best rates—better than banks alone—and it’s free for you. Whether it’s your first home or an investment, our know-how beats the rest.
