Top 5 Mortgage Broker Myths Debunked
If you’re exploring home loan options, you’ve probably heard a few mixed opinions about mortgage brokers. Some people worry that brokers are expensive, biased, or only useful for first-home buyers. Others think it’s safer to stick with their bank. But most of these ideas are based on outdated or incorrect information.
The truth is, mortgage brokers play a valuable role in helping borrowers find the right home loan, often at no cost to the client. In this article, we break down five of the most common myths about mortgage brokers and explain how the process really works in 2025.
Myth 1: Mortgage Brokers Are Expensive to Use
One of the biggest misconceptions is that using a mortgage broker means paying extra fees. In reality, at Capitol Home Loans we provide our expert services at no cost to the borrower, in fact this is often the case with most brokers. That’s because brokers are paid by the lender after your loan settles. You're not charged more for using a broker than you would be if you went straight to the bank, and you still get access to competitive rates. Some brokers may charge a fee for highly complex or commercial lending scenarios, but this is rare when it comes to standard home loans. It’s always worth asking upfront, transparency is key.
Myth 2: Brokers Only Work With a Small Pool of Lenders
It’s easy to assume that brokers have limited options, but the opposite is true. Most brokers have access to a panel of 40+ lenders, including the big four banks, smaller lenders, credit unions, and specialist providers. This allows them to compare a wide range of loan products and features to suit different needs. Unlike bank staff who only offer their own products, brokers can access exclusive deals and provide independent recommendations tailored to your situation.
Myth 3: You’ll Get a Better Deal Going Directly to a Bank
Some people believe banks will offer better rates to customers who approach them directly, but that’s often not the case. Mortgage brokers can negotiate on your behalf and may have access to discounted interest rates or loan packages not advertised to the public. And if your application doesn’t meet the criteria of one lender, a broker can quickly pivot to another option, something you can’t do as easily on your own. Banks won’t tell you if a competitor offers a better deal, but a broker will.
Myth 4: Brokers Are Only for First-Home Buyers
While brokers are incredibly helpful for first-home buyers, especially when it comes to understanding grants and deposit options, they also assist a wide range of borrowers. Homeowners looking to refinance, investors building a portfolio, and self-employed borrowers all benefit from a broker’s ability to find loans suited to their circumstances. Whether it’s accessing equity, restructuring for tax purposes, or simply saving on interest, a broker can offer insights and options you might not discover on your own.
Myth 5: Brokers Only Recommend Loans That Benefit Them
Another common myth is that brokers are just salespeople trying to earn a commission. But in Australia, mortgage brokers are legally bound by the Best Interests Duty. This means they must act in your best interests when recommending a loan, not theirs. Brokers are expected to provide a clear explanation of why a specific product is being recommended, taking your goals and financial situation into account. If a broker isn’t being transparent or seems to be pushing one option, it’s okay to ask questions, or find one who better prioritises your needs.
Why Use a Mortgage Broker Instead of Going to a Bank?
The biggest advantage of using a broker is choice. Instead of being limited to one lender’s products, you get access to a wide range of home loans across the market. Brokers do the heavy lifting, comparing rates, reviewing fees, helping with paperwork, and liaising with lenders on your behalf. If you’re self-employed, have a lower deposit, or don’t meet standard bank criteria, a broker can identify lenders who are more flexible.
Take Emma, for example. She approached her bank and was offered a 6% interest rate on a $500,000 loan. After speaking with a broker, she was matched with a lender offering 5.5%, with an offset account. That half a percent difference saved her over $50,000 in interest over the life of her loan.
Final Thoughts: Should You Use a Mortgage Broker?
If you’re looking for the right home loan, whether you’re buying your first home or refinancing, a mortgage broker can be your greatest asset. They offer more choice, expert advice, and can often negotiate better terms, all without charging you a cent. And in a lending environment that continues to evolve in 2025, having someone on your side who understands the market is invaluable.
How We Can Help
We work with over 20 lenders to match you with the right home loan, based on your goals, your budget, and your lifestyle. Whether you’re saving for your first home or ready to refinance, we’ll take care of the paperwork, compare your options, and guide you through every step of the loan process.
