Are mortgage brokers a rip off?
We bust the myths
“Are mortgage brokers a rip off?” is a question many borrowers ask when comparing home loans, especially when deciding whether to go to the bank directly or work with a broker.
Some people believe mortgage brokers charge higher fees, push loans that benefit them, or cost more than dealing with a bank. Others assume brokers add unnecessary cost to the home loan process.
According to The Property Education Company, these concerns usually stem from misunderstandings about how brokers are paid, how the home loan market works, and how Australian lending laws protect borrowers.
In this article, I’ll explain how mortgage brokers actually operate, how fees and commissions work, and whether brokers genuinely offer value when you’re trying to compare home loans and make informed financial decisions. Keep reading, then get in touch to find out exactly how a mortgage broker can help you.
In short: Are mortgage brokers a rip off?
- Mortgage brokers are usually paid by lenders, not borrowers. Any costs to you will be explained in detail
- Interest rates are typically the same whether you go direct to a bank or use a broker
- Brokers must act in the client’s best interests under Australian law
- Brokers provide access to multiple lenders, not just one bank
- The value of a mortgage broker lies in comparison, advice and structure
Short answer:
Are mortgage brokers a rip off?
Mortgage brokers are not a rip-off!
- In many cases, brokers do not charge borrowers any fee, despite spending hours supporting them. If a service fee does apply, it will be fully explained up front.
- It’s lenders who pay the broker, not the client (via a separate fee and/or commission payment)
- Australian regulations require brokers to act in the borrower’s best interests
- Interest rates are generally the same whether you go directly to a bank or through a broker
Mortgage brokers exist to help borrowers navigate a complex market, not to inflate costs. You’re under no obligation to use a broker’s services, and we really are here with the goal of making things easier for you.
Read more: How to be home loan ready in 2026
How mortgage brokers are paid
(and who actually pays)
One of the biggest myths we hear at The Property Education Company is that brokers charge hidden or ongoing fees to home buyers.
In reality:
- Most brokers are paid an upfront commission by the lender after settlement
- This commission is built into the lender’s pricing
- Borrowers usually pay the same interest rate whether they deal directly with a bank or use a broker
- There are typically no ongoing fees paid by the client in return for a broker’s service.
There’s no rip off… at The Property Education Company, we explain to our clients that our service is similar to how insurance brokers or some financial planners operate; the service exists regardless of the channel you access it through, but a broker can help you choose the right product.
Need a mortgage broker to identify a suitable loan and help you apply for it?
We’ll guide you through step by step.
Book a first home buyer strategy call here.
Now, let’s bust some mortgage broker myths to help you understand why professionals like me are never a rip off…
Mortgage broker myth: Going directly to a bank is cheaper
Many borrowers assume dealing directly with a bank results in a lower price.
In practice:
- Banks do not offer cheaper interest rates just because you avoid a broker
- Bank staff can only offer their own loan products
- Brokers can access other lenders, not just one credit provider
- Brokers often compare loans across more than one lender
- If you want to buy a house or investment property and you only speak to one bank, you could be limiting your options.
Your broker is also your representative to the decision-makers at the bank. We know how to ‘speak their language’ and can make sure your documents are presented clearly and well. We have direct line contact with many individuals and long-established relationships with lending specialists, so you don’t have to worry about being constantly on the phone to the bank.
Myth: Mortgage brokers push loans that pay them more
After the Royal Commission several years ago, mortgage brokers became subject to the Best Interests Duty, enforced by the Australian Securities and Investments Commission (ASIC).
This means brokers must:
- Recommend loan options that are suitable for the client
- Act in the client’s best interests, not their own
- Document why a loan is recommended
- Disclose how they are paid
Brokers who breach this duty risk losing their licence, business and reputation.
At The Property Education Company, we have always prided ourselves on ethical best practices, even before the Royal Commission. We are proud to be education-first, so our clients have access to as much information as possible in order to make a highly informed decision.
Myth: Mortgage brokers are expensive to use
A broker fee may apply when:
- The loan is very small
- The structure is highly complex
- The loan will be repaid or refinanced quickly.
These fees are at the discretion of the broker.
Any fee paid to establish a home loan will be:
- Disclosed upfront
- Agreed to in writing
- Clearly explained
When you look at the amount of work involved with establishing a loan (the lead-up time can sometimes be several months), paying a service fee is justifiable. However, transparency is key. If a broker can’t clearly explain a cost involved with setting up a home loan, that’s a red flag.
Why brokers exist in the home loan market in Australia
Banks are credit providers. Brokers are advisers and intermediaries.
A bank can only:
- Offer its own loan products
- Apply its own lending policy
- Assess applications through its own criteria
A broker can:
- Compare home loans across the many lenders available to them
- Assess borrowing capacity under different policies
- Structure loans around repayments, loan terms and future plans
- Help borrowers understand the true cost of interest over time
This is why close to 80% of Australian home loans are now written through brokers. In 2025, new home loans facilitated by mortgage brokers in the June quarter reached $121.58 billion, which was the highest value for any June quarter on record.
What mortgage brokers actually do for borrowers
A good broker does far more than lodge forms.
They help home buyers to:
- Understand borrowing power and eligibility for government incentives
- Compare loan options and interest rates
- Structure loans to suit repayments and cash flow
- Navigate the loan application process
- Liaise with lenders through approval and settlement
- Support clients after settlement as circumstances change
For many borrowers, this guidance reduces stress, saves time and can lead to improved financial outcomes.
Read more: How much can I borrow for a home loan?
At the end of the day, your broker is here to support you. At The Property Education Company, our reputation is built on trust as well as education, and we are proud to have hundreds of happy clients who rely on us for ongoing service as well as initial support to secure a home loan.
FAQs About Mortgage Brokers
Do mortgage brokers charge borrowers a fee?
Brokers do not charge for standard home loans. Service fees may apply in complex cases and must be disclosed upfront.
Can brokers access better loan options than banks?
Brokers can compare loans across many lenders, while banks only offer their own products. They may not find a ‘better’ option, but at least they have done their research.
Are mortgage brokers regulated in Australia?
Yes. Brokers are regulated by ASIC and must comply with the Best Interests Duty.
Is it safer to deal directly with a bank than go to a mortgage broker?
Not necessarily. Bank staff are not required to act in your best interests in the same way brokers are.
How does The Property Education Company help borrowers?
The Property Education Company focuses on education, helping borrowers understand interest, loan structure, repayments and lender policy so they can make informed decisions before buying a home. We are happy to be transparent about how we are paid and to answer any questions you may have.
Why you need a mortgage broker on your side
Mortgage brokers are not a rip off, but misunderstanding how they’re paid and how the industry is regulated can raise these fears.
The real value of a broker is not just access to loans, but the ability to explain the financial implications clearly, compare options across the market, and help borrowers decide what makes sense for their circumstances.
In a complex home loan market, informed decisions matter more than ever.
Want to know more about how a mortgage broker can help you? Call 0468 026 200 right now or connect with The Property Education Company here.
About the author:
As an MFAA-certified finance broker, James Gregors has been helping first home buyers and other investors to build their property portfolio for many years. He is especially dedicated to helping first time buyers experience the excitement of buying their first home.
James loves learning about property opportunities then sharing what he has learnt with his clients. He has a natural flair for figures, which makes him a whiz at working out the most advantageous borrowing opportunities.
Disclaimer: This page provides general information only and has been prepared without taking into account your 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.
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Your full financial situation would need to be reviewed prior to acceptance of any offer or product.
Licensing Statement: Credit Representative 365124) is authorised under Australian Credit Licence 389328.
