You’re ready to apply for a home loan. Your bank wants you to walk into a branch. A friend swears by the broker they used through Aussie Home Loans. A colleague tells you an independent broker saved them thousands during refinancing.
So which route is actually best?
In Australia, you can get a home loan in three main ways: directly through a bank, through a franchise mortgage broker, or through an independent mortgage broker. On the surface they can look similar, but the differences around lender access, service, incentives, and long-term support are significant.
This matters more than ever in Sydney’s 2026 property market, where borrowing capacity, lender policy, and loan structure can change your outcome by hundreds of thousands of dollars over time.
In this guide, we’ll break down the real differences between bank direct, franchise brokers, and independent brokers, including how each gets paid, what the Best Interests Duty actually means, and which route makes the most sense depending on your situation.
At Australian Financial & Mortgage Solutions, principal broker Andrew Hadjidemetri has personally managed more than $700M in loans and was ranked a Top 10 Broker in Australia in 2025, but this article is designed to educate first, not sell.
Key Takeaways
- Going direct to a bank limits you to one lender’s products and policies.
- Franchise brokers like Aussie Home Loans, Mortgage Choice, and Smartline operate under large national networks with curated lender panels.
- Independent mortgage brokers typically have access to 30–60+ lenders and broader policy flexibility.
- Mortgage brokers in Australia are generally paid by lenders, not borrowers.
- Existing bank customers often pay higher “back-book” rates over time without realising it.
- First home buyers, refinancers, investors, and self-employed borrowers usually benefit most from broker access and lender-policy expertise.
- Borrowers with very simple PAYG income and strong banking relationships may still do well going direct.
The Three Home Loan Routes Explained
In Australia, you can arrange a home loan through one of three routes – through an independent mortgage broker, through a franchise broker operating under a national network brand, or directly with a bank.
These three options can appear similar from the outside, but they operate very differently once you look under the surface. The biggest differences come down to lender access, service continuity, incentives, and how much comparison is actually happening on your behalf.
If you’re still learning the basics, it also helps to understand what a mortgage broker actually does before comparing the routes.
Using an Independent Mortgage Broker
An independent mortgage broker operates outside a major franchise network and usually has access to a wider lender panel than franchise groups or banks.
Independent brokers either hold their own Australian Credit Licence or operate through a smaller aggregator structure. They are not tied to head-office sales targets, corporate KPIs, or a parent-company lending agenda.
In practice, this usually means access to 30-60+ lenders across major banks, second-tier lenders, non-bank lenders, and specialist credit providers.
Another major difference is service continuity. In many independent firms, the person you meet is the same person managing your application through settlement and beyond.
At AFMS Group, for example, principal broker Andrew Hadjidemetri remains directly involved in client strategy and has helped build more than 490+ five-star reviews through a highly personalised service model.
Going Direct to a Bank
Going direct means you deal with one lender only.
If you walk into Commonwealth Bank, you will only be offered Commonwealth Bank products. The same applies to NAB, ANZ, Westpac, Macquarie, ING, Bankwest, and regional lenders.
The lender or branch staff member works for the bank and is incentivised to sell that bank’s products.
That does not automatically make going direct a bad option. Some borrowers with strong existing banking relationships or private banking access can secure competitive outcomes.
The limitation is simple: there is no market comparison happening.
If another lender has a better policy, lower repayments, stronger borrowing capacity, or a more suitable structure, your bank lender will not recommend it.
If you want to understand the broader lending landscape, it’s worth reading big banks vs second-tier lenders.
Using a Franchise Broker
Franchise mortgage brokers operate under large national brands such as Aussie Home Loans, Mortgage Choice, or Smartline.
These brokers work under the franchise network’s credit licence and lender panel, which is usually curated by head office and often sits around 20-30 lenders.
As of 2026, Lendi Group owns both Aussie Home Loans and Mortgage Choice.
The practical implication is that franchise brokers operate inside a corporate sales structure. They may have network KPIs, preferred lender relationships, or commercial targets set by head office.
That does not mean the advice is automatically poor. Franchise brokers are still bound by the Best Interests Duty and can absolutely help many borrowers successfully.
But compared with independent brokers, franchise networks usually offer smaller lender panels and less flexibility.
Mortgage Broker vs Bank vs Franchise Broker: At a Glance
All three routes are usually free to the borrower, commissions are paid by lenders, not by you.
