What does a mortgage broker do, and how much does one cost?

Around three in four Australian home loans are now written through a mortgage broker. If you’ve never used one, two questions come up immediately: what does a broker actually do, and what does it cost? Short version: they find, negotiate and manage your loan, and for standard home loans, the service costs you nothing.

What a broker actually does

• Assesses your position: income, deposit, debts, goals, and tells you what you can realistically borrow.
• Compares the market: policies, rates and fees across dozens of lenders, including ones you’ve never heard of.
• Structures the loan: offset vs redraw, fixed vs variable splits, loan terms that fit your plans.
• Negotiates: brokers regularly get pricing below a lender’s advertised rate.
• Runs the paperwork: application, valuation, approval and settlement, chasing the lender so you don’t have to.
• Reviews your rate over time: a good broker repricing your loan every year or two is how you avoid the “loyalty tax”.

How brokers get paid

For most home loans, the lender pays the broker a commission after your loan settles, you don’t pay a fee. The commission is disclosed to you in writing before you proceed, and rates through a broker are the same or better than going to that lender directly.

A legal duty banks don’t have

Since 2021, mortgage brokers operate under a legislated Best Interests Duty: they are legally required to act in your best interests. A bank branch has no such obligation, it can only ever recommend its own products, whether or not they suit you.

When a broker matters most

Anyone benefits from having the market compared, but brokers add the most value when your situation doesn’t fit the standard mould: self-employed income, professional LMI waivers, construction lending, or a borrowing capacity that one bank knocked back and another would approve tomorrow.