Mortgages FAQs

A bank can only offer you its own products. A mortgage broker has access to dozens of lenders and can compare rates, fees, features, and lending policies across the market in a single conversation. For most borrowers, that's a meaningful advantage — particularly when your situation is anything other than straightforward, because lenders have very different appetites for self-employed income, rental income, complex structures, or higher loan-to-value ratios. Brokers in Australia operate under a Best Interests Duty that legally requires them to act in the borrower's interests rather than the lender's. There's no direct cost to the borrower for using one — brokers are paid by the lender on settlement.

Borrowing capacity depends on the factors lenders use to assess serviceability — your income, existing debts, living expenses, dependants, the property's purpose (owner-occupied or investment), the loan structure, and the lender's specific policies. Two lenders can produce materially different borrowing capacities for the same applicant because each weighs these inputs differently. Online calculators give a rough indication but rarely match what a lender will actually approve, because they don't account for lender-specific policies or current rate buffers. The most reliable way to get a real number is a proper assessment with a broker who can model your circumstances against multiple lenders.

There's typically no direct cost to the borrower. Brokers are paid by the lender as a commission on settlement, with the rate determined by the lender — not negotiated between you and the broker. This is the same commission structure across the industry, and Australian regulation requires brokers to disclose it. The borrower's cost of the loan is the same whether you go through a broker or directly to the bank — the bank pays the commission either way; if you go direct, the bank simply keeps it. The broker's service is genuinely free to the borrower in almost all cases.

Each suits different priorities. A fixed rate gives you certainty about your repayments for the fixed period, which can be valuable if cashflow is tight or you're at the limit of what's affordable. A variable rate gives you flexibility — you can usually make extra repayments, redraw, and benefit if rates fall, but you also wear the cost if they rise. Many borrowers split their loan between fixed and variable to balance the two. The right answer depends on your view on rates, your risk tolerance, your cashflow, and whether you're likely to sell or refinance during the fixed period — fixed loans can have significant break costs.

The financial logic is different. Investment property loans typically have higher interest rates and stricter lending criteria than owner-occupied loans, because lenders consider them higher risk. Interest on the investment loan is generally tax-deductible, which significantly changes the after-tax cost of borrowing. The property's rental income contributes to serviceability in lenders' calculations, but is often discounted (typically by 20-25%) to account for vacancy and expenses. Loan structure matters more for investment properties — interest-only periods, offset accounts, and ownership structure (personal name, company, trust, or SMSF) all affect the tax outcome and need to be considered before signing the loan documents.

The most common triggers are: a fixed-rate period expiring (the rollover rate is rarely the most competitive available), a material gap between your current rate and the market, accumulating equity that lets you access better LVR pricing, or a change in circumstances that means your current loan structure no longer fits. Refinancing has costs — discharge fees, government charges, and any application costs at the new lender — so the saving needs to outweigh the switching cost. As a rough guide, if you haven't reviewed your loan in the last two years, it's worth a check. Lenders compete hardest for new business, which often means existing customers pay more than necessary.