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Mortgage brokers vs banks: which is the right choice?

Shopping for a home loan is an exciting time - after all, you’re on your way to owning your dream home! But it can also be a little overwhelming. Between interest rates, property jargon and lenders giving you the run around, it can start to get pretty stressful.

So sometimes it’s worth looking for some help when you’re trying to find the right home loan fit. That’s where mortgage brokers come into the picture. But is that the right option for you? Or are you better off heading down to your local bank branch? We’ve broken down the differences between mortgage brokers and banks to help you work it out.

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Last updated 25 June 2024 Important disclosures and comparison rate warning*
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Discount Great Rate Home Loan

    Owner Occupier, Principal & Interest, LVR<80%, over $150k

    interest rate
    comparison rate
    Initial monthly repayment
    6.19% p.a. variable
    6.21% p.a.

    An easy to use Home Loan with no establishment fee and no monthly or annual fees. Minimum deposit of 20% is required. Mozo Experts Choice Awards - Investor Home Loan Award 2024^.

  • Variable Home Loan 90

    Principal and Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.04% p.a. variable
    6.06% p.a.

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • The Better Home Loan Special Offer

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.14% p.a.

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.


What are my options?

Approaching the bank direct

Pros of going straight to a bank

  • If you’re already a customer of the bank, you probably know and trust their service. To check out what other customers think of your bank, find them in our customer reviews.
  • If you are certain you want a home loan from a particular lender, going directly to them will probably mean dealing with someone who has specialised knowledge of that lender’s offers
  • Taking out a home loan with the same lender you bank with should make it super easy to set up automatic payments from your bank account to your home loan

Cons of a bank

  • Going straight to your bank for a home loan means you’ll miss out on comparing the other options on the market and finding potential savings
  • You never know who will be dealing with your home loan application. Bank staff don’t necessarily specialise in home loans, whereas a mortgage broker does
  • If you’re finances are tricky or your credit history is not great, you might be less likely to secure a home loan by contacting the bank directly

Tips to make it work

If you’re heading out to your nearest bank branch or jumping online to find a home loan, there are a few things you can do to make sure you’re getting the best bang for your buck. Here are our top tips for approaching a bank directly to find a home loan.

  • Do your research. Even if you’ve got your heart set on a home loan from your bank, it’s always a good idea to know what else is available. It gives you a good starting point for when you…
  • Haggle. The interest rate on your home loan can make a big difference. For example, our rate change calculator shows that on a $500,000 home loan, the difference between a 3.94% interest rate and a 4.69% interest rate would be $210 each month on a 25 year loan. So don’t be scared to ask for a better deal.
  • Bundle. One of the perks of sticking with your current bank is that if you bundle your existing banking products with your home loan, you could snag a better interest rate, or even cash in on special bonus offers.

Using a mortgage broker

Pros of using a mortgage broker

  • A mortgage broker can save you the time and hassle of shopping around for a home loan
  • Because they work closely with lenders, mortgage brokers have access to insider knowledge, deals and rates that the average home buyer doesn’t
  • If your finances are a bit tricky - maybe your credit history isn’t great, or you’re looking at your first investment property - a mortgage broker can help you navigate the home loan process
  • First home buyers might benefit from a mortgage broker's knowledge and experience
  • Consulting a mortgage broker can be a good way to get a handle on a range of different home loans from different lenders, rather than heading straight to one bank

Cons of using a mortgage broker

  • A mortgage broker will earn a commission from signing you up for a home loan and sometimes, certain home loans will pay a higher commission - which means the advice you get from a mortgage broker may not be totally unbiased
  • Although many brokers don’t charge you a fee, some do, so you have to be careful that you’re not being overcharged.
  • A broker isn’t a real estate expert - they can’t really advise you on what property to buy, or on finding tax concessions or grants you're eligible for

Tips to make it work

The good news is, there are a few ways you can get around the pitfalls of using a mortgage broker. If that’s the path you want to take, we have a few tips for how to make it work for you.

  • Do your own research! This should be your number one strategy. Don’t rely entirely on your mortgage broker. Use our home loan comparison to check out what deals are available and make sure your broker is finding you the best possible savings
  • Choose your broker carefully. Not only do you want to work with someone you trust and like, but look for a broker who has the right skills and attitude to get you a better deal. Also, find out what providers they deal with, and make sure those options will be a good fit for you.
  • Break it down. Ask your mortgage broker to break down each of their recommendations and justify why it’s a good deal - make sure they’re taking into account your individual loan situation and not just fishing for the highest commission.

Mortgage brokers vs D.I.Y

One of the useful things about working with a mortgage broker is that they can calculate loan costs based on your specific circumstances and compare deals accordingly, which is something you may find a little harder to do yourself. For example, the comparison rate is a handy tool for seeing the true cost of home loans you’re comparing, but it’s based on a set scenario. A mortgage broker can base comparisons on your circumstances.

But the good news is there are a few tools you can use to do this yourself. Our home loan calculators will let you plug in your loan details - like how much you want to borrow, your loan term and the interest rate you’re considering - and will give you the details of what that loan might cost you, both all up and in monthly repayments.

So if you do decide to go D.I.Y with your home loan comparisons, be sure to check out all the resources we’ve compiled on our home loans page.

Where else can I find help with my home loan?

There are a few stops you could make on the road to finding a great home loan deal. No matter what, the first place you visit should be a home loan comparison, so you can get a feel for the market and what’s out there.

Or, if you’d rather talk to a person about your home loan search, get in touch with our resident home loan negotiator, Steve, and he’ll help you snag a great deal on your home loan. 

Mozo Editorial
Mozo Editorial

Mozo’s team of experienced journalists and money experts provide news, insights, practical guides and expert analysis to help you master your personal finances. We follow editorial guidelines that focus on accuracy, reliability and timeliness; helping you make informed financial decisions with confidence and the most of your hard-earned money.

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

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