Start a Mortgage Broker Business

Hi there –

Good luck firstly with your new year resolution :)

Firstly you will need to be qualified and generally will need to be mentored for 2 years, even with 2 years of experience overseas. You can join FBAA with a Cert IV

1) How should i start out?
a) go out on my own and find my way
b) start working for somoneelse, get the knowledge then start my own business later
c) buy a franchise

Choose (B) – its hard to find your way as you need clients…..most MB lose in the first two years

2) How much do mortgage brokers earn from each mortgage?
Depends on the lender and type of loan. Generally for a standard resi mortgage will be 0.5-0.77% upfront plus trailing commission of 0.15-.3%. Remember the clawback, if your clients are shopping – the clawback is brutal.

3) How do mortgage brokers do in a recession? Do mortgage brokers add on insurance to get a repetitive income stream coming into get them through the hard times? Do they just refer people to someone else and make a cut?

Can’t answer this one, last recession was 1990, i was still in high school! Your protection is your brand and trail, everyone will still buy property

4) Do you need to study to become a mortgage broker? YES! Cert IV is minimum and diploma needed for MFAA

5) As i have quite a few investor friends and as investors buy multiple properties im thinking this is the best area for me to specialise in. Good idea?

Not sure, just because your investor friends buy property, does not mean they will go with you.

6) Is it very scalable?

Hope that helps

Cheers Ivan

Also if you dont mind what does a normal day look like for a mortgage broker?

The dream
Wake up at 10am, check emails. Then check out netflix to see if the latest episode of your favourite show is available. Pause the show while you take a few calls. Then head off to Bunnings to buy something. Take a call while walking back to your tax deductible car. Go home and finish counting your money and then play Xbox until the close of business.

But for most brokers the reality is:
wake up at 7am and go and meet a prospect at 10am. Spend 2 hours with them answering investment related questions with a few loan questions. Go home and work out serviceability etc. The next day you put a proposal to them. A week later after not hearing back from them you call up to find out that they went direct to the bank.

The next day you go out to see another client. after driving 2 hours to get there you find out that the husband actually works in a bank and can get 90% loans with no LMI. They just wanted to use you to further their education.

Commission time is coming up and the only loan you have settled is one for $250,000. You think oh well that is enough to live on for another month until you get your commisison statements and find out that your cousin refinanced one day prior to the 1 year anniversary of their settlement so that now you have to repay all of the commission you received on that deal. Your monthly income is now negative $2000. At least you will get some GST back.