Mortgage Broking as a Business
Mortgage broking can be a very lucrative business, provided the broker is getting enough new clients through the door and the value of the loans is high enough. For example, if a broker is successfully processing 10 clients per month and the average mortgage is $300k, then the broker’s monthly income will be $19,500, or $234,000 p/a. The actual time spent processing each mortgage will be as little as 2 hours if there is no travel involved for the broker, and in this case the equivalent hourly rate is $1000 per hour.
The reality is that not all mortgage brokers are doing anything like this volume business, but there still are many that are achieving this and they are becoming very wealthy. For new brokers entering the industry they need to choose whether to stay independent or whether to join a larger broking firm.
The advantage of joining a large broking firm, if it can be arranged, is that the firm will provide the broker with a regular supply of new clients, and generally these clients will be pre-screened in order to weed out the less profitable clients and the more difficult cases. For the broker this obviously means a steady supply of work, but there may not be many interesting challenges in the work and it will seem repetitive, plus they will need to pay a sizable percentage of their commission to the broking firm. For more information about mortgage brokers Whakatane click here. Also mortgage broking firms tend to tie up their brokers in tight contracts that basically prevent them from leaving the firm and setting up business in opposition.
A new broker setting up business on their own or with one or two others will need to make certain that they have a ready supply of new clients, and this can be one of the biggest stumbling blocks. The clients they get will generally have more challenges included and the work will be interesting, and a key benefit will be that they get to keep all of the commission, but they may find it very difficult to gain the number of new clients they need. For independent brokers this can mean being very proactive buy networking with the real estate community, developers, property investor groups and at home shows for example. It can be a lot of hard work but if they can set up a steady supply of new clients in the work will be very worthwhile.
One avenue of new clients that is generally not available is those clients resulting from Internet searches, as this market is totally dominated by a small handful of large mortgage broking firms who are ranked in the top three for the major mortgage broker search terms. This is a sad fact of life for most small and independent mortgage broking firms, and is made even more difficult to accept once they understand that for the high ranking companies the leads are coming thick and fast.