Feature | Big Bank | Franchise Broker | Independent Broker |
Lender Panel Size | 1 lender | Typically 20-30 lenders | Typically 30-60 lenders |
Who they work for | The bank | Franchise network | Their own business and the client |
How they’re paid | Salary + bonuses | Lender commissions + network override | Lender commissions |
Best Interests Duty Applies | No | Yes | Yes |
Commercial KPI Pressure | High | Medium | Low |
Service Continuity | Staff may change | Franchise/Team dependent | Usually same broker throughout |
Typical cost to you | None | None | None |
Suits you if | Simple application and strong bank relationship | You want a recognised brand | You want broad comparison and strategic advice |
Avoid if | You want market comparison | You want maximum independence | You only want one specific bank |
The biggest misconception in the Australian mortgage market is that “a broker is a broker”.
In reality, there is a substantial difference between an independent broker comparing a wide lender panel and a franchise broker operating inside a national network structure.
Lender Panel Access: Who Compares What for You?
Lender panel size is the single biggest practical difference between the three routes, and the easiest one to verify before you commit.
Different lenders have dramatically different credit policies.
One lender may accept overtime income at 100%. Another may shade it heavily. One lender may support self-employed borrowers after one year of financials. Another may require two years plus stricter servicing buffers.
These policy differences matter far more than most borrowers realise.
A bank direct lender compares one lender.
A franchise broker usually compares around 20-30 lenders.
An independent broker often compares 30-60+ lenders, including specialist non-bank and niche lenders.
This becomes especially important for:
- First home buyers with HELP debt
- Self-employed applicants
- Investors building portfolios
- Borrowers needing high-LVR lending
- Complex family trust or SMSF structures
- Refinancers trying to maximise borrowing capacity
Mortgage brokers now write more than 70% of Australian home loans, largely because borrowers increasingly value lender comparison and policy expertise.
AFMS Group works across a broad lender panel specifically because different lenders fit different situations.
If you are not sure which lender policy actually fits your circumstances, speaking with someone who compares the wider market can save substantial time and money.
How Each Route Charges You (and What That Means for the Deal You Get)
In Australia, mortgage brokers are generally paid by lenders, not borrowers. Bank staff are paid by their employer. From the borrower’s perspective, all three routes usually cost nothing upfront.
The important part is not the cost itself, it is how the payment structure shapes the recommendation you receive.
Broker Commissions Explained: Upfront, Trail, and Clawback
Mortgage brokers are typically paid three ways.
- The first is upfront commission, paid when the loan settles. This is usually around 0.5-0.7% of the loan amount.
- The second is trail commission, which is an ongoing annual payment usually around 0.15-0.2%. Trail exists to support ongoing service, annual reviews, and repricing assistance.
- The third is clawback.
If a borrower refinances or repays the loan within roughly two years, the lender can claw back some or all of the upfront commission from the broker.
This is important because it discourages unnecessary refinancing churn.
Combined with Australia’s Best Interests Duty laws, clawback creates a system where brokers are generally incentivised to place borrowers into sustainable long-term solutions rather than constantly moving loans around.
One subtle difference rarely discussed online is how franchise structures work.
Independent brokers usually retain their commissions directly through their business. Franchise brokers commonly split commissions with the parent network or head office, sometimes by 20-30%.
That commercial structure can create different operating pressures between franchise networks and independent firms.
Bank Direct: Where the ‘Loyalty Tax’ Sneaks In
Banks often reserve their sharpest pricing for new customers.
Existing customers, particularly those who have not reviewed their loan in years, frequently drift onto higher “back-book” rates over time.
This is commonly referred to as the loyalty tax.
RBA reporting has previously shown meaningful gaps between front-book and back-book mortgage rates.
On larger Sydney loan balances, even a modest rate difference can mean thousands of dollars per year in additional repayments.
Most bank customers never proactively receive rate reviews unless they ask.
Independent brokers, by contrast, usually build annual rate reviews into their service model because ongoing trail commission supports that relationship.
If you suspect your rate may no longer be competitive, it may be worth exploring options to refinance your home loan.
The Best Interests Duty: What It Actually Means When You Get Advice
Since January 2021, Australian mortgage brokers have been legally required to act in the best interests of borrowers under the Best Interests Duty (BID). Bank lenders are not bound by BID because they sell their employer’s products only.
Under BID, brokers must be able to demonstrate why their recommendation was suitable for the client’s objectives, needs, and financial situation.
ASIC can enforce these obligations, and brokers must document their reasoning carefully.
