Questions to Ask a Mortgage Broker Before Settlement in Australia
- 1 day ago
- 10 min read
Written by Christopher Hall, AdvDipFP | Authorised Representative, AFSL 526688 | June 2026
Before settling on a home loan, the questions worth asking a mortgage broker fall into four areas: the true cost of the loan over its life — interest rate, comparison rate and fees; which features actually matter — offset, redraw, fixed versus variable, and break costs; what happens to the repayments if interest rates rise or income drops; and who pays the loan if the borrower cannot work, or dies. A mortgage broker can answer the first three — they arrange the loan under a legal best interests duty. The fourth is the one question a mortgage broker is not licensed to answer: personal life, total and permanent disability and income protection advice sits with a licensed insurance adviser, not a credit professional.
This is a short, practical guide to those questions — useful for anyone about to settle, and for the mortgage brokers who hand it to clients. A mortgage broker is sometimes called a mortgage advisor, and the questions to ask a mortgage advisor before a home loan settles are the same. It is general information only, not personal advice.
Why these questions matter — and what a mortgage broker is licensed to do
A mortgage is usually the largest debt a household will ever carry, which is why settlement is the moment the questions below stop being abstract. Christopher Hall, AdvDipFP, Authorised Representative, AFSL 526688, has completed more than 500 life insurance policy reviews across Australian families. Across that practice, around 90% of clients who sit down to review their cover do so on the back of a mortgage change — a new purchase, an upsize, or a refinance (C. Hall, Arrow Equities, 500+ policy reviews). The new debt is what prompts the question every borrower eventually asks: "is the cover behind this enough?"
A mortgage broker arranges credit. Under the best interests duty in Part 3-5A of the National Consumer Credit Protection Act 2009 (Cth), as amended in 2020, mortgage brokers are required to act in the best interests of their clients and, where a conflict arises, to prioritise the client's interests when recommending a loan (ASIC, Regulatory Guide 273, 2020). That duty is real and it is enforceable — but it applies to the credit recommendation. It does not extend to personal advice on life, total and permanent disability (TPD) or income protection cover, which requires a separate licence. Knowing where that line sits is what turns a settlement conversation into the right set of questions for the right professional — the loan questions for the broker, and the protection question for a licensed life and income protection adviser.
What is the true cost of this loan over its life — the rate, comparison rate and fees?
The headline interest rate is the number most borrowers anchor to, but it is rarely the full cost. The comparison rate folds in most fees and charges to give a truer picture of what the loan costs over its term, and it is worth asking a broker to explain the gap between the two on the specific loan being recommended. Application fees, ongoing account fees, valuation costs, and lender's mortgage insurance (where the deposit is under 20%) all change the real cost. A clear question to ask is what the loan costs in total over its life — not just the monthly repayment — and which of those costs are one-off versus ongoing.
Which loan features actually matter — offset, redraw, fixed or variable, and break costs?
Loan features carry a cost, so the useful question is which ones earn their keep for the borrower's situation. An offset account can reduce the interest charged by holding savings against the loan balance; a redraw facility lets extra repayments be pulled back if needed; a fixed rate buys repayment certainty but usually carries break costs if the loan is repaid or refinanced early, while a variable rate moves with the market. None of these is universally "better" — each is a trade-off between flexibility, certainty and cost. Asking a broker to map each feature to its cost, and to the way the household actually manages money, separates the features that matter from the ones that simply add to the rate.
What happens to the repayments if interest rates rise or income drops?
A loan that is comfortable at today's rate is the one to stress-test. A broker can model what the repayments become if rates rise by one, two or three percentage points — most lenders already assess borrowers against a serviceability buffer, and it is worth asking what that buffer assumes. The second half of the question is the one a broker can only partly answer: what happens if the income paying the loan drops, not the rate. Rates are the lender's risk to model; a loss of income through illness or injury is the household's, and it is the bridge to the question a mortgage broker is not licensed to advise on.
Who pays the mortgage if the borrower cannot work, or dies?
This is the question that sits outside a mortgage broker's licence — and the one most worth asking before settlement. A new mortgage changes what would happen financially if the income servicing it stopped through illness, injury or death. The cover that answers it is income protection, total and permanent disability cover and life insurance — what is broadly meant by mortgage and property protection, understood not as a single lender-sold product but as the cover arranged so a home need not be sold at the wrong time. A mortgage broker can flag that this cover exists; advising on what is appropriate for an individual is the work of a licensed insurance adviser.
Two practical points come up repeatedly at review. The first is that the cover many people assume they hold — default life and TPD insurance inside superannuation — is frequently less than they think. In Christopher Hall's experience, approximately 1 in 3 clients presenting for review and holding default super cover only are found to have TPD cover that has fallen to what most Australians would consider an inadequate level; in one case on file, a client who believed they held $500,000 of cover had actual default cover of $36,000 (C. Hall, Arrow Equities, 500+ policy reviews). A new mortgage is a sensible point to check whether default cover inside super is enough against the actual numbers, and to check for duplicate cover paid for twice across super and a personal policy.
The second is the cover sometimes sold around settlement. A useful question to ask a broker directly is whether any insurance was bundled into the loan or offered alongside it, who issues it, and how it is billed. One practical signal is payment frequency: in Christopher Hall's experience across 500+ policy reviews, policies billed weekly or fortnightly — rather than monthly or annually — are frequently white-labelled products distributed through banks, lenders and mortgage brokers rather than placed through a licensed insurance adviser. Because no adviser is attached, there is often no mechanism to review the policy as premiums step up on unreviewed cover year on year. This is an industry-wide pricing pattern, not insurer misconduct — but it is a reason to know exactly what was bought and on what terms. How each policy is owned and paid for — personally or through superannuation — is a structural question best worked through with a qualified adviser.
