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Corinne
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Hi there

I was a mortgage broker for about 6 years. Quit just over 2 years ago. I am in WA which was the first state in Australia to bring in licensing requirements for brokers due to the finance brokers scandal. Unfortunately none of the requirements will stop dodgy brokers from being out there, but again i guess that may have helped my business too.

I targeted the self-employed lodoc business market. Being a property owners with many investment properties, this was a great in for me. I never advertised, as all my work came from word of mouth. I was a member of BNI (similar to business swaps depending on where you live). I got quite a lot of business through that networking organisations.

Apart from dribbling on about the problems and dilemas i went through i will try and give you a list of pros and cons as i see it and see if that helps you in any way make up your mind…

PROS
1. you can work for clients you WANT to work with – like most people some can be a complete pain in the arse and some are fabulous – i only wanted to work with the great ones, and thats what i ended up doing
2. when you get good at it, you can plan to not even visit clients unless they are actually going to sign up for a loan. I used to collect most of the basic info off them over the phone and try to not visit till i’d worked out that they were going to get a loan, and then get them to email me their docs (or visit if it was convenient for both parties – sometime people were in a hurry) and then visit to sight their original docs, and get them to sign the application forms
3. you can plan your working week and availability around what hours you want to work. I never worked weekends (unless i chose to do a bit of paperwork if i was busy) and usually started work around 9 or 10 in the morning and saw clients at night during the week. so it can be very flexible if that’s what you’re after.
4. although things are tightening up (see cons below), its a fabulous way to set yourself up for a great residual income. I havent worked for 2 years and am still getting trail income of around $2500 per month! this wont last for ever, but its still month for nothing now the hard work has been done.
5. you can make it as big or as small as you like. i worked for myself and worked from a small shop front office on the ground floor of my house. it was great for clients to come here and fill forms in etc.

CONS
1. with the recent financial fallout, banks have cut back services and tightened up on profits and cut back upfront and trail commission to brokers. my experience in the end was to have all loans falling over or being a couple of days from settlement and something was always stuffed up. it really affected my health as i was stressed to the max worrying about my clients loans not settling on time. this was the reason why i quit in the end.
2. there is so much paperwork to get your accreditation with each lender, getting your membership with an “approved” industry group (also a cost, exam and many questions to get and keep your membership) when i first started being a broker you just filled in your name and details and it was yours!
3. if you have large commitments and need a good income relatively quickly after starting, then you’ll have to work your arse off to make money. I was in a position that i didnt have to make money, so it took quite a bit of pressure off. I did it as i loved to share my experineces with lodoc loans with other investors as it was a very specialised market at the time. I also did first home buyers and second home buyers, anthing that came my way, but it wasnt hard after the first year as i know pretty much all situations and what would work and what wouldnt with most lenders with a few details.
4. choosing a brokerage firm (wholesaler) to work through (if going it alone) is a precarious choice. not all brokerage firms deal with “every” lender. there are some specialist ones such as Keystart here in WA who deal with only one or two wholesalers. this can make negotiating better rates or commission more difficult etc. If you changed brokerage firms you can loose all your trail – so its best to try to research this thoroughly before committing to one wholesaler. my deal involved me keeping my trail income till it gets down to $50/month or less. So i hope to still be able to have an income for a few more years yet – but as time passes some clients will need to refinance or change lenders to do other things, but it still something you should get clear from the start.

As far as buying a franchise, it can be big $s but they do offer training and get you all off and ruinning with all the lenders so these days it may be worth it. Some of the smaller firms i found had negotiated really good deals with some lenders, so again its all word of mouth. i’m not sure if having a franchise is going to generate that much business. if you do go down that path, you’ll soon have to emply a receptionist to answer the calls and get rid of some of the useless phone call wasters (there can be plenty) who are no hopers who dont have a hope in hell of getting a mortgage. I guess that’s where being self employed and not advertising made things easy for me. I did everything so it was somewhat easier. given the what should be now – fully automated systems that most of the banks have now, it should be less time consuming than in previous years to have to write each application up by hand. If the client was rejected by a lender you’d have to start it all again. With the computerised systems, you’d just click on CHANGE BANK and the data would then be input into the next banks’ format – requiring only a small adjustment here and there…

Anyway i’ve drivelled on enough for one day… if you have any questions, please ask away. hope you find something useful there!

cheers

Corinne