Mortgage Broker vs Direct Bank - Which Is Better for Homebuyers

What’s the Difference? Broker vs Direct Bank Explained Simply

Learn the key differences so you can decide whether you prefer a wider range of options (broker) or a simple direct approach (bank).

Mortgage Broker

A mortgage broker is an independent professional who works with multiple lenders to find the most suitable loan for you. Brokers have access to a wide array of products, enabling them to offer various interest rates, terms, and loan features from multiple banks and financial institutions. Essentially, a broker acts as your personal loan adviser, helping you navigate the maze of loan options without having to approach each bank individually.

Direct Bank

A direct bank (or lender) is the traditional route where you apply directly to one bank or credit union for a home loan. These institutions typically offer only their in-house mortgage products, meaning you won’t be able to compare rates or features across different lenders unless you do so manually. While this approach may feel convenient and familiar—particularly if you already have an existing relationship with the bank—it restricts you to their specific loan offerings, which may not be the most competitive available.

Mortgage Broker vs Direct Bank: Pros and Cons

To make the choice easier, let’s break down the pros and cons of each option.

When a Mortgage Broker Might Be Better

Opting for a mortgage broker can be an excellent choice in several scenarios:

1. Self-employed or Freelancer: If you don’t have a traditional income, brokers can help find lenders who specialise in non-traditional income situations. Brokers will know which lenders are more flexible with self-employed applicants, allowing you to access better rates
2. First-time Homebuyer: Buying your first home is exciting yet overwhelming. A broker can simplify the process with expert advice, explain your loan options, and guide you through the paperwork.
3. Borrowers with Complex Situations: If you have low credit, a small deposit, or you’re self-employed, a broker can match you with a lender willing to work with your circumstances.
4. Want to Compare Dozens of Options Fast: Instead of contacting multiple banks yourself, brokers provide instant access to dozens of loan products from different lenders—making it easy to compare rates and features quickly.
5. Need Help Navigating Grants or Cashback Offers: Brokers are often across government grants and cashback deals that can save you money. They help ensure you take full advantage of any available programs.

When a Direct Bank Might Be the Right Choice

Although brokers offer significant advantages, there are times when working with a direct bank may be the better option:

1. Strong Relationship with Your Bank: If you’ve been a long-term customer, your bank may offer a personalised deal, faster processing times, and loyalty rewards — sometimes including discounts not available to the general public.
2. Looking for a Simple Loan: If your situation is straightforward and you don’t need much guidance, applying directly to the bank can be quicker and more efficient — especially if you already know exactly what you want.
3. Refinancing with Familiar Terms: If you’re refinancing with your current lender and don’t need to shop around, your existing bank might offer a competitive deal and a more streamlined process due to their familiarity with your financial history.

What About Fees, Commissions, and Transparency?

One of the most common misconceptions about mortgage brokers is that they charge significant fees. In Australia, however, most brokers don’t charge clients directly. Instead, they earn a commission from the lender once you settle your loan. This fee structure incentivises brokers to find the best deal for you, as their commission is typically a percentage of the loan amount.

On the other hand, direct banks typically don’t involve commissions, but they may charge fees or offer rates that aren’t as competitive as what a broker could find through multiple lenders. While banks are transparent with their fees, they’re also limited to their own products — which means you might miss out on better rates or features available from other financial institutions.

What Do Aussie Borrowers Prefer Today?

In Australia, mortgage brokers have become the preferred choice for most homebuyers. In fact, over 60% of home loans are now arranged through brokers, and the number is growing. Aussies are increasingly opting for brokers due to the wide range of lenders available, the expertise they provide, and the time-saving benefits.

Brokers are especially popular among first-home buyers, refinancers, and borrowers with non-standard financial situations, such as variable income or low credit scores, because of the personalised support they offer. Brokers help these buyers save time, money, and effort by ensuring they find the best deal for their unique needs.

At Stryve Finance, we’ve helped thousands of Australians navigate the mortgage maze with ease, providing them access to over 50 lenders and ensuring they secure the best available rates.

Frequently Asked Questions (FAQs)

Is it cheaper to use a mortgage broker in Australia?

No. Brokers are usually paid by the lender, and you typically don’t pay any extra fees. They often secure rates and features better than what’s publicly available, making brokers a cost-effective option.

Do mortgage brokers get better interest rates than banks?

Often, yes. Brokers can access wholesale rates that banks don’t offer to the public, and they can negotiate lower rates and better terms on your behalf.

How do mortgage brokers get paid in Australia?

Brokers earn a commission from the lender once your loan settles. This commission is usually a small percentage of the loan amount and is factored into the overall loan package.

Can I trust a mortgage broker?

Yes. Mortgage brokers are required by law to act in your best interest under the Best Interests Duty. This ensures brokers provide impartial advice and recommend the most suitable product for your needs.

What is the best option for first-home buyers in Australia?

For many first-home buyers, a mortgage broker can be invaluable. Brokers provide access to a wide range of products, help you navigate government grants, and offer expert advice to ensure you get the best deal.

Conclusion: Which One Is Right for You?

Ultimately, there’s no one-size-fits-all solution. The choice between a mortgage broker and a direct bank depends on your preferences, financial situation, and what you want from the loan process.

• If you value flexibility, choice, and expert advice, a mortgage broker is likely the best fit.
• If you have a straightforward financial situation, a direct bank may offer the simplicity and speed you’re after.

At Stryve Finance, we work with 50+ lenders to help you secure the most competitive rates and terms. We make the process smooth and help you secure the home loan you deserve.

Choose the option that fits your situation — not just for today, but for the life of your loan.

Get in Touch

If you’re still unsure or want personalised advice, reach out to Stryve Finance. We offer a free, no-obligation consultation to help you navigate your options. The right mortgage can change your future — and we’re here to help you find it.