What Does a Mortgage Broker Actually Do?

The short answer

A mortgage broker is a licensed credit professional who acts as a go-between for you and a panel of lenders. Instead of applying directly to a single bank, you give your information once to the broker, who then matches you to lenders on their panel, prepares the application, negotiates pricing, and runs the file through to settlement. In Australia they are paid by the lender — not by you — and they are legally required to act in your best interests under the National Consumer Credit Protection Act 2009.

The five-step process on a typical file

Almost every broker engagement follows the same shape, whether you're buying your first apartment or refinancing an investment portfolio. Knowing the steps helps you spot a broker who is cutting corners.

• Intake — a fact-find covering income, expenses, deposit source, existing debts, and the property goal. Expect to provide payslips, tax returns, bank statements, and ID.
• Research — the broker runs your numbers against their lender panel's serviceability calculators and policy rules to shortlist three to five options.
• Preapproval — once you've picked a lender, the broker submits a conditional approval application so you can bid or make offers with confidence on a price ceiling.
• Full application and submission — after you find a property, the broker packages the contract, valuation order, and supporting documents and submits to the chosen lender for unconditional approval.
• Settlement liaison — the broker chases the lender, coordinates with your conveyancer or solicitor on the settlement date, and confirms funds are ready. Post-settlement, a good broker reviews your rate annually.

Who is allowed to call themselves a mortgage broker

In Australia, anyone giving credit assistance for a home loan must operate under an Australian Credit Licence (ACL) issued by ASIC. Most individual brokers don't hold the licence themselves — they operate as a Credit Representative authorised under a larger licensee, typically an aggregator group. Either way, the licence number must appear in the broker's credit guide, which they're required to give you at first meeting. You can verify any broker's current status free on the ASIC Connect public register before you sign anything.

Best Interests Duty — what it actually means

Since 1 January 2021, mortgage brokers in Australia have been bound by a Best Interests Duty (BID) under the National Consumer Credit Protection Act. In plain English, BID means three things. First, the broker must recommend a loan that is in your best interests — not the loan that pays them the highest commission, and not the loan that's easiest to get approved. Second, if there's a conflict between your interests and theirs, yours wins. Third, the broker has to document why they recommended what they recommended, which means you're entitled to a written rationale showing the lenders they compared. If a broker can't produce that comparison on request, they're not meeting their obligations.

The lender panel and why it matters

A broker can only place your loan with a lender on their panel. Panel size varies — most brokers have access to 20 to 40 lenders through their aggregator group, covering the four major banks, the second-tier banks, credit unions, customer-owned banks, and non-bank lenders. A few details about panels worth understanding:

• Aggregator-tied brokers operate under a parent group that maintains the panel — this covers most brokers in the market, and panel size is usually 25 to 35 lenders.
• Fully independent brokers (rarer) maintain their own lender accreditations directly and may have a smaller but more curated panel.
• No broker has access to every lender in Australia — some online-only lenders deliberately bypass the broker channel.
• Some specialist lenders (commercial, non-conforming, expat) are only accessible through accredited brokers and won't deal direct with retail borrowers at all.

How brokers get paid

This is the part most borrowers misunderstand. In Australia, the lender — not the borrower — pays the broker. Commission has two components. Upfront commission is roughly 0.65% of the loan amount, paid once on settlement. Trail commission is roughly 0.15% to 0.20% per year of the outstanding balance, paid monthly for as long as the loan stays with that lender. On a $700,000 loan, that's about $4,550 upfront and roughly $1,050 to $1,400 a year in trail. The rates you're quoted by the bank are the same whether you go through a broker or walk in off the street — the commission comes out of the lender's margin, not added to your rate. Some brokers also operate a fee-for-service model, usually for complex commercial files, expat applications, or low-doc loans where commissions are lower or unavailable. That fee should be disclosed in writing before any work starts.

When a broker is worth it — and when going direct is fine

A broker adds the most value when your file is unusual or competitive. Use a broker when you're a first home buyer juggling government schemes, self-employed with variable income, buying with a guarantor, refinancing across lenders to chase a better rate, or stretching your serviceability where one bank says no and another might say yes. Going direct to a bank is fine when you already have a long banking relationship at competitive pricing, your file is genuinely simple (PAYG income, 20%+ deposit, no dependants), or you're using a digital-only lender that doesn't pay broker commissions. The cost to you is the same either way — what differs is who does the running around.

Red flags when choosing a broker

Most brokers in the market are competent and follow BID without prompting. A few don't. Walk away if you see any of these:

• No written credit guide handed over at first meeting (it's a legal requirement)
• Refusal to show you which lenders they compared and why they recommended one over the others
• A recommendation pushed before they've seen your payslips, tax returns, and bank statements
• Pressure to add features (offset, redraw, fixed-rate splits) you didn't ask about and don't need
• A fee-for-service charge that isn't disclosed upfront in writing
• An ACL or Credit Representative number that doesn't appear on the ASIC Connect register
• A track record of only ever placing loans with the same one or two lenders, regardless of client circumstances

How to verify a broker is currently licensed

Go to the ASIC Connect Professional Registers search. Pick "Credit Licensee" or "Credit Representative" and enter the broker's name, business name, or licence number. The register shows whether the licence is current, suspended, or cancelled, and lists any conditions ASIC has placed on it. The check takes 30 seconds and is free. Do this before you hand over identity documents or sign a credit assistance agreement — not after.

FAQ

Frequently asked questions