Debunking Common Myths About Mortgage Brokers in Australia

Ask around at a barbecue about mortgage brokers and you will hear strong opinions in both directions. Some people swear their broker saved them weeks of paperwork; others are convinced brokers are an unnecessary middleman. A lot of that doubt comes from ideas that sound plausible but fall apart on closer inspection. Here are six of the most common, and what tends to be closer to the truth.

Cost and reach

Myth one: a broker adds to the cost

Many Australian brokers are paid by the lender through commission when a loan settles, so the borrower often pays no separate fee. Some brokers do charge fees, particularly for complex work, and they should say so up front. The useful question is not whether the broker is paid, but how, and whether the loan they help you find suits your situation.

Myth two: brokers only deal with the big four

A broker's lender panel commonly includes regional banks, credit unions, customer-owned banks and non-bank lenders as well as the major banks. That range matters most for people who sit slightly outside a typical bank's preferred profile, such as the self-employed, borrowers with irregular income or buyers of unusual properties.

Who brokers serve and how

Myth three: brokers are for people with poor credit

Brokers work with first-home buyers, upgraders, investors, people refinancing and those with complicated finances. A borrower with a strong credit history can still benefit from someone comparing features such as offset accounts, redraw, fixed and variable splits and fees across several lenders.

Myth four: they simply push the product that pays them most

Mortgage brokers in Australia must hold or be authorised under a credit licence and are subject to a best-interests duty, which requires them to put the customer's interests first when recommending a loan. Borrowers are entitled to ask how commissions work and why a particular loan was recommended, and a good broker will be comfortable explaining both.

Speed and quality

Myth five: going straight to the bank is always faster

A broker who knows lenders' documentation requirements can help an application arrive complete the first time, which often avoids back-and-forth. Speed ultimately depends on the lender's own processing and on how quickly the borrower supplies documents, so neither route is guaranteed to be quicker.

Myth six: all brokers are much the same

Experience, specialisation and local knowledge vary considerably. A Finance Broker in Melbourne who works with Victorian buyers every week, for instance, will be familiar with the state's market conditions, first-home buyer schemes and the lenders that suit different property types, which can make the process feel far more straightforward.

Things to clarify at the outset

• Which lenders can you place my loan with, and what method do you use to shortlist them?
• How are you paid, and will I pay any fees?
• What makes this particular loan a closer fit for me than the runner-up options?
• What will the total cost look like over time, not just the headline rate?

A home loan is a long-term commitment, and interest rates, repayments and property values can all move against you. Borrow only what you can comfortably repay if rates rise, read the loan documents carefully and, where your circumstances are complex, seek independent financial or legal advice before signing.