Hi Guys,
I'm looking at a possible career from contract fencer to a mortgage broker ,I understand that I will need to get level iv accreditation,after that is done is where I need some advice on what to do next.Ideally I would like to work for someone else to gain the experience and skills required ,however due to my reasonably high financial commitments along with a family to feed I don't feel I could survive on a trainee wage so I need to be able to start up part time(while continuing with my other business) and hopfully build it up to where I can go full time.
So my main questions are .
To start up with a mortgage aggregator or try and build up my own panal of lenders ?
Major pit falls of the business to watch out for ?
Is this a very tough bussiness to get clients in ? what would be the average amount of loans processed per month for a good broker working on his own ?
Best lending software to use ?
Ideas to start and grow my own business with limited capital ?
All advice and ideas will be much appricated.
Thankyou
Rob WilsonRobert Wilson
Whether you think you can or think you can't ....... your right . - Henry Ford
robwilson wrote:
To start up with a mortgage aggregator or try and build up my own panal of lenders ?Major pit falls of the business to watch out for ?
Is this a very tough bussiness to get clients in ? what would be the average amount of loans processed per month for a good broker working on his own ?
Best lending software to use ?
Ideas to start and grow my own business with limited capital ?
1. You need an aggregator/ most lenders won't direct accredit you unless you do certain volumes with them…like a lot of volume.
2. Ultra competitive. Potential clients being mecinary in their decisions. A lot of brokers earn very little. Dealing with banks can be really frustrating. Long hours. Night time appointments.
3. Yes very tough. Average accross the industry is $600K per month (2 or 3 loans) which is not enough to live off. It costs at least $20,000 pa to run a broking business + your time / wages say $50,000 minimum. If you are not getting trail (takes a while to build up and many lenders dont pay it in the first year) you will need to settle about $1,300,000 a month to break even. Most dont do this.
4. Aggregator will supply it.
5. You need at least 12 montsh income up your sleeve to even consider a carrer as a broker.
I don't mean to sound negative but its a tough game. When I am busy I often work 12 + hour days and sometimes you get a run when nothing is going right, clients dick you around, banks dick you around and you basically are working for nothing.
From client first contact to actually getting paid is usually at least 3 or 4 months but can be 18 months or 2 years or whatever. There is a very long lead in time to make it a viable business. You also end up answering a lot of questions and running endless scenarios often for no reward.
It can be a great job when things are going well and I truly enjoy it most of the time especially the interaction with my clients. The money can be good if you are good but most brokers struggle.
Dont give up your day job until you give it a go and you need some capital to give it a go.
Marty McDonald | Mortgage Experts
http://mortgageexpertsonline.com.au/
Phone MeHi Rob,
Get as much protein & carbs into you as you can …..and then run and don't look back.!!!
If you are really cashed up and have some good contacts, as well as a suitable aggregation group to be part of as already mentioned, and you don't think you will need any money for 6 – 12 months it may be worthwhile.
Marty's comment about having to use your time for no reward also is very true. It's great to have a warm fuzzy feeling, and helping others in any way you can is truly a good thing – BUT it does not put food on the table.
Probably the wrong time to enter the industry too. IF it helps, I listened to several 'promises' from aggregation groups, and also from brokers who " wanted finance professionals to earn in excess of $100k per year" (small time ones as it were) several years back, and slashed my net worth by about 80% in the process……..so IF you mus….don't jump in mate without plenty of due diligence and tens of thousands of dollars worth of capital.Cheers
Thankyou Marty and V8ghia for your posts, that has given me plenty of food for thought.
Cheers
RobRobert Wilson
Whether you think you can or think you can't ....... your right . - Henry Ford
Marty McDonald wrote:robwilson wrote:
To start up with a mortgage aggregator or try and build up my own panal of lenders ?Major pit falls of the business to watch out for ?
Is this a very tough bussiness to get clients in ? what would be the average amount of loans processed per month for a good broker working on his own ?
Best lending software to use ?
Ideas to start and grow my own business with limited capital ?
1. You need an aggregator/ most lenders won't direct accredit you unless you do certain volumes with them…like a lot of volume.
