How mortgage brokers work in Australia

What a broker actually does, how they are paid, and the legal duty they owe you.

The short version

A mortgage broker compares home loans from a panel of lenders, helps you assemble an application, and manages it through to settlement. You still sign with the lender; the broker sits between you and the lender's credit process.

Brokers in Australia must hold an Australian Credit Licence or act as a credit representative of a licensee. You can ask any broker for their licence or representative number and check it on ASIC's professional registers.

The best interests duty

Since 1 January 2021, mortgage brokers have been legally required to act in the best interests of consumers when giving credit assistance, and to prioritise your interests where there is a conflict. This duty sits in the National Consumer Credit Protection Act.

In practice, a broker should be able to explain why the loan they recommend suits your goals, and should record the reasons. Asking 'why this one over the others?' is a fair and normal question.

How brokers are paid

Most brokers are paid by the lender rather than by you: an upfront commission when the loan settles and a smaller trail commission over the life of the loan. Some also charge a fee, which must be disclosed.

Before you proceed, a broker must give you a credit guide and, later, a credit quote or proposal explaining fees and commissions. Read these documents; they are short, and they are designed for you.

What a broker cannot do

A broker cannot guarantee approval: the lender makes the credit decision. Panels differ between brokers, so 'compares the market' means 'compares the lenders on their panel'. Ask how many lenders are on it and which ones they use most.

When it helps most

Brokers tend to add the most value when your situation is less standard: self-employed income, a small deposit, construction, a guarantor, or a refinance with fees to weigh. For a simple loan with your existing bank, going direct can also be reasonable.