How to Become A Mortgage Broker in Australia
A Mortgage Broker assists borrowers by providing information, expertise and contacts. They then compare the lenders and loan products in the market that match the borrower’s requirements. A mortgage or finance broker’s role is to facilitate a smooth transaction with as little hassle to the borrowers as possible, saving them from the confusion of credit processes and needing to talk to lenders.
What Does A mortgage Broker Do?
Brokers usually have access to a wide range of lenders and products, and should aim to source the most appropriate loan for the clients’ situation. A broker looks at the clients specific needs and circumstances, and should be able to interpret which type of loan best suits their clients and why.
A broker has the ability to look at the different angles of a loan application and structure their client’s application in it’s most positive light, rather than just seeing whether it meets a checklist or not. Remember, the broker doesn’t get paid until the loan settles so it’s in your interest as a broker to make sure you are looking after your clients needs ethically and within the lending policy set out by the lenders you use.
What does a good Mortgage broker do?
Good brokers will ‘chase’ approvals for their clients. Your service doesn’t stop with just submitting your loan, it continues right up to and after settlement. As a broker you should be trying to minimize the legwork and hassles for your clients, and remain available to answer any questions they may have, even well after the loan settles. The broker should liaise with all the parties involved in the transaction including the real estate agent and solicitor / conveyancer. This way you do not only offer a professional service but can build a relationship with them so that you are the first person they come to when they or their clients are thinking about finance.
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To act as a broker you will need to have access to a variety of lenders and products. Most lenders have a minimum volume of loans that a broker/brokerage has to send them on a monthly basis in order for the broker/brokerage to have access to and get paid by that lender. If each lender required $2 million in settlements a month, to maintain accreditation with 3 lenders would require $6 million in loans each month.
Some brokers will do this, or will have agreements with one or two major institutions, and then use other institutions that don’t have a minimum requirement to make up the numbers for marketing purposes. To gain access to lots of lenders without having to worry about minimum volumes etc, most mortgage brokers will enlisted the support of an ‘aggregator’ or wholesaler. The aggregator holds the individual agreements with the lenders and brokers use the aggregator’s agreements to submit their loans. The minimum volumes are made up by the loans being submitted by all the brokers using the aggregator’s agreements. The aggregator takes a portion of the overall commission for providing the service or may charge a flat fee. Most aggregators also provide other services such as ACL (Credit Licence) compliance, software, training support, general business support, and back office administration.
The main requirement to become a mortgage broker is to complete a Certificate IV in Finance and Mortgage Broking FNS40815 .
On the 1st July 2010 National Consumer Credit Protection Act came into force (NCCP). This requires anyone providing credit to comply to the NCCP . From 1st January 2011 NCCP requires Mortgage and Finance Brokers to either hold an Australian Credit Licence (ACL) or act under a licence as a credit representative.
Most lending institutions will require you to have completed at minimum an accreditation with a Mortgage Industry Body, either hold an ACL or be a credit representative.
For more information on the various industry bodies available, click here.
Read as much as you can about mortgages, sales, and finance. There are numerous publications such The Adviser, Mortgage Professional Australia, and Australian Broker that are available from most newsagents. Some other tips include:
- Speak with other mortgage brokers to find out how they work and who they operate through.
- Speak to various lenders whose products you may wish to sell and find out about their individual accreditation processes.
- Speak to the aggregator and franchise companies to see if any of them offer a model that suits your needs.
- Consider a franchise or aggregator where they provide training and support.
- You will also have to complete a FNS40815 Certificate IV in Finance and Mortgage Broking which can be completed through us. For more information on the Cert IV, please visit the ‘Course Content‘ page of our website.
- You will need to get professional indemnity insurance generally with a minimum of $1,000,000 per claim, and $2,000,000 in aggregate. Most of the industry bodies have relationships with various insurers, as do most aggregation or franchise groups.
Join and industry body. (MFAA or FBAA) To find a website link to the mortgage industry bodies, please visit the ‘Industry Bodies’ link in the ‘Innovation and Information’ section of our website.
- Become a Credit representative of an Australian Credit Licence
- Get Experience. You may want to gain some experience in the industry before you go out on your own. You can do this by utilizing the services of an aggregator or franchisor, or by working for an established company. The benefits of doing something like this include having some training and support, and also not having to outlay huge sums of money to get started. You can also learn while you work. We can introduce you to aggregators and groups to get you started.