Hi guys,
I'm working in the finance world and interested in becoming a mortgage broker. I'm wondering if anyone can help me with tips they know about the process.
I understand the certificate that has to be completed in order to provide financial advice.
I think the easy way to get the right answers to my questions in to explain my situation and what I would like to acheive.
A partner & I are thinking about becoming registered mortgage brokers on a part time basis in the first instance.
We both understand the process and that it would be a fairly serious time commitment but we have discussed the fact we believe after a period of time we could fairly confidently write 2-3 new mortgages a week. We currently have extensive contact and through our lives and other work commitments we believe new contacts would arise purely from word of mouth.I'm interested to know from other exisiting brokers or people who have looking into this what the cost associated with starting something as per above would be, and whether going it alone and getting involved with a pre-existing company.
We believe we would be able to roll $2-3m in loan through close friends in the first few weeks alone.Any information would be greatly appreciated. PLease feel free to send me a personal message.
Thanks for comments in advance
Chris
Hi
You would probably need to do the diploma in mortgage lending to get started. This costs about $2000, once you have that then you could apply to join the MFAA, but I think you may need an existing member to sponsor you. Staying in your existing job and doing broking on the side would be a good idea as it takes a while to build up the business.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I agree. I wouldn't give up your day job.
While you may have a $1-2 m in the first month there are a lot of costs involved initially such as joining the MFAA and PI insurance. Also being realistic it would be quite some time before you write 2-3 loan per week.
All the best in the new venture
JK
you need to join COSL as well. Also you need to have previous experience in writing mortgages to be a broker via MFAA membership. This is where the catch is. You need to have an intermediate, sponsor you so that you can offer more than one banks products and get around the 2 year experience requirement. Also you need to be able to cope with no income for 3 to 6 months depending on settlements of loans.
Then your intermediate will pressure you to write loans.Yup – mostly covered in your replies so far. The MFAA calls the shots in general, and to be a 'member' you need to have either 2 years prior broking experieince, or your Cert4 FInancial Services (Finance/Mortgage Broking) and a few other courses passed (minr stuff) and a 'sponsor' – essentially meaning they want no 'newbies' between the lines. Seriously, there are probably some genuine great potential brokers around, that find it difficult to get into the industry now, whereas there is some serious deadwood, unscupulous, commission driven 'brokers' that have done none of this stuff. Vicious circle for the MFAA.
You may find an aggregator (someone who essentially has access to numerous lenders where you can work under their 'umbrella') who will assist, but many now want experieinced full timers. Perhaps try a 'casual' role with an aggregator and see how you go – get some runs on the board. Bear in mind though, with more brokers than clients, and many people returning to the banks directly now (even with P-poor service in many cases) depending on where you are located it may be a quiet start for you with very little if any income. Some lenders will allow you to act as an 'introducer'(some mobile bankers even try and 'recruit' loan introducers)……maybe this could be something to consider 'on the side' to get you started.
Please let us know how you go. All the best.
i have a few queries to add to the above reponses, seeing as you guys have been so informative so far!!
i am currently in the real estate industry, and i get a lot of finance enquiries in my position (3 or 4 per week). I currently have a working relationship with a broker who i refer all my clients to. My broker does finance for all the clients and then i , hopefully, sign them up for a new home!
i was interested in doing the cert. IV in financial services, mainly for my own knowledge and to assist me in pre-qualifying clients before i refer them on to my broker (mainly to avoid giving him dead leads and wasting his time!).
I didnt think there was ever a chance that i could write my own loans, as i thought i had to have a couple years full time experience as well as the cert iv. It seems now that this isnt the case, but im still not entirely sure on what exactly would be required for me to be able to handle all my clients finance.
would love to hear what you guys think, as to be able to handle my own clients finance as well as their new home purchase would be fantastic!
thanks in advance!!
Lyndon
Have you thought about working for an existing broker either as a contractor or employee? That way you will be for filling the mentoring criteria with the MFAA. They will also be able to give you invaluable advice as you will be coming into the industry fairly green.
I know a few people who have gone down the same path you are contemplating and that's they way they have gone.
Im sure being in real estate will interest a lot of potential employers.
I agree with John on this one and a contractor arrangment maybe a lot easier than being licensed yourself.
