How Does a Mortgage Broker Actually Work?

Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited

What does a mortgage broker actually do?

A mortgage broker acts as an intermediary between you and multiple lenders. Instead of you walking into one bank and taking whatever rate they offer, a broker compares products from 20 to 60+ lenders, identifies which ones suit your specific financial situation, and manages the entire application through to settlement.

They handle the paperwork, chase up valuations, negotiate with credit assessors, and keep you updated throughout. The broker does not lend money directly. They find the right lender for you, prepare and submit the application, and manage the process until your loan settles.

At Lend and Loan, John personally reviews every application before submission to maximise approval chances. This matters because the way an application is presented to a lender can be the difference between approval and decline.

Do I have to pay a mortgage broker?

No. In Australia, mortgage brokers are paid a commission by the lender you choose, not by you. The commission is typically 0.5% to 0.7% of the loan amount (upfront) plus a smaller trailing commission of 0.15% to 0.2% per year. This means a broker is financially motivated to get your loan approved and to keep you happy long-term.

The lender builds this cost into their standard pricing. You do not pay a higher interest rate by using a broker. The rate you receive through a broker is the same rate you would receive going direct, and in many cases better, because brokers have volume-based pricing agreements with lenders.

At Lend and Loan, our service is completely free to borrowers. You pay nothing, ever.

Is it better to use a mortgage broker or go direct to the bank?

For most borrowers, a broker delivers a better outcome. A bank can only offer you their own products. A broker compares products across 50+ lenders and finds the combination of rate, features, and approval likelihood that suits your situation.

This is particularly true for borrowers with non-standard income (self-employed, contractors, commission earners), complex scenarios (multiple properties, trusts, SMSF), or borrowers who simply want confirmation they are getting the best deal.

74% of all home loans in Australia are now written through brokers, up from 55% a decade ago. That shift reflects the value borrowers are getting. When you go direct to a bank, that bank will never tell you a competitor has a better product. A broker will.

How does a mortgage broker choose which lender to recommend?

Under the Best Interests Duty (introduced 2021), brokers are legally required to recommend products that are in your best interest, not the lender that pays the highest commission. At Lend and Loan, we document why a specific lender was recommended for every client.

The selection is based on:

• Interest rate: The headline rate and the comparison rate, which includes fees.
• Loan features: Offset accounts, redraw facilities, extra repayment flexibility.
• Approval likelihood: Different lenders have different credit policies. A lender that suits a self-employed borrower may not be the best for a PAYG employee, and vice versa.
• Turnaround time: Some lenders approve in 2 days, others take 3 weeks. If you are buying at auction, speed matters.
• Special policies: LMI waivers for professionals, parental leave policies, self-employed lending criteria.

We show you the comparison so you can see exactly why a particular lender was recommended.

What is the Best Interests Duty and how does it protect me?

The Best Interests Duty (BID) is a legal obligation that requires mortgage brokers to act in the best interests of the borrower when recommending a loan product. It was introduced in January 2021 under the National Consumer Credit Protection Act.

If a broker recommends a product that is not in your best interest, they face penalties including loss of their credit licence. This is enforced by ASIC (the Australian Securities and Investments Commission).

Banks are not subject to this same duty. A bank lender is only required to ensure the loan is "not unsuitable" for you, which is a much lower bar. This is one of the key regulatory differences between using a broker and going direct to a bank. A broker must act in your best interest. A bank only needs to avoid giving you something clearly wrong.

How long does it take to get a home loan through a broker?

The typical timeline from first conversation to settlement is 4 to 6 weeks for a straightforward purchase or refinance. Here is how the timeline breaks down:

• Initial consultation and strategy: Same day or next business day.
• Pre-approval: 1 to 5 business days, depending on the lender.
• Full approval (after you find a property): 3 to 10 business days, depending on the lender and complexity.
• Settlement: 2 to 6 weeks, depending on the contract terms.

Complex scenarios (self-employed, multiple properties, trusts) may take longer. A good broker manages the timeline actively, chasing up lenders and keeping the process moving. At Lend and Loan, you get direct access to John throughout, not a call centre.

What documents do I need to give a mortgage broker?

Your broker will tell you exactly what is needed upfront so there are no surprises. The standard document list depends on your employment type.

For PAYG employees

• 2 most recent payslips
• Most recent tax return or tax assessment notice (ATO MyGov)
• 3 months of bank statements (all accounts)
• Photo ID (passport or driver licence)
• Details of any existing debts (credit cards, personal loans, car loans)

For self-employed borrowers

• 2 years of personal and business tax returns
• 2 years of business financials (profit and loss, balance sheet)
• 6 to 12 months of BAS statements
• ABN registration
• Photo ID and bank statements (same as PAYG)

If you do not have the standard documents, alternative options exist. Alt doc and low doc loans allow self-employed borrowers to use BAS statements or accountant declarations instead of full tax returns.

Can a mortgage broker help if I have been declined by a bank?

Yes, and this is one of the most valuable things a broker does. A bank decline means that specific bank said no based on their specific credit policy. It does not mean every lender will say no.

Different lenders have different credit policies, different risk appetites, and different ways of assessing income. A broker who knows the policies of 50+ lenders can often find one that fits your situation.

Common reasons for bank declines that a broker can often resolve include:

• Self-employed income: Some lenders are far more generous in how they assess business income.
• Short employment history: Some lenders require 6 months in a role, others accept day one of a new job.
• Credit history issues: Specialist lenders exist for borrowers with past defaults or credit impairment.
• Complex income: Commission, bonuses, rental income, and overtime are assessed differently by different lenders.

At Lend and Loan, a significant portion of our clients come to us after being declined elsewhere. We find them a path forward.

What questions should I ask a mortgage broker before choosing one?

Choosing the right broker matters. Here are the questions to ask before you commit:

• How many lenders do you compare? The more the better. 30+ is strong. Fewer than 15 means limited options.
• Are you MFAA or FBAA accredited? This confirms they meet industry standards and ongoing education requirements.
• Do you specialise in any particular area? Self-employed lending, investment structuring, and medical professional LMI waivers all require specific expertise.
• How do you communicate and how often will I get updates? You want a broker who is responsive and proactive, not one who disappears after submission.
• Can you show me the comparison of products you considered? A good broker will show you why they recommended a specific lender over others.
• Will you handle the entire process through to settlement? Some brokers hand off to a processor after submission. You want to know who is managing your file.

A good broker will answer all of these confidently and show you their process upfront.