Choosing a mortgage broker is one of the most important steps in the home loan process. With more Australians relying on brokers in recent years due to tighter lending criteria, shifting interest rate expectations and increased lender policy variation, it is essential to understand how to choose a mortgage broker who provides transparent and reliable guidance.
A good broker can simplify the lending process and compare options across lenders, while a poor one can leave you with unsuitable products or avoidable costs. This guide highlights the most common mortgage broker red flags in 2026 and beyond so you can make an informed decision before committing.
At a glance: mortgage broker red flags vs green flags
Red flags | Green flags |
❌Commission-led recommendations — Pushes the same lender without a clear “why”, and dodges questions about how they’re paid. | ✅Transparent, documented advice — Explains commissions and has a written shortlist showing why each option fits your goals. |
❌Limited Lender access — Only shows a narrow set of products, avoids bank vs non-bank comparisons. | ✅Real market coverage — Can talk through their lender panel & present genuine alternatives, with pros & cons. |
❌Poor communication — Slow replies, vague updates, unclear instructions, changes their story mid-process. | ✅Tight process, clear updates — Sets expectations upfront, shares a timeline & communicates in plain English. |
❌Surprise costs — Fees appear late, can’t provide written details and asks for payment before clear documentation. | ✅No nasty surprises — Confirms any fees early in writing & explains exactly when they apply and why. |
❌Missing accreditation or compliance gaps — Won’t share licence details, vague credentials, no evidence of industry membership. | ✅Properly licensed and accountable — Provides credit licence/authorised rep details, compliance obligations & industry memberships without fuss. |
Red Flag 1: Pushing loans that pay them higher commissions
Commission-focused advice is one of the most significant mortgage broker warning signs. While commissions are a standard part of the Australian lending industry, a broker should never recommend a product because it pays them more. Brokers are paid by lenders through upfront and trail commissions, which is normal and does not cost the borrower directly, but these payments should not shape the recommendations you receive.
You may notice bad mortgage broker signs if a broker repeatedly recommends loans from the same lender without explaining why it suits your needs. Other red flags include avoiding questions about how they are paid or becoming vague when you ask whether different lenders offer different commission rates.
A professional broker will explain commission structures clearly and also explain why a recommended product aligns with your financial goals. If a broker struggles to justify a product, it is reasonable to question whether the advice is influenced by commissions rather than suitability.
The best way to avoid commission-focused advice is to ask early about payment structures and how recommendations are selected. Here are some examples:
“Can you show me the exact upfront and trail commission amount for this loan in dollar terms?”
“Are there any lenders that pay a lower commission but still meet my requirements?”
“Can you explain why this loan suits my situation better than the alternatives you considered?”
“Will I receive a written summary explaining why this option was selected?”
Red Flag 2: Restricted lender choice that limits your outcomes
A limited lender panel is another major concern when evaluating how to choose a mortgage broker. Brokers work with lender panels provided by their aggregator, and these panels vary in size and diversity. A small panel can restrict your access to competitive loan options, which may lead to higher costs or reduced flexibility over the life of your loan.
There are clear mortgage broker red flags that suggest a broker may have limited choices. These include:
Refusing to disclose which lenders they work with
Presenting only a narrow range of loan products
Avoiding comparisons between banks and non-bank lenders.
A broker should be able to explain their panel confidently and provide a genuine comparison that considers your goals and borrowing capacity.
Limited lender access is one of the most common bad mortgage broker signs because it prevents you from seeing a wider market. To protect yourself, ask:
“Which lenders are on your panel, and how many did you actively compare for my scenario?”
“Did you consider both bank and non-bank lenders, and why were some ruled out?”
“Are there lenders you don’t work with that could be relevant for my situation?”
“Can you explain how your lender panel might limit or expand my options?”
Red Flag 3: Communication gaps that put your approval at risk
Poor communication is a practical issue that often signals deeper problems with a broker’s service standards. When identifying mortgage broker warning signs, communication quality should always be near the top of the list.
The home loan process involves strict timelines, detailed documentation and careful coordination with lenders and sometimes conveyancers. Any delay or misunderstanding can disrupt your application or slow your settlement.
Some signs of a bad mortgage broker include delayed replies to messages, unclear explanations, inconsistent information and a lack of updates about your loan’s progress. If communication is poor before the application is submitted, it’s unlikely to improve once the process becomes more complex.
Here’s how to test responsiveness and process clarity early on.
“What does your communication process look like once my application is submitted?”
“How often will I receive updates, even if there’s no change?”
“Who will be my point of contact if you’re unavailable?”
“What are the expected timeframes for each stage of the application?”
Red Flag 4: Costs that only surface after you’ve committed
Hidden fees remain one of the most concerning mortgage broker red flags. In Australia, most mortgage brokers do not charge borrowers directly because they’re paid by lenders. However, some brokers charge fees for specialised or complex situations, like private lending or non-standard credit profiles. There is nothing wrong with legitimate fees, but they must be disclosed upfront and explained clearly.
Mortgage broker warning signs include vague explanations about costs, reluctance to provide written fee details or requests for payment before you receive documentation outlining what you are paying for. A trustworthy broker will provide a full breakdown of any fees and explain why they apply to your situation. Hidden costs often indicate transparency issues that can extend to other areas of the broker’s process.
Here’s how to surface costs early and avoid surprises later.