This changed the mortgage industry significantly.
Prior to BID, critics argued brokers could simply recommend whichever lender paid the highest commission. Today, brokers must justify why the chosen lender was appropriate.
The interesting nuance is how BID operates inside different business structures.
A franchise broker may still act fully within BID obligations, but they are operating inside a curated lender panel with corporate KPIs and network structures.
An independent broker with broader lender access may simply have more options available when forming a recommendation.
The law is identical.
The operating environment is not.
For borrowers wanting to understand the regulator’s guidance MoneySmart’s mortgage broker information is a useful starting point.
Pros and Cons of Each Route
Each route has legitimate advantages.
The right choice depends less on abstract “best option” arguments and more on your personal situation, complexity, and priorities.
Bank Direct: Pros and Cons
Pros
- Existing relationship discounts may apply
- Simpler process for straightforward PAYG borrowers
- Direct communication with the lender
- Some occasional bank-direct promotional pricing exists
Cons
- Only one lender is being compared
- No Best Interests Duty obligation
- Loyalty tax risk increases over time
- You handle most lender comparison yourself
- Staff turnover can impact continuity
- Policy limitations may reduce borrowing capacity unnecessarily
Franchise Broker: Pros and Cons
Pros
- Recognisable national brands feel reassuring
- Wider lender access than one bank
- Convenient branch-style locations
- Familiar process for first-time broker users
Cons
- Smaller lender panels than most independent brokers
- Network KPIs may influence recommendations
- Commission-sharing with parent networks
- Service continuity varies between franchise offices
- Parent-company ownership structures can create conflict
Independent Broker: Pros and Cons
Pros
- Widest lender access
- Principal-led service continuity
- No franchise-network sales pressure
- Stronger flexibility for complex lending
- Often highly specialised in local markets and niche scenarios
Cons
- Less brand recognition than national franchises
- Smaller marketing budgets can make discovery harder
- Quality varies significantly between independent brokers
That is why reviews, credentials, and experience matter.
At AFMS Group, for example, clients often discover the business through referrals or is it worth using a broker style research before engaging.
style research before engaging.
When Each Option Makes the Most Sense
There is no universally best route, but there is a best route for your specific situation.
The biggest factors are:
- Complexity of your application
- Whether you want market comparison
- How important ongoing support is to you
When a Bank Direct Application Works
Going direct can absolutely work for some borrowers.
This is particularly true when:
- You have a strong private banking relationship
- Your income is straightforward PAYG
- Your deposit exceeds 20%
- You are simply testing your current bank’s offer first
- You are refinancing internally and receiving a genuinely competitive retention offer
Even in these situations, getting a second opinion from a broker costs nothing and can still provide useful leverage.
When a Franchise Broker Is a Reasonable Choice
Franchise brokers suit borrowers who value brand familiarity.
This can make sense if:
- You are a first-time borrower wanting a recognisable name
- You prefer a shopping-centre or branch-style experience
- You already have a trusted relationship with a specific franchise broker
In most situations, independent brokers will still offer broader lender access, but franchise brokers remain a legitimate option for borrowers prioritising familiarity and convenience.
When an Independent Broker Wins
Independent brokers tend to perform best in more strategic or complex lending situations.
Examples include:
- Self-employed income
- Contractors and commission-based income
- First home buyers using government schemes
- Investors building multi-property portfolios
- SMSF lending
- Refinancers wanting ongoing rate reviews
- Borrowers needing specialist lender policy expertise
This is where lender-policy knowledge becomes extremely valuable.
At AFMS Group, much of the work involves helping Sydney borrowers navigate complex investment structures, refinancing strategies, and borrowing-capacity optimisation across multiple lenders.
Sydney Scenarios: Which Route Works When?
The abstract pros and cons matter less than how each route performs in real Sydney situations.
Here are three examples that play out regularly in 2026.
First Home Buyer Looking at Randwick or Coogee
A professional couple earning $160K combined with a $120K deposit is looking at a $1.1M apartment.
One applicant is PAYG. The other is a contractor.
The challenges:
- First Home Guarantee eligibility
- High-LVR lending
- Variable income treatment
- Stamp duty considerations
- Lender policy differences
A bank direct lender compares one policy only.
A franchise broker may compare several participating lenders.
An independent broker can compare the full range of participating and non-participating lenders to determine whether the scheme actually helps, or whether alternative structures work better.
This is where broader lender access matters enormously.