There are other considerations depending on what State you are in but surely receiving a percentage of the commission from your broker for introducing the loan will avoid any potential "conflict of interest" from your buyers and the complaince.
Richard Taylor | Australia's leading private lender
Hi Chris,
Send me a PM of email. If you are sure you want to become a broker I can assist you getting accredited. The difficulty and cost of becoming accredited is overstated, the real issue for most brokers is generating work. I warn you though, very few independent brokers are in the least bit successful, the industry is flooded and it is very difficult to compete for regular home loans with branded businesses and direct lenders. Having said this, if you are capable of generating leads, it can also be very lucrative.
My advice is to get yourself accredited, don't bother to work for anyone else, just live or die (figeratively of course) by your own knowledge and ability. You will know pretty quickly if you can make a go of this industry.
Regards
AlistairLyndon,
You can do the Cert IV in Finacial Services in-line for as little as $600 … more if you require tutoring.
One I can recommend is the National Finace Institute …. Peter Heinrich is very well known in the education
circles for finance training both in Oz and the UK.
Membership of the MFAA is about $400 … currently you are required to do the Anti-Money Laundering course which costs
$375 … if you join the MFAA within 90days …. they will contribute $300 of the fee to your MFAA membership, leaving you only
$100 remaining to pay ….The finance industry is very exciting and rewarding if you maintain a positive attitude. I also agree thatv it can be very mutual to form a contractual relationship or partnership with a company or franchise arrangement. In a good partnership, you dont have to do the nitty gritty work but you can still be rewarded for your efforts and screening of clients.
Good luck!
Regards
Maxxi
[email protected]Probably you could inquire with your mortgage broker if you can have a list of the lending rules from the lenders they use most.
The main points are LVR, Income,security of employment and Credit Rating.Chris
I work full time as an accountant in public practice and maintain a mortgage broking business on a part time basis. It is a big step to go from a guaranteed income to an industry that is very mature and very competitive. If you need any assistance in getting started please feel free to e-mail me [email protected]
Regards
Hi Everyone
I noticed that all the brokers that posted comments made mention that it is a very hard industry and hard to make money.
I have gotten rid of 4 brokers in the past 18 months, from scheming, lying and acting in their own bests interests.
I take out a loan on average once every six months.. I am a long term repeat customer.
Do you not believe that if you act in your clients best interest over time, you will be flooded?
Just to confirmt that in W.A. you must have a mentor, either an individual with a B class licence or join an aggregator.
1. Do you Cert IV
2. Find an aggregator to mentor you, you must do this for 2 years
3. Apply for your own licence and work soloMake sure you interview the aggregators… each will take a different percentage of your commission and make sure they provide you with a plan of how they will train you and what they have to offer. Some may even offer you a certain amount of leads.
For eg. there is one in Perth and you have to sit at their office every Wednesday all day to be trained. This is invaluable. many will not even set you up a proper program.
Remember your business will also come from building a relationship with other businesses who will refer your services to other clients. ie. real estate agents, financial planners….. you get the gist.
GOOD LUCK!
Nearly all the brokers that I have approached cannot handle property investors who have got multiple properties (ie over 5). In the certificate 4 course, do future mortgage brokers learn how to deal with people like myself? I find it very frustrating trying to find brokers who are firstly, competent & trustworthy and secondly, have got the skills to deal with the more complicated transactions.
I have found exactly the same problem.
You have to interview your Finance Broker the same as your Accountant… do they own a property portfolio? if not then move on. The Certificate IV will not teach them that or the strategies involved.
I have been burnt by incompetent brokers myself.Totally agree about incompetent brokers and if they do not own multiple properties then you probably want to move on to someone who does.
As brokers we also get approached by clients wishing to scheme, lie and act in their own interest similar to how franchesca mentioned she has found a couple of her brokers. Recent legislation has tried to limit this but it will still go on.
Clients who tell you this property is a long term buy and hold and you explain the commission structure and 11 months later they sell up and you have your commission clawed back.
Before i comitt to taking on any new client i want to make sure that they are genuine so as to avoid be caught on any potential fraud problems down the track.
One of the issues in the industry is that it is too easy to become a mortgage broker and hence the level of competance is extremely poor. How many times do you that a broker has been in the industry 3 years but previously used to sell second hand cars or be in adminstration.
