Mortgage broking could offer you a fulfilling and rewarding career. But how exactly can it do that? And how do you become a broker in the first place?
Pros of becoming a mortgage broker
There are many benefits to becoming a mortgage broker, from the freedom to choose your working hours to the knowledge you’re helping people with one of the most important financial decisions of their lives. Here are some of the key advantages of a career in mortgage broking.
1. High potential income
Many mortgage brokers make a good living from their work. In fact, if you run your own mortgage broking business, the amount you can make is potentially far higher than the salary of most employees. Better still, your ability to make a good living from broking often comes down to your own skill and expertise, as well as how hard you’re prepared to work. You also need to be able to relate well to people. You’re in much greater control of your own earnings.
Mortgage brokers don’t usually spend all day behind their desks, nor do they have a boss watching over their every move. There’s usually a high degree of autonomy, even if you choose to work for someone else. You may find this gives you greater scope to do things your way than you’d get in many jobs.
3. Flexible hours
You often have some scope to choose when you do your work, especially if you run your own broking business. So if you’re responsible for a young family, want to do further study or even have a serious side interest, you may find mortgage broking gives you the flexibility you need. There may be some evening or weekend work but that can be balanced by more time during the weekdays allowing you to, for instance, do the school run.
As a mortgage broker, you’ll get to meet many people and potentially solve many different problems. You’ll also get to combine multiple skills, including sales and analytic skills, as well as customer service. This can make it a lot more interesting than more routine employment.
5. The opportunity to learn
There’s a lot of information you need to be on top of – from rules and regulations to new loan products and features. If you’re curious and committed to learning new things, you’re likely to enjoy this part of being a mortgage broker.
6. The opportunity to help
Buying a home is one of the most important decisions people make and, as a mortgage broker, the work you do will be right at the centre of it. Many brokers enjoy making a difference in other people’s lives.
Cons of becoming a mortgage broker
While there are many advantages to becoming a mortgage broker, there are some downsides too. So it’s important that you go into the profession with your eyes wide open.
1. Starting out can be hard work
Starting a business as a mortgage broker involves hard work. Building a book of clients and a referral network for clients takes both time and effort. That means many brokers don’t really see a decent income for the first few years.
2. Your income may be subject to the mortgage market and broader economy
Mortgage brokers generally get paid an upfront commission for signing up new clients and then a trail commission for holding onto them and looking after their ongoing needs. This means your income will probably always rely in part on people taking out new mortgages, particularly until your ongoing income or trail increases. When conditions in the property market soften, you may find you have to work even harder to earn money.
3. You need to follow a lot of rules and regulations
Mortgage broking is heavily regulated, so you’ll need to be across a lot of rules just to keep doing your job. You will also be subject to an annual review of some of your work by the Australian Credit Licence holder (ACL) under whom you are accredited (see below).
4. You may find it stressful
While helping people through a major financial decision is rewarding, it can also be stressful. After all, there’s a lot riding on you doing your job well.
5. You may find it frustrating
Dealing with banks on a daily basis won’t always be fun. There’s likely to be a lot of red tape you need to deal with, as well as hoops you must jump through. There are times you’ll need to be patient.
Steps for becoming a mortgage broker
Here are the seven steps you’ll need to take if you want to begin a career as a mortgage broker.
Step 1: Get qualified
In some cases, the minimum education you’ll need to become a mortgage broker is to complete a Certificate IV in Finance and Mortgage Broking, however, more and more broking groups or aggregators now require you to hold a Diploma.
Step 2: Complete a credit check and police check
Mortgage brokers should be financially sound and of good standing.
Step 3: Choose an aggregator or franchise
If you want to be a self-employed mortgage broker, you have two options. You can join an aggregator who will provide you with a panel of lenders, technology and varying levels of support.
Alternatively, you can join a franchise model which in addition to the above, provides you with a brand name, marketing and back office support.
Step 4: Set up your business
If you intend to work for yourself, you’ll need to apply for an ABN and potentially register for PAYG tax, super and GST. You should obtain advice from an accountant as to the best way to set up and structure your business.
Step 5: Licensing
In order to provide credit advice, you need to be a Credit Representative of an Australian Credit Licence holder or hold your own Australian Credit Licence (ACL). If you want your own ACL, you’ll need to apply to ASIC and then meet their ongoing rigorous standards. An easier alternative is to become a Credit Representative of an existing ACL holder, such as your aggregator.
Step 6: Join an industry organisation
All aggregators and franchises will require that you become a member of one of the industry bodies, either the Mortgage and Finance Association of Australia (MFFA) or the Finance Brokers Association of Australia (FBAA). These can be an important source of advice, support and ongoing education. You also need to have external dispute resolution membership with the Australian Financial Complaints Authority (AFCA).
Step 7: Find a mentor
A mentor helps you learn the ropes during your first two years as a mortgage broker and oversees your work. Some franchises will offer this service to you as part of their support package. If they don’t, and you don’t have the appropriate level of lending experience, this is a cost you will need to allow for.