Questions to take to a mortgage broker appointment
The following are among the questions Australians commonly raise before settling. They are general considerations, not a personal recommendation — individual circumstances vary, and a qualified professional can confirm what applies to a specific situation.
What does this loan cost in total over its life — the interest rate, the comparison rate, and every one-off and ongoing fee?
Which features (offset, redraw, fixed or variable, break costs) suit how this household manages money, and what does each one cost?
What do the repayments become if interest rates rise by one, two or three percentage points?
What happens to the loan if the income paying it stops through illness, injury or death — and which professional advises on that?
Was any insurance bundled into the loan or sold around settlement — who issues it, what does it cover, and how is it billed?
Whether the default life and TPD cover inside superannuation would actually clear the new mortgage, and whether any cover is duplicated.
The first three are squarely a mortgage broker's territory. The last three point to the insurance checklist for the weeks after settlement and, for the protection question specifically, to a licensed insurance adviser.
Frequently asked questions
What questions should I ask a mortgage broker?
The most useful questions a borrower can ask cover four areas: the true cost of the loan over its life (interest rate, comparison rate and all fees); which features genuinely suit the household (offset, redraw, fixed versus variable, break costs); how the repayments behave if interest rates rise or income drops; and who would pay the loan if the borrower could not work or died. The first three are a mortgage broker's territory. The fourth points to a licensed insurance adviser, because personal life, TPD and income protection advice sits outside a broker's credit licence.
Do mortgage brokers give insurance advice?
Generally not. A mortgage broker is licensed to provide credit assistance — arranging and recommending loans. Personal advice on life, total and permanent disability (TPD) and income protection insurance requires a separate financial services licence. A broker can mention that this cover exists, and may distribute certain bundled or white-labelled insurance products, but advising on what cover is appropriate for an individual's circumstances is the work of a licensed insurance adviser, not a credit professional.
Is using a mortgage broker free?
In most cases a borrower is not charged a direct fee — mortgage brokers are typically paid a commission by the lender once a loan settles, rather than billing the client. Because that payment comes from the lender, the best interests duty in the National Consumer Credit Protection Act 2009 exists to ensure the broker still prioritises the client's interests when recommending a loan. Borrowers can ask a broker directly how they are remunerated and whether any fee applies in their situation.
What is a mortgage broker's best interests duty?
Under Part 3-5A of the National Consumer Credit Protection Act 2009 (Cth), introduced by amendments in 2020, mortgage brokers are required to act in the best interests of consumers when providing credit assistance, and to prioritise the consumer's interests where a conflict arises. ASIC sets out how it assesses compliance in Regulatory Guide 273 and monitors broker conduct against the duty (ASIC, 2026). The duty applies to the credit recommendation — it does not extend to personal insurance advice.
What's the difference between a mortgage broker and a financial adviser?
A mortgage broker is a credit professional who arranges home loans under a best interests duty in the credit law. A licensed financial adviser — including a specialist insurance adviser — is authorised under a financial services licence to advise on products such as life, TPD and income protection insurance. The two roles are complementary at settlement: the broker arranges the loan, and the adviser assesses the cover that protects the household's ability to keep paying it. Each works within a separate licence.
Does a mortgage broker arrange life insurance?
Some do distribute insurance products, but this is usually general (non-advised) product sold alongside the loan rather than personal advice tailored to the borrower's circumstances. Cover sold this way is sometimes white-labelled and billed weekly or fortnightly. A borrower wanting cover assessed against their actual debts, income and existing arrangements — including any default cover inside superannuation — would generally have that work done by a licensed insurance adviser rather than through a loan settlement.
Should income protection be considered when taking out a mortgage?
A new mortgage increases the amount of income a household needs to protect, so a property purchase is one of the most common points at which Australians review their cover. Income protection typically replaces up to around 70% of pre-disability earnings, paid monthly, and is not tied to a specific loan. Whether existing cover still fits, or whether new cover is appropriate, depends entirely on individual circumstances and is a question for a qualified adviser — not something resolved at the loan-settlement stage.
What should I ask before settling on a home loan?
Beyond the loan itself — rate, comparison rate, fees, features and repayment stress-testing — it is worth asking what was put in place to protect the repayments if the income behind them stops. That includes identifying any insurance bundled into the loan, checking whether the default life and TPD cover inside superannuation would clear the new debt, and confirming who advises on personal cover. The loan questions are for the mortgage broker; the protection questions are for a licensed insurance adviser.
Book a quick review with an adviser
Book a quick review with an adviser now. A market-wide review of life, TPD and income protection cover assesses what cover a household already holds — including any cover inside superannuation or bundled around a loan — and, for those still insurable, what arranging or adjusting cover would involve, across a panel of leading Australian insurers including Zurich, OnePath and MetLife, among others.
About the Author
Christopher Hall, AdvDipFP, is the principal financial adviser at Arrow Equities and an Authorised Representative under AFSL 526688. He has completed more than 500 life insurance policy reviews for Australian families, with a specialisation in life risk insurance.
Sources
Australian Securities and Investments Commission, Regulatory Guide 273: Mortgage brokers — best interests duty — Tier 1, regulatory — June 2020 (ASIC compliance monitoring, 2026).
National Consumer Credit Protection Act 2009 (Cth), Part 3-5A, as amended by the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 — Tier 1, legislative — 2020.
Educational Disclaimer: This content is for educational purposes only and does not constitute financial advice. Past performance is no guarantee of future results.
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