“Can you confirm in writing whether there are any fees I’ll be charged?”
“Under what circumstances would a fee apply to my situation?”
“Can you provide a written breakdown of all costs before I proceed?”
“Are there any third-party or lender fees I should factor in?”
Red Flag 5: Credentials that fall apart under scrutiny
One of the most serious bad mortgage broker signs is the absence of proper accreditation. Brokers must hold an Australian Credit Licence or be authorised representatives of a licensed entity. They must also comply with national credit laws, which require them to provide responsible lending guidance and act in the best interests of their clients.
If a broker is unwilling to provide licence details, accreditation documents or proof of membership with industry bodies, this is a major warning sign. Industry memberships, such as the MFAA or FBAA, demonstrate that the broker adheres to professional standards. Brokers should also maintain lender accreditations, which allow them to submit applications to each lender. Without these accreditations, a broker cannot provide access to the full range of available products.
Here’s how to verify credentials and professional obligations.
“Can you provide your Australian Credit Licence number or authorised representative details?”
“Which industry bodies are you a member of?”
“Do you hold accreditations with the lenders you’re recommending?”
“How do you meet your best interests duty for my application?”
How to Choose a Mortgage Broker — Your Simple Checklist
Recognising mortgage broker warning signs is the first step in protecting yourself, but it also helps to understand what a good broker looks like. Here is a simple checklist to guide your search:
Does your broker explain loan products clearly and provide written summaries?
Does your broker work with a broad and varied lender panel?
Does your broker disclose commissions and any fees without hesitation?
Does your broker communicate proactively and respond within reasonable timeframes?
Does your broker hold proper accreditation and membership with recognised industry bodies?
Does your broker compare options across multiple lenders and tailor recommendations to your goals?
A quick checklist can help you avoid these mortgage broker red flags and choose someone who meets industry standards. You may also find it helpful to calculate your borrowing capacity before speaking with any broker. This allows you to approach initial conversations with more confidence and a better understanding of your position.
If you want to have a great starting point with vetted professionals, OurTop10 can guide you with trusted information.
Find Trusted Mortgage Brokers in Your Area with OurTop10
Choosing a mortgage broker requires careful attention to transparency, communication and accreditation. By understanding common mortgage broker red flags, you can avoid poor advice and select someone who provides reliable guidance throughout your home loan journey.
If you want to compare trusted professionals in your area, explore our lists of the best mortgage brokers in Sydney, Melbourne and Brisbane.
FAQs
1. How do I choose the best mortgage broker?
You can choose the best mortgage broker by comparing lenders, checking accreditation and assessing how clearly the broker explains loan options. A good starting point is to look for a broker who provides written summaries of their recommendations and explains why each loan suits your goals. When learning how to choose a mortgage broker, focus on transparency, communication and willingness to answer questions about commissions or lender panels.
2. What are red flags when choosing a mortgage broker?
Common mortgage broker red flags include vague explanations about fees, limited lender panels and unclear communication during the early stages of the process. These mortgage broker warning signs suggest the broker may prioritise convenience over suitability or fail to provide full comparisons.
You should also be cautious if a broker avoids questions about how they are paid or offers repeated recommendations from a single lender without justification. Other bad mortgage broker signs include missing accreditation details or inconsistent information about their professional experience. If you notice any of these issues, it may be better to continue your search before committing to an application.
3. Should I avoid brokers who only recommend one lender?
Yes, you should usually avoid brokers who only recommend one lender unless there is a clear, written explanation that matches your personal financial goals. A key part of learning how to choose a mortgage broker is ensuring they compare options across a genuine lender panel, rather than relying on a single preferred institution. When a broker repeatedly recommends the same bank or non-bank lender without outlining alternatives, this can indicate mortgage broker red flags related to limited choices or commission-driven suggestions.
A strong broker will walk you through multiple options and explain the pros and cons of each, including rates, features and fees. If the broker cannot justify their narrow recommendation, you may benefit from speaking with another professional.
4. What questions should I ask a mortgage broker?
You should ask a mortgage broker questions that help you understand their lender access, fee structure and approach to comparisons. These questions make it easier to identify early bad mortgage broker signs and ensure the advice is tailored to your goals.
Here are some helpful questions to ask:
What lenders are on your panel, and how many do you regularly use?
How are you paid, and are there any fees I need to know about?
How will you compare loan options for me, and will I receive a written summary?
Have you worked with borrowers in a similar financial situation to mine?
How do you determine which loan is the most suitable for my goals?
What loan features do you believe matter most for my scenario?
How often will you update me during the application process?
If you want to understand your repayment expectations before speaking with a broker, using a loan repayment calculator can give you a useful starting point.
5. How do I know if my mortgage broker is trustworthy?
You know a mortgage broker is trustworthy when they provide clear documentation, disclose fees upfront and answer questions without hesitation. Trustworthy brokers explain how recommendations are selected, which removes common mortgage broker warning signs related to unclear motives or hidden costs. They should also provide their Australian Credit Licence details and confirm membership with recognised industry bodies. Communication quality is another strong indicator.
A trustworthy broker keeps you informed, responds within reasonable timeframes and provides accurate information about lender requirements. If you want to avoid unnecessary risks, reviewing the curated lists on OurTop10 can help you start with brokers who already meet professional and service standards.