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How to Choose a Mortgage Broker (and the Red Flags to Avoid)
You've decided to use a mortgage broker. Choosing a good one comes down to a licence check, a few green flags, and the red flags that are simply their absence.
You’ve decided a mortgage broker is worth it. The next question is which one, and it matters more than it sounds. A broker must act in your best interests by law (ASIC MoneySmart), but that’s a floor, not a promise of the cheapest loan. Choosing well comes down to a few checks and a few warning signs.
Most of it you can verify before you commit. You can confirm a broker is licensed, see whether they compare a real range of lenders, and watch how they handle your application. This guide covers what a good broker looks like, the red flags to avoid, and the one risk worth protecting: your credit score.
Still deciding whether you need a broker at all? Broker vs going to your bank weighs that first. New to brokers? Start with what a mortgage broker does.
- Choosing well starts with one non-negotiable check: that the broker is licensed. Search ASIC’s registers before you meet.
- A good broker acts in your best interests (a legal duty, not a promise of the cheapest loan), compares a real range of lenders, and is upfront about how they’re paid.
- The clearest red flags are the absence of that: not licensed, vague on commission or fees, pushing one lender, or treating a small panel as the whole market.
- Applications affect your credit score, not using a broker itself: each is noted on your credit report, and too many in a short time can lower it, so a good broker won’t scatter applications.
- Decide you actually need a broker first, then judge the one in front of you against these. The exact questions to ask are a separate guide.
Start with the one check you can’t skip: the licence
Before anything else, confirm the broker is allowed to give you credit advice. A mortgage broker has to hold an Australian Credit Licence, or act as a representative of someone who does: a registered credit representative, or an employee or director of that licensee (ASIC MoneySmart). That is the line between a regulated professional and someone who isn’t.
You can check this yourself, before you meet. MoneySmart says to search ASIC’s Professional Registers for the Credit Licensee and Credit Representative lists (ASIC MoneySmart). An employee of a licensee may not be listed on their own, so ask which licensee they work under and check that. If no licence link holds up, treat it as a dealbreaker, not a detail.
What does a good mortgage broker look like?
A licence is the floor. Above it, a good broker shows a few consistent traits, and they’re the ones the right questions will surface.
- They act in your best interests, and can show it. That’s a legal duty, not a favour (ASIC MoneySmart), and a good broker can explain why the recommended loan fits you.
- They compare a real range of lenders. MoneySmart says a broker should present you with more than one option, not a single take-it-or-leave-it loan.
- They’re upfront about how they’re paid. For most buyers a broker is free, because the lender pays them, and any fee to you is disclosed in writing first. What that costs is in what a broker costs you.
- They protect your credit file. A good broker works out which lender you actually fit before lodging, rather than firing off applications you might fail.
Those traits are exactly what the questions to ask a broker are designed to surface. This is how to read the answers.
What are the red flags?
If the green flags are what a good broker does, the red flags are their absence. Most of these aren’t illegal on their own, but together they’re a reason to walk.
- They’re not licensed, or won’t let you check. If you can’t tie them to any licence (their own, or a licensee they work under), or they’re cagey about it, stop there.
- They push one lender, or one option. A broker who only ever lands on a single loan isn’t really comparing, and MoneySmart says you should get more than one option.
- They’re vague about how they’re paid. Commission can vary by lender, which is fine; refusing to talk about it isn’t. Any fee to you should be set out in writing up front.
- They treat a small panel as the whole market. A panel isn’t every lender, and a good broker will tell you what they can’t access, not imply they cover everything.
- They rush to lodge applications. Scattering applications across lenders can mark your credit file, which is the next section.
A broker who does one of these might just be careless. A broker who does several is one to walk away from.
Green flags come from ASIC MoneySmart; the red flags are knest.ai’s framing of their absence.
Does using a mortgage broker affect your credit score?
Not on its own, but it can, depending on how the broker works. Every time you apply for a home loan, it’s noted on your credit report, and too many applications in a short time can lower your credit score (ASIC MoneySmart). Using a broker doesn’t change that rule; how the broker works within it is what matters.
A good broker uses their knowledge of lender policies to match you to a lender you’re likely to qualify with, before lodging a formal application. A broker who instead sends your file to several lenders to see who says yes can leave a trail of applications behind. That’s the behaviour to watch, and a fair thing to ask about up front.
MoneySmart doesn’t put a number on “a short time”, and getting pre-approval can still involve a credit check, so treat any “it won’t touch your score” promise with care.
How many lenders should they compare?
