Home – New Forums Starting your journey Mortgage broking business?

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  • #966247
    Alchemisst
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    Just wondering what everyone’s thoughts on starting a mortgage broking business are, is it a better idea to buy a franchise, as I don’t have any experience in the area. Any here a mortgage broker/ know any info/ tips etc?

    Regards,

    Alex.

    #1017003
    BB
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    Alex,

    ASIC now have some very strict requirements for people wanting to work as a mortgage broker and also to operate that type of business.

    At the moment minimum requirements are that you will need to successfully complete Certificate 4 in Mortgage Broking, and there is also talk of requiring a Diploma.
    You will need to work in the industry for a while so as to be able to satisfy some of the other requirements to hold a licence to operate a mortgage broking business.
    And of course, you will also need to satisfy the requirements for Professional Indemnity insurance.

    My suggestion is that you perhaps talk to a ‘local’ mortgage broker before you decide if this is the career path you wish to follow

    B.B.

    #1017004
    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

    #1017005
    Alchemisst
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    Thanks heaps for the reply that’s exactly what I was after, a low down of all the pro’s and cons of being a mortgage broker, a couple more questions; what would be the best way to get into broking, and is there a lot of night time call outs or could you restrict it to mostly day time?

    Thanks again,

    Alex.

    #1017006
    Corinne
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    I guess intially I just took every loan that came my way as I wanted the work and its hard to get the business up and running. most real estate agents and land selling organisations want a huge cut – usually around 50% of your upfront fee to get going, but initially i accepted what ever cut I could get as i just needed to get my name out there. as i did a good job, they passed my details onto their friends and family, so it takes some time, but it does build up. I didnt instinctively set out to only work during the day, but to be truthful, many people are too busy themselves also, and i was able to do much of the business over the phone, which is a great help. I had a checklist i emailed to each new client and ticked the boxes of the items that needed to do. with changes to the regulations there are certain things that have to be signed as orginals but i did have some clients i never even met as we did work well over email and phone. So it really gets down to your gift of the gab, and how good you are at working with people. i had a great knack of making them feel at ease with the process. i really prided myself on getting quite personally involved in their purchase/refinance and it really did pay off. so once you find your thing you can get comfortable with the lenders, their processes and idiosyncracies and allay clients fears or even prewarn them of what to expect throughout the process of their loan. lots of these conversations were done during the day while they were at work. they would go home and get the info i’d emailed them to provide and scan them and email them to me. it worked great for those with the technology. so you really can customise the lack of “physical” contact by making the phone service and email really personal, and therefore lessen the amount of night time work and weekend work. Most brokers work every night and every weekend, but i dont know how they’d do it!

    as far as where to start looking to work, that really depends as your other reply stated, as to where you are based. and your state’s setup. I worked through a guy who had a couple of entity changes over the years, but got stuck with AFG as they were the biggest for a while in WA and had a few people by the short and curlies. but i think they all might know that. once you’ve been there a while you build up too much trail to just walk away…

    i guess the best suggestion is to call all the brokers you can find close by where you want to work, and ask their advice and suggestions. I did find one about a year before i quit that was just a small band of guys but they’d negotiated a really good deal with another wholesaler. cant remember who it was, but again it all depends on the people you want to work with.

    my experience – as an investor – was that 90% of the brokers were single loan bog standard loan type of guys, and there were 10% out there who were outside the box. I think I was one of those, but there were lots of people who worked for just one or two lenders. and that is just crap. you cant call yourself a broker if you work like that. but again the licensing didnt address that. so you really need to do some home work with the people you choose to get involved with. if they cut too many corners they might end up short cutting you too. i guess its an ethical debate. i have very high ethics, even though i did lodoc loans. i think the best advice i can give is dont rush into a quick decision on who to work through. as it can be a very costly mistake if you have to pull out a year later. you’ll loose all your trail and have to start building it up again.

    best of luck!

