Should you use a mortgage broker to refinance your home loan?
If you’re considering refinancing your home loan via a mortgage broker, here are some things to think about.

If you’re considering refinancing your home loan via a mortgage broker, here are some things to think about.
Key points:
- Mortgage brokers typically are only able to offer loans from certain providers.
- It could be wise to check deals with lenders, too.
- Mortgage brokers for refinancing are required to act in your best interests.
There are any number of reasons why you might wish to refinance your home loan. You may be coming to the end of a fixed rate period and wish to move onto another one, or you may simply be unsatisfied with your current rate or lender. Whatever the reason may be, you can find a new bank or lender on your own, or you can enlist the help of a refinance mortgage broker who may be able to find you a competitive deal.
What is a mortgage broker?
A mortgage broker is a go-between who deals with a certain selection of banks or other lenders to arrange a home loan. Their job is to gather information about the needs of their clients and to suggest lenders and products that match those needs. They then help their clients through the application, approval and settlement process of the loan.
According to the Australian Government’s Moneysmart website a good broker works with you to:
- Understand your needs and goals
- Work out what you can afford to borrow
- Find options to suit your situation
- Explain how each loan works and what it costs (for example, interest rate, features and fees)
- Apply for a loan and manage the process through to settlement.
Can I use a broker to refinance?
Yes, mortgage brokers can handle refinance home loans.
It’s important to carefully consider the pros and cons before booking an appointment with a mortgage broker, and to check that the broker you choose has the qualifications and experience necessary to provide you with quality advice and support.
For example, a potential advantage of using a mortgage broker for refinance could be convenience, as brokers tend to be knowledgeable about the home loan market, and can have access to a variety of home loan options, some of which may be suitable for your needs and situation. They may be able to help you understand the complexities of certain mortgage features, which ones could suit your needs, and which loans (from those available to them to offer you) match your circumstances.
It’s important to note that mortgage brokers typically can’t offer all loans on the market to their clients. They work with a panel of lenders, each of whom may offer a variety of different home loan options. It may be the case that a lender on your mortgage broker’s panel might offer the broker access to lower rates or better deals than might be available to the general public. It might also be the case that a broker cannot offer the most competitive deal on the market as that loan is not from a lender on their panel.
Even if you are using a broker it can pay to do your own research. While your broker is duty-bound to act in your best interests, it can still pay to ask them questions about the home loan options they recommend to you, and ask why they believe the products they’ve chosen are in your best interests.
You might even like to compare home loans that are on the market to those offered to you by your broker, to see how they stack up.
Do mortgage brokers have to act in your best interest?
Yes, mortgage brokers must act in your best interests when suggesting a loan for you. The Australian Securities and Investments Commission (ASIC) states mortgage brokers must comply with the best interests obligations as set out in the National Consumer Credit Protection Act 2009 (National Credit Act).
This means mortgage brokers are required to determine and assess the best interests of the consumer and present recommendations in line with those interests.
The best interests duty, which came into effect in 2021, requires brokers to consider your best interests when recommending a home loan product or products, keeping in mind things such as the cost of the product being recommended, and whether it has a realistic possibility of offering you the best possible benefit relative to other products on the market.
This statutory duty was introduced in response to the Banking Royal Commission, partly as an attempt to mitigate conflicts of interest that could arise between borrowers, brokers and lenders. This is in addition to another set of regulations designed to protect consumers, called Responsible Lending. These laws mandate that significant effort is made by the lender to ensure a loan is actually a good option for you.
Do mortgage brokers need to be licensed?
Yes, Moneysmart states that a broker has to have a licence to give you loan advice.
Before meeting with a broker, search the following lists on ASIC Connect’s Professional Registers to check if they are licenced:
- Credit Representative
- Credit Licensee
If the broker isn’t on one of these lists, Moneysmart says they are operating illegally.
How do mortgage brokers make money on refinances?
Mortgage brokers typically do not charge fees to borrowers, nor are they necessarily paid by their employers. Instead, they make most or all of their money by receiving commissions from banks and other lenders, and this is also the case when you use a broker to help refinance your home loan.
There are a number of ways mortgage brokers receive commissions. They can be upfront, meaning the bank or lender pays when you sign up for a home loan, or they can be so-called ‘trail’ commissions, which continue annually for the life of the loan.
Either way, mortgage broker commissions are typically calculated as a percentage of the full loan amount.