I am not knocking wither of these professions just making a point that the majority of brokers would not have 10 years in the industry. Be amazed how they come and go.
Richard Taylor | Australia's leading private lender
<font color=”#000000″>What other competent professional requires just a certificate 4 to be able to operate in such a complicated area as finance? Accountants require 3 years university study plus extra study to complete their CPA or ICA. Mortgage brokers may not need to study for 5 years but as a minimum they should complete a TAFE diploma or even a university degree.
The mortgage broking industry needs a big shake up. I recently spoke to 4 mortgage brokers about doing a deal for me. Not one could work out what to do as they said it was too complicated. Two promised to get back to me but never did. What's the use learning about communications in a course but not able to apply even the most simple principle of returning a phone call? I refuse to deal with people who are so rude. In the end <font size=”3″>I had to tell a broker what to do</font> and eventually he got the deal over for me – pathetic!! I now have found a person who can deal with investors and was able to get another 2 deals for me. Unfortunately, she is so busy that she can't always give me the personal service that I want.
I've always said that finance is the most important part of property investing. If we don't get that right then the transaction will fall over. Enjoyed your comment, Richard.</font>
hieung
Totally agree with you. Any MB claiming to be a Professional who has no TAFE dip or Degree really is a joke.
You can learn to be a MB by reading the back of a cornflakes package.
I have a friend here in Brisbane who sepnt 20 years as an electrician then decided a year ago he need a job change and decided to become a Mortgage Broker. 5 minutes of training and a quick read of a manual and he was out there on the unsuspecting public. He used to telephone me to ask me what a Trust was and how do i calculate negative gearing.
Within the first 12 months he has decided that this industry is not for him and gone back to being a tradie.
If we could halve the numbers of MB's out there through legislation or natural attricion then the standing of MB's in the industry would increase. In the UK a series of legislation has been passed to try and keep the industry levels more professional just a shame the Aus market doesnt go through the same shake up.
Richard Taylor | Australia's leading private lender
Apart from Richard, any other mortgage brokers out there? What do you think about the qualifications needed to become a mortgage broker? What a sham – only a certificate 4 to become a mortgage broker. I recently finished a TAFE cert 4 (not mortgage broking) in 3 days with no homework and no exams. I only had to attend, fill in a few workbooks, had a few discussions, that's all. I've got a feeling that the lecturerer didn't even read my workbooks because I got my certificate 4 within a few days. Some in my class only attended half the time and still got through.
Francesca Chakich wrote:Hi EveryoneI noticed that all the brokers that posted comments made mention that it is a very hard industry and hard to make money.
I have gotten rid of 4 brokers in the past 18 months, from scheming, lying and acting in their own bests interests.
I take out a loan on average once every six months.. I am a long term repeat customer.
Do you not believe that if you act in your clients best interest over time, you will be flooded?
Just to confirmt that in W.A. you must have a mentor, either an individual with a B class licence or join an aggregator.
1. Do you Cert IV
2. Find an aggregator to mentor you, you must do this for 2 years
3. Apply for your own licence and work soloMake sure you interview the aggregators… each will take a different percentage of your commission and make sure they provide you with a plan of how they will train you and what they have to offer. Some may even offer you a certain amount of leads.
For eg. there is one in Perth and you have to sit at their office every Wednesday all day to be trained. This is invaluable. many will not even set you up a proper program.
Remember your business will also come from building a relationship with other businesses who will refer your services to other clients. ie. real estate agents, financial planners….. you get the gist.
GOOD LUCK!
Francesca,This is the reason I am investigating. I have a property portfolio as does my father and I am often the one dealing with the MB however of late the brokers we deal with are nothing short of pathetic. This got me to thinking. If they do get good trailing commission and upfront commissions why are they so rude and not interested in your business??
I've worked for a couple of very large corporations where the client come first always. This doesn't seem the case. I thought that if I had the ability to speak to clients and understand what they wanted but more importantly build a relationship with them to have repeat customers it would be a beneficial career move for myself along with being able to provide a valuable service to others requiring a MB.
In the end i'm trying to reiterate my interest in becoming a mortgage broker comes from the lack of comfort I have in previous broker, i do however think more training should be required because a online test for certificate 4 just doesn't seem adequate especially with some of the complex strategies people are running these days.
just my two cents.
chris
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