    #1017007
    Pete LHCC
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    Hi Alex
    I have a mortagage broking business which has been operating for 3 years now and have expanded to other services such as finanical planning. I am happy for you to contact me at [email protected] and we can make contact by phone to discuss in length. I started in a franchise model but lasted 6 months before going independant.
    regards
    Peter Gwynne
    http://www.financingproperty.com.au

    #1017008
    Alistair
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    Hi I have been in broking and management for many years now and I truely believe that this area of business is changing and is no longer sustainable as just a broking business. The banks are shafting us to put it bluntly and the work we do for the reduced commisions just does not eqaute anymore. Add to that the reduced or no trail for the first 12 months and you have got an issue in our model.

    If your smart and do your research you will probably find that it is going to be better to invest some money in training and become a financial planner as well. This is a natural progression in our industry and you will find the insurance agencies are far more loyal towards their brokers than the banks are.

    I myself am going to head in to mortgage reduction, wealth creation and then in to investment property sales.

    We will see what happens.

    #1017009
    Alchemisst
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    Thanks for the reply, yes I have been looking into all areas of financial services and am leaning more towards planning/ insurance now.

    Cheers,

    Alex.

    #1017010
    Lara Tandem
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    Initially you will probably need a license to operate off of- either your own or through a net branch. Some states don’t require a license and all you have to do is hang up a sign and go. Most likely you will want to get some experience as a loan officer if you have none now. Mortgage companies will generally hire all year for that position. Good Luck.

    #1017011
    Alistair
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    You need a minimum of Cert 4 these days which costs around $350 then MFAA membership, COSL membership and PI insurance. My business miraclehomeloans.com.au has now progressed to the next phase of this industry and is looking to recuit mortgage brokers looking to diversify their income and set themselves up for the future.

    #1017012
    questor
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    Alchemisst, post: 24883 wrote:
    Thanks for the reply, yes I have been looking into all areas of financial services and am leaning more towards planning/ insurance now.

    Cheers,

    Alex.

    Good to know that you’ve already chosen your path. Now when you get a better grasp of your chosen services, don’t just go about visiting every potential client for this could take a huge bite off your finances. As a safety precaution, you can choose to not visit clients unless they have confirmed to sign up for your offered loan. Save time, effort, and budget for sure clients.

    #1017013
    Alistair
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    The above theory is very good but as a broker manager for over 5 years there is a very simple rule for success in this business and that is “See Everyone”‘ I know that contradicts the above statement but if your starting out on your own then it is a great way to get infront of people. They might not need a loan but one of their fridns might and it is much easier to find that information infront of them than over the phone.

    Both answers are correct.

    #1017014
    Nardia
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    Hi there,

    Not sure if this thread is still active… I am currently compiling information on starting a brokerage business in Western Sydney.

    I understand I need to obtain a Cert 4 and a Diploma in financial services. Does anyone have any suggestions for a good RTO to complete this through. (I will need to complete via online or correspondence as I currently work.) I have previous experience as a lender so I am hoping this will be an advantage when completing required studies.

    Also does anyone have any advise on choosing an aggregator? I have looked on the Mortgage and Finance Association of Australia’s website and there are quite a few!!! Any tips would be great!!!

    #1017015
    jlambas
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    Nardia, post: 178442 wrote:
    Hi there,

    Not sure if this thread is still active… I am currently compiling information on starting a brokerage business in Western Sydney.

    I understand I need to obtain a Cert 4 and a Diploma in financial services. Does anyone have any suggestions for a good RTO to complete this through. (I will need to complete via online or correspondence as I currently work.) I have previous experience as a lender so I am hoping this will be an advantage when completing required studies.

    Also does anyone have any advise on choosing an aggregator? I have looked on the Mortgage and Finance Association of Australia’s website and there are quite a few!!! Any tips would be great!!!

    Google Kaplan, i am currently doing a course through them and it is straight forward

    #1017016
    CharlieX
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    thank you for this thread, very informative :)

    I am assessing whether to switch my engineering career into mortgage brokering now. I want a career without boundaries, and I hope this industry will be it. I have a bachelor in engineering and mba, but seems that switching career will require more schooling.

    anyways, I am trying to find info on aggregators/wholesalers and franchisors, such as their cut/split with me. if anyone in here can please share your info, I am much grateful.

    thank goodness there is a site like this :)

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