Becoming a mortgage broker

well, I don’t know the fair compensation figure, that’s why I am asking what is the fair figure.

say the 3% per gross commission would add up because the higher the value of the loans and the larger the number of loans written by the student. so it costs more than $90 for the mentor to check through the student’s paperwork? how many hours or days does it take to check the works of the student?

if it’s 20% or more, isn’t that more than the aggregator already?

let’s see,
20% x $3000 = $600 per loan

student writes 4 loans per month = 4 x $600 = $2,400 per month to the mentor

if the mentor has 5 students, that would be $12,000 per month to check the paperwork of the students?
this task obviously pays way more than my teaching at the university.

I would definitely be a mentor if that is the going rate :)

anyways, please shine some light on this mentoring requirement so new entrants can assess their situations.

what is the average number of loans a new broker in his/her first year is expected to write per month?

also which aggregators charge per transaction rather than a percentage of the loan value?

Charlie, there is a lot more to being a mentor than just checking loans. It’s offering all sorts of guidance too that is involved with running a successful mortgage broking business. It may take them an hr to check through your loan but what about all the coaching up until that point – making sure you pick the right loan for the client, especially if it’s a tricky one.

IIRC correctly you have no previous lending experience so it will take a lot of time to build up that knowledge base and learn all the intricacies and idiosyncrasies of lending in general but how each financial institution works.

You can either hold your own agreement direct with the aggregator and hold a separate agreement with your mentor or you can go under their agreement as a loan consultant assuming they hold an ACL. For mentoring if it’s a % or comms then I would think that anything from 20-40% would be fair depending on their experience and how good they are. Keep in mind if you go as a loan consultant under your mentor’s ACL it will also depend on their agreement with their agg. They may have a 90/10 or 95/5 split so you would be receiving a % or that and not a % or 100%. There are also the mentors who charge a fee for their mentoring which may be anywhere from $500p/m upwards.

I wouldn’t want a mentor with too many mentees as well. They get busy and overwhelmed so it’s one thing to look out for.

It’s not just the mentoring or agg fees you need to consider either. There’s PI insurance, membership fees with the MFAA or FBAA, potentially software licencing fees and other incidentals that add up.

Be prepared to be poor for a long time and have at least 6 – 12 months of living expenses set aside if you’re giving up your job to do this. The pipeline for a mortgage broker is a long one. From first meeting, to when the clients are ready to buy, submitting the loan app, settlement, payment to the agg then the agg passing payment to you. This process can be anywhere from 3 to 6 months and even longer sometimes.

I think writing 4 loans a month to begin with is extremely optimistic. Do you have any networks set up already? How do you plan on getting clients?

None. Banks want membership of one or the other.

Many thanks!

TaylorChang wrote:

Thank you for the above,

Just out of my curiosity, currently, I am working in the financial service industry (fund management) and with finance degree. Do you guys think I can get an exemption from doing the certificate or diploma course to get the MFAA or FBAA ?

No. I was in the mortgage broking industry for around 8 years, masters of law, lawyer etc but still have to do a useless cert IV

thank you guys

Sound like I need to focus on getting it, rather than finding the way to get around it.

Kinnon Bell wrote:

Charlie, there is a lot more to being a mentor than just checking loans. It’s offering all sorts of guidance too that is involved with running a successful mortgage broking business. It may take them an hr to check through your loan but what about all the coaching up until that point – making sure you pick the right loan for the client, especially if it’s a tricky one.

Good post.

I mentor – and it’s certainly not for the money!

There’s a lot of time/effort involved – especially early on.

It’s not a “file checking” role – it’s about mentoring in all facets of the industry and helping them develop their businesses.

Cheers

Jamie

The Cert IV and Diploma courses are basically the same, only that the Diploma course has a few extra stuffs on consumer finance. these two courses needs to be just one course, and get rid of the useless case studies and role plays. they need to be very focus on the laws, regulations, guidelines, code of conduct, and so on. There are so many useless things in these courses, no wonder someone coming out from the courses don’t know where to start, and need a mentor to hold hand. there needs to be more practical concepts, taking a broker from the information gathering stage right to approval or rejection of the finance, and even to the settlement stage will let a broker understand the whole process from beginning to end. just feel bad for the training system for this industry. MFAA and FBAA need to wakeup if they truly want to improve this industry.

its hard to say as that information is not given out readily. Generally commissions are probably similar, but there are volume bonuses given to aggregators by some banks. Best to email a few and ask for their commission schedules.