For example, a hypothetical mortgage broker might receive an upfront commission of 0.5% of the total loan amount of your refinanced home loan, plus a trail commission of 0.2% of the loan amount per year. Mortgage brokers can also receive ‘soft dollar’ benefits from banks and lenders – these are non-monetary perks, such as trips and exclusive access. Following the Banking Royal Commission, the major banks have committed to banning incentives for retail staff based directly on sales targets.
It’s also worth noting some lenders have products they sell directly that don’t provide commissions to brokers.
Do you need a mortgage broker to refinance?
If you are considering refinancing, you don’t need to use a mortgage broker.
While a mortgage broker may be able to assist you in finding a loan that suits your particular needs and budget, you can search the market and compare home loans yourself to find one that suits your needs.
Once you have found a home loan that meets your needs, you can then apply directly to the lender of your choice. This is the case even if you got your current loan through a mortgage broker. You may choose to continue your relationship with the broker, or having gone through the home loan application previously, you may have the confidence to apply directly to a lender this time around.
Is it better to deal with a mortgage broker or bank?
There is no definitive answer as to whether going through a broker or dealing directly with a bank is better when refinancing.
Ultimately, it will come down to a matter of personal preference and potentially the range of loans a broker can offer you, versus what you may be able to find by comparing options for yourself.
If you’re thinking about refinancing, you could even consider contacting your current lender directly to ask if they can offer you a more favourable rate than the one you are currently on. It may well be the case that your current lender wishes to keep you as a customer, so if you let them know you’re planning on refinancing, they may offer you a better deal.
In order to get the deal that suits you the best when refinancing your home loan, it may be advisable to consider the various options – dealing with a mortgage broker, contacting your existing lender and researching and comparing home loans for yourself. Considering all options may improve your chances of finding a home loan deal that will save you the most money.
What should you ask a mortgage broker when refinancing?
If you are refinancing with a mortgage refinance broker, there are number of key things you should consider asking, in particular:
- Are they licensed? The Federal Government’s Moneysmart website advises you to check if a broker is licensed to give credit advice. You can ask your broker directly or check with a body such as the Finance Brokers Association of Australia Limited (FBAA) or the Mortgage and Finance Association of Australia (MFAA).
- How many lenders do they deal with? While there is no hard-and-fast rule about how large a panel should be, a broker who works with several dozen lenders will naturally have more options to choose from than one who only works with a handful.
- What are their fees and commissions? While mortgage brokers are bound by statutory duty to act in your best interests, you may still wish to understand how much your broker stands to earn in commissions, and whether this will be paid upfront or annually over the lifetime of the loan.
- What will the borrowing costs be? While you may not have to pay your broker a fee, there are still costs that can come with refinancing. For example, if you are changing lenders before your fixed home loan term is up, you may be required to pay a break fee to exit your current loan. You can ask your broker or your existing lender about this and other costs that may arise.
- What type of interest rate is best for you? If you are refinancing your home loan, you likely already have some idea about whether you wish to move to a fixed or variable interest rate, or a split rate loan that combines the two. Nonetheless, a mortgage broker may be able to offer insight on what arrangement may be suitable for you.
- What is the comparison rate of the new home loan? While the interest rate of a home loan can give you a picture of what your repayments will be like, the comparison rate of the loan is designed to be a truer measure of how much it will cost, as it includes the impact of most fees and charges. It is important to consider this before refinancing to a new home loan.
- Is the loan the best one they can recommend? Moneysmart advises that when a mortgage broker recommends a home loan or home loans to you, it is worthwhile to ask if they are recommending the best loan or loans for you, and if they can potentially show you a few more loan options, including one with the lowest cost, so you can compare.
- What features are available? It may be the case that you are refinancing to take advantage of a home loan that has available features such as offset accounts and redraw facilities. If so, it is important for your broker to understand exactly the kinds of features you want in a home loan.
- What information will the lender need? When applying to refinance your home loan, your new lender will want to get a picture of your financial situation. If you wish to know more, Canstar has a guide to the kinds of documentation that banks and lenders generally want to see with a home loan application.
- What happens after you apply to refinance? It is important to keep in mind that applying for a home loan does not guarantee that you will be approved, even if your broker has recommended a particular lender to you. Your broker will be able to advise you on what happens after your refinance application is submitted.
The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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Cover image source: GaudiLab/Shutterstock.com
This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.

The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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