Borrowers in these situations often also benefit from guidance around how to get pre-approved for a home loan before committing to a property search.
Inner West Refinancer Coming Off a Fixed Rate
A Marrickville homeowner with a fixed loan ending in 2026 suddenly reverts to a much higher variable rate.
They have stayed with the same lender since 2019.
Their bank may offer a retention discount, but not necessarily the sharpest market rate.
This is where the loyalty tax becomes real.
A franchise broker can compare a meaningful portion of the market.
An independent broker can compare even broader options, assess break costs properly, negotiate lender pricing, and benchmark the loan against the wider market.
The ongoing annual review process is often where independent brokers deliver the most long-term value.
Self-Employed Investor Building a Portfolio
A self-employed borrower with two existing investment properties wants to buy a third.
Their tax returns show strong income, but several major banks shade or restrict that income heavily under servicing calculators.
This is where lender policy expertise matters far more than headline rates.
A bank lender compares one servicing model.
A franchise broker may have access to some specialist lenders.
An independent broker can compare major banks alongside lenders such as Pepper, Liberty, Resimac, and La Trobe, which often assess self-employed borrowers differently.
More importantly, experienced independent brokers can help structure:
- Equity releases
- Cross-collateralisation avoidance
- Trust lending
- SMSF lending strategies
- Future borrowing-capacity planning
That strategic element becomes critical once portfolios become more complex.
Frequently Asked Questions
Is It Better to Use a Mortgage Broker or Go Directly to a Bank?
For most Australian borrowers in 2026, an independent mortgage broker offers the stronger overall outcome because they compare multiple lenders and are legally bound by the Best Interests Duty.
Going direct can still work well for borrowers with simple applications and strong banking relationships.
Do Mortgage Brokers Get Better Deals Than Banks?
Often yes, not because they have secret rates, but because they compare many lenders and understand which lender policy best fits your situation.
Banks only offer their own products.
What Does a Mortgage Broker Do That I Can’t Do on Canstar?
Comparison sites list rates. Brokers arrange loans.
A broker:
- Assesses your situation against lender policy
- Submits the application
- Negotiates pricing
- Handles lender communication
- Supports settlement
- Conducts ongoing reviews
A comparison site cannot tell you whether a lender will actually approve your application.
AFMS Group actively encourages clients to research rates before consultations because informed borrowers ask better questions.
What Are the Disadvantages of Using a Mortgage Broker?
No broker has every lender in Australia.
Some lenders remain direct-only, and brokers cannot guarantee approval outcomes.
The good news is broker commissions do not typically increase your interest rate, lenders price products similarly across broker and direct channels.
Are Franchise Mortgage Brokers Like Aussie or Mortgage Choice the Same as Independent Brokers?
No. They operate under the same regulatory framework and Best Interests Duty, but franchise brokers work within national network structures with curated lender panels and corporate KPIs.
Independent brokers generally offer broader lender access and greater operational independence.
How Much Does a Mortgage Broker Cost the Borrower?
In most residential lending situations, nothing.
Mortgage brokers are usually paid by lenders through upfront and trail commissions after settlement.
Some complex commercial or specialist lending scenarios may involve disclosed brokerage fees.
Can a Broker Get Me Approved if My Bank Said No?
Often yes. Different lenders have different credit policies.
A decline from one lender does not automatically mean the wider market will decline the application too.
Get Expert Guidance for Your Next Sydney Home Loan
The mortgage broker vs bank debate is no longer just a two-way comparison.
In 2026, the real decision is between:
- Going direct to one bank
- Using a franchise broker
- Working with an independent mortgage broker
The right route depends on your situation, complexity, and priorities, not on which company has the biggest billboard.
For borrowers wanting broader lender access, strategic guidance, and ongoing support, independent brokers are increasingly becoming the preferred option across Sydney.
If you want tailored guidance for your next purchase, refinance, or investment strategy, explore Sydney home loan broker services or review these questions to ask a mortgage broker before choosing who to work with.
You can also call Australian Financial & Mortgage Solutions on 1300 659 756 or request a free CoreLogic property report as a no-obligation starting point.
Author: Andrew Hadjidemetri – Principal Mortgage Broker, AFMS Group. Top 10 Broker in Australia (MPA 2025) | $700M+ in loans personally managed | 490+ five-star reviews | MFAA member | Australian Credit Licence 389087.
This is general information only and does not constitute financial or credit advice. Speak to a licensed mortgage broker about your individual circumstances.