There’s no magic number, but the principle is simple: the more lenders a broker can genuinely compare, the more the recommendation means. A panel of a handful isn’t the same as a panel of thirty, and neither is the whole market. That range is wide, so a claim to “compare the market” always deserves a number.
Ask how many lenders they work with, and how many they actually compared for your loan. The useful follow-up is why the recommended loan won, over the others they looked at. A good broker will have a clear answer, and the questions to ask covers how to frame it.
Before you choose, know your own position
The best way to judge a broker is to walk in knowing your own numbers. With a clear sense of your own position and what you’re trying to do, you can tell whether a recommendation fits you, or whether it just suits the broker. You can map your borrowing position before you choose with knest.ai.
And if you’re still not sure you need a broker at all, settle that first. Broker vs going straight to your bank weighs the whether, before this weighs the which.
The bottom line for buyers
Choosing a broker isn’t complicated, but it rewards a little care. Check the licence first, because nothing else matters without it. Then judge the broker the way a good one behaves: acting in your best interests, comparing a real range of lenders, being upfront about pay, and protecting your credit file. The red flags are simply the absence of those. Get your own position clear so you can tell a good recommendation from a convenient one, and you’re choosing from strength.
Get your income, deposit and goals organised with knest.ai’s free AI assistant, and see the factors a lender weighs. Then you can judge a broker’s recommendation on your own terms, rather than take it on trust.
Ask knest.aiFrequently asked questions
How do I choose a mortgage broker?
Start by checking they’re licensed on ASIC’s Professional Registers. Then judge them the way a good broker behaves: acting in your best interests, comparing a real range of lenders, giving you more than one option, and being upfront about pay (ASIC MoneySmart). The warning signs are the absence of those, plus scattering applications across lenders.
Does using a mortgage broker affect my credit score?
Not by itself. Every home-loan application is noted on your credit report, and too many applications in a short time can lower your credit score (ASIC MoneySmart). Using a broker doesn’t change that, but a good one matches you to a lender you’re likely to qualify with before lodging, rather than sending applications to several at once. Ask how they’ll handle it before you apply.
What are the warning signs of a bad mortgage broker?
The clearest red flags are the absence of good practice. You can’t tie them to a licence, they push a single lender or one option, they’re vague about how they’re paid, or they present a small panel as the whole market. Rushing to lodge applications is another. One of these might be carelessness; several together are a reason to walk.
How many lenders should a mortgage broker compare?
There’s no set number, but a broker’s panel isn’t the whole market, and a bigger, genuinely-compared panel makes the recommendation mean more. Ask how many lenders they work with, how many they compared for your loan, and why the recommended loan won over the others. A good broker will have a clear answer.
Can I use more than one mortgage broker at once?
You can talk to more than one to compare, but don’t have several lodging loan applications for you at the same time. Each application is noted on your credit report, and too many in a short time can lower your score (ASIC MoneySmart). Pick one broker to actually proceed with once you’ve decided.
Sources
- ASIC MoneySmart, “Using a mortgage broker” (best interests, licence check, present more than one option, how to find a broker, AFCA), updated 4 September 2026, retrieved 2026-09-16, https://moneysmart.gov.au/home-loans/using-a-mortgage-broker
- ASIC MoneySmart, “Loan rejection” (each application noted on your credit report; too many applications in a short time), retrieved 2026-09-16, https://moneysmart.gov.au/loans/loan-rejection
- ASIC MoneySmart, “Credit scores and credit reports”, retrieved 2026-09-16, https://moneysmart.gov.au/managing-debt/credit-scores-and-credit-reports
- ASIC, “Professional registers search” (Credit Licensee and Credit Representative registers), retrieved 2026-09-16, https://www.asic.gov.au/online-services/search-asic-registers/professional-registers-search
- ASIC, Regulatory Guide 273 “Mortgage brokers: Best interests duty” (issued 24 June 2020), retrieved 2026-09-16, https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-273-mortgage-brokers-best-interests-duty/
- Australian Financial Complaints Authority (AFCA), “Credit, finance and loan complaints”, retrieved 2026-09-16, https://www.afca.org.au/make-a-complaint/credit-finance-and-loan-complaints
Eleanor Hayes, Editor, knest.ai
This article is general information for Australian home buyers, not personal financial or credit advice. knest.ai is a buyer-focused property intelligence platform that provides decision support, not a broker or lender service, and does not replace a licensed mortgage broker or lender. Any broker introduction through the Home Loan Expert is buyer-initiated and never automatic. Where knest.ai receives a benefit from such an introduction, that benefit is disclosed to you. Verify any figures for your own circumstances before you act.
