Mortgage Broker

Plain-English definition. A mortgage broker is a licensed credit professional who compares home loans across multiple lenders, recommends and applies for one on your behalf, and is paid commission by the lender on settlement.

How it works in Australia. Brokers must hold an Australian Credit Licence (ACL) or operate as a Credit Representative under one. They are regulated by ASIC under the National Consumer Credit Protection Act 2009 and have been subject to a Best Interests Duty since 1 January 2021, requiring them to act in the borrower's best interests. Commission structures are typically an upfront 0.65% of the loan plus a trail of 0.15–0.20% per year, paid by the lender — there is no extra cost to the borrower. Brokers wrote 74% of new home loans in the September 2024 quarter (MFAA data).

Concrete example. A borrower seeking $720,000 has two preferred banks but is unsure which is cheapest. A broker checks 30+ lenders, identifies a non-major offering 5.94% with no annual fee and a $4,000 cashback — saving roughly $1,800/year vs. the borrower's existing bank's 6.24% rate. The broker earns $4,680 upfront from the lender plus ongoing trail; the borrower pays nothing extra and saves more than $50,000 of interest over 30 years.

Common confusion. Borrowers worry brokers push them to higher-commission lenders. The Best Interests Duty makes that legally risky — written records of why a recommendation was made are required. But not all brokers have the same lender panel: a small broker with 12 lenders may miss better deals from the next 18.