Mortgage Brokers vs Banks: Which is Better For Your Home Loan?

When it’s time to take out a home loan—whether you’re buying your first home, refinancing, or investing in property—one of the most important decisions you’ll make isn’t just which loan to choose. It’s who to get it from.

Should you go directly to your financial institution? Or should you work with a mortgage broker?

It’s a common question, and the mortgage broker vs banks debate isn’t always straightforward. Both have advantages. But if you want a broader view of the home loan market, a more personalised service, and potentially better loan options, it’s worth understanding exactly how brokers and banks differ.

What’s the difference between a mortgage broker and a bank?

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At the simplest level, the difference comes down to how many lenders you’re dealing with. A bank is a single lender, offering only its own loan products. A mortgage broker works with multiple lenders—often 20 or more—to help you compare home loans and find one that suits your needs.

When you apply directly with a bank, you’re limited to their suite of home loans, interest rates, and lending policies. If your financial situation doesn’t fit their criteria, you may be declined or offered a product that isn’t the best fit.

Mortgage brokers, on the other hand, act as a go-between. They assess your situation, compare loans across many banks, credit unions, and non-bank lenders, and recommend an option based on your goals.

Choice and flexibility: the broker advantage

When comparing broker vs bank, choice is one of the most significant factors. A good mortgage broker can give you access to a broad range of loan products from many lenders, including major banks, second-tier lenders, and credit unions. This helps you explore more interest rates, features, and loan terms than you might find on a bank’s website or in-branch.

For example, if you’re self-employed, have a low deposit, or need a larger loan amount, you might not meet a particular bank’s lending criteria. However, a broker may know of several other lenders willing to work with borrowers in your situation.

Banks are more likely to favour low-risk borrowers with stable incomes and large deposits. If you fall outside that narrow profile, your application might be rejected, or you may be offered a loan that doesn’t match your long-term goals.

In contrast, brokers generally take the time to assess your financial situation, goals, and borrowing power. They can recommend products with fewer ongoing fees, lower comparison rates, or better offset account features that suit your lifestyle. In short, brokers provide tailored advice, not just a limited product list.

Understanding how brokers get paid

One of the biggest misconceptions in the mortgage broker vs banks debate is cost. Some borrowers worry they’ll have to pay a broker’s fees or extra charges for using a mortgage broker.

In reality, most mortgage brokers do not charge direct costs to borrowers—including Watson Mortgages. Instead, the lender pays us a commission when your loan settles. This payment is built into the overall cost of the loan, the same way it would be if you went directly to the bank.

Under Australian law, mortgage brokers must act in your best interest. This Best Interests Duty is a legal requirement that ensures your broker puts your needs first, unlike bank staff, who are only required to recommend products from their institution.

Mortgage brokers are also licensed under an Australian credit licence and subject to oversight by ASIC. That means they must provide clear, compliant, and responsible recommendations.

The value of personalised support

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Another key benefit of using a broker is their personalised, ongoing support throughout the loan process. Applying for a home loan isn’t just about filling in a form. It often involves preparing financial documents, dealing with valuers, navigating pre-approval, liaising with solicitors, and meeting lender requirements while meeting tight deadlines during settlement.

When you go directly to a bank, you may be assigned a lending officer, but their service is typically limited to the application process. They won’t assist you beyond the bank’s products or explain whether other loan options might suit you better.

A broker, by contrast, works with you from start to finish. They help you gather documentation, identify any risks in your application, recommend strategies to strengthen it, and keep you informed every step of the way.

If your financial circumstances change—say you receive a pay rise, change jobs, or buy another property—a broker can help you reassess your loan and compare home loans again, even years after your original loan was approved.

What about interest rates? 

A key part of the broker vs bank discussion is whether you’ll get a better deal.

Banks usually only offer their own rates, and may not inform you if a better offer exists elsewhere. Unless you regularly do your own research, you might not realise you’re overpaying.

Mortgage brokers compare rates across a vast network of lenders and can often negotiate more competitive offers, particularly if you’re refinancing or borrowing a larger amount. Some lenders also offer broker-exclusive products unavailable directly through their branches or websites.

That said, not all brokers have access to every lender. This is why it is essential to work with an experienced, independent broker with access to a broad panel of lenders, not just a select few.

Protecting your credit score

When you apply for a home loan directly with a bank and your application is rejected, it’s recorded on your credit file. Multiple rejections can affect your credit score and limit your future borrowing ability.

Mortgage brokers help protect your credit history by filtering out lenders unlikely to approve your application. Using industry software, they can assess how likely you are to qualify and recommend a targeted list of suitable lenders.

This is especially helpful if your application is more complex, such as if you’re self-employed, recently changed jobs, or have multiple income streams.

Rather than risk rejection from a particular bank, your broker helps you put your best foot forward with a lender more likely to say yes, reducing unnecessary marks on your file.

What are the pros and cons of each? 

Mortgage brokers	Banks
✔ Access to many lenders and loan products	✔ Simpler if you already have an existing relationship with your bank
✔ Can secure competitive interest rates and lower fees upfront	✔ May offer bundled deals (e.g. credit cards, transaction accounts)
✔ Help with complex applications (e.g., self-employed, low deposit, multiple incomes)	✘ Limited to the bank’s own loan products
✔ Ongoing support beyond the loan settlement	✘ May not offer the most competitive rates or features
✘ Not all brokers work with every lender—check their panel	✘ Service is often generic and product-focused.
✘ Varying levels of experience—always choose an accredited broker.

So—Broker or bank?

Ultimately, the choice between a mortgage broker vs banks comes down to your needs.

If you value convenience, product variety, and personalised service, using a mortgage broker may save you time, money, and hassle, especially if you’re not a cookie-cutter borrower. If you’re confident in your financial situation and happy with your existing bank, it might be quicker to go directly.

However, for many home buyers and property investors, mortgage brokers are the preferred choice because they have broader access to different lenders, expert advice, and help navigating the home loan process.

Make an informed decision with Watson Mortgages

Buying a home or refinancing your mortgage is one of the biggest financial decisions you’ll ever make. Don’t settle for the first product your bank offers without comparing your options.

A mortgage broker can help you make an informed decision, compare loans across the market, and find a home loan that fits your needs, not just your bank’s sales targets.

At Watson Mortgages, we work with over 30 trusted lenders to help you compare, apply, and settle your loan smoothly. Whether you’re a first home buyer, upgrading your home, or refinancing to get a better rate, our experienced brokers are here to help.

No fees. No pressure. Just personalised support that puts your best interests first.

Call 02 4018 7505 or book your free consultation online today.

Disclaimer:

Watson Mortgages Pty Ltd (Nestor Ramirez Credit Representative Number 378816) is authorised under Australian Credit Licence 389328.

Watson Mortgages Pty Ltd ABN 29 642 538 967 is a separate entity to Elliot Watson Financial Planning Pty Ltd.  Elliot Watson Financial Planning Pty Ltd is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.

This page provides general information only and has been prepared without taking into account your own objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply. Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.