2. Ultra competitive. Potential clients being mecinary in their decisions. A lot of brokers earn very little. Dealing with banks can be really frustrating. Long hours. Night time appointments.
3. Yes very tough. Average accross the industry is $600K per month (2 or 3 loans) which is not enough to live off. It costs at least $20,000 pa to run a broking business + your time / wages say $50,000 minimum. If you are not getting trail (takes a while to build up and many lenders dont pay it in the first year) you will need to settle about $1,300,000 a month to break even. Most dont do this.
4. Aggregator will supply it.
5. You need at least 12 montsh income up your sleeve to even consider a carrer as a broker.
I don't mean to sound negative but its a tough game. When I am busy I often work 12 + hour days and sometimes you get a run when nothing is going right, clients dick you around, banks dick you around and you basically are working for nothing.
From client first contact to actually getting paid is usually at least 3 or 4 months but can be 18 months or 2 years or whatever. There is a very long lead in time to make it a viable business. You also end up answering a lot of questions and running endless scenarios often for no reward.
It can be a great job when things are going well and I truly enjoy it most of the time especially the interaction with my clients. The money can be good if you are good but most brokers struggle.
Dont give up your day job until you give it a go and you need some capital to give it a go.
Good post Marty.
A couple of other things to add.
Claw backs – something that most clients don't realise is that if the loan is closed down within 18 to 24 months from settlement the broker doesn't get paid. The lender simply claws back the commission. Needless to say, you should be doing the right thing via your client so that any refinancing or future borrowings is done through you – however, claw backs are a reality and they do happen.
Compliance – so much time, energy and money is spent on maintaining compliance these days. Whilst it's great that the market has become regulated and shonky operators will eventually be weeded out – the compliance aspect, at present, is quite onerous – particularly, if like me, you hold your own Australian Credit Licence.
Just my two cents.
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I am a former broker turned solicitor but I am now thinking about getting back into broking to work it in with my law work ( I like estate planning and structures etc).
There are so many regulations with broking now it is amazing. Even rules on how you need to back up your computer files. In the good old days we just wrote the loan and faxed it off. Now you need to enter into contracts with the client, make sure they have the ability to service the loan, look out to terrorists (report anyone with a beard) and etc etc. You do all that work and you may not even get trails until the second year and then the client sells the house after 17 months and you have to give it all back!
You also have to compete with those brokers who give back their commissions. I have found that some people just use you for the expertise and then disappear at the last min and possibly go to one of these brokers to get some of the comm back. So to prevent this I think you have to charge a small brokerage amount, maybe $500, to help prevent this. But if you do this then maybe you woudn't get as many clients.
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
Terryw wrote:I have found that some people just use you for the expertise and then disappear at the last min and possibly go to one of these brokers to get some of the comm back. So to prevent this I think you have to charge a small brokerage amount, maybe $500, to help prevent this. But if you do this then maybe you woudn't get as many clients.That's another reality of this industry and Terry is right, I think fee for service will probably start to become more prevalent for those brokers who deal with more complex scenarios and are able to provide more value to their clients due to their specialist knowledge.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Guys,
Thankyou to everyone who has posted for the great advice and tips.
Upon reading all the posts and speaking with a couple of brokers I have decided that I might give the mortgage broking a miss,it seems the amount of knowlage,capital and work required vs reward doesn't quite stack up for me.What about the payday loan industry any of you guys had experience in this field ?
Cheers
RobRobert Wilson
Whether you think you can or think you can't ....... your right . - Henry Ford
I started lending my own money many years ago and it is stressful and a pain in the butt when they don't want to pay you back. Payday loans would have a high risk of default I imagine.
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
robwilson wrote:Hi Guys,
What about the payday loan industry any of you guys had experience in this field ?Cheers
Rob
The Payday loan sector is finally getting some well needed attention.http://www.smh.com.au/national/screws-turned-on-loan-sharks-20110827-1jfb7.html
http://www.smh.com.au/national/screws-turned-on-loan-sharks-20110827-1jfb7.html
I think this will put a few people out of business, it might be a good time to jump in ?
Robert Wilson
Whether you think you can or think you can't ....... your right . - Henry Ford
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