The realities of the broker life
Mortgage broking isn’t a shortcut to riches. Yes, you can make a great living but you have to put in the work.
One of the biggest misconceptions is the idea of the “part-time mortgage broker”: at best, you can only start considering this 1 or 2 years into the role.
What are the typical hours of a mortgage broker?
As a bare minimum, the standard white collar hours of 9-5 apply to mortgage broking.
That’s because these are the operating hours of the banks, who you’ll be dealing with in the mortgage application and approval process.
However, customers are not always available during work hours because, well, they’re working!
On top of that, the nature of home loans and the banking industry means you need to put out fires when things go wrong, not in a day or two.
Why part-time doesn’t usually work
As far as a dream working week goes, 4 days on and 4 days off sounds pretty great.
However, no matter what your dream work/life balance looks like, we just don’t believe part-time broking works.
The reality is that you’ll need to be available after hours and even on weekends.
On top of that, banks are actively trying to remove part-time brokers from the industry as there are a lot of complaints about them.
As mentioned previously, you often need to make appointments with clients and field their questions, although you may get away with phone calls for the latter.
Ultimately, customers expect you to handle any problems that may arise in those 4 days that you are “off”.
Similarly, urgent applications will require a lot of work to be done in a short amount of time which means your day will stretch past the typical 9-5.
Not only are you going to struggle to respond to existing clients in a timely manner but you’ll potentially miss out on new clients if you don’t reply to enquiries within a few hours.
Clients can generally be easier to manage than banks because you can encourage them to reply on time with the information or documents you need for their application.
With banks, you’ll be dealing with staff that may not always know the application process or their own procedures!
Customer documents and even entire applications can get lost as you contend with miscommunication on all sides.
While clients want you to take action right away, banks won’t work around your schedule.
The difference between working less and flexible hours
You’re considering getting into broking under the pretense that you’ll be able to start your day later, finish early or take a Friday or Monday off every so often.
However, what many people fail to realise is that these brokers are often doing work in their own time and often working overtime during the week.
Broking certainly offers flexibility but it depends on how organised and disciplined you are in your first two years in the role.
Building a book of referrals, repeat business and a healthy trail is the key to success.
How can you make part-time work?
The bottom line is we don’t believe part-time broking works.
The industry changes rapidly and a part time broker struggles to stay on top of it.
Mortgage brokers that have been successful in dropping down to part-time hours have typically built strong relationships with the key decision makers at the banks.
They know who to speak to and the exact documents that they need to provide to get a home loan approved in a timely manner.
Here’s the trick.
Successful brokers who work less hours have been building their business for years, have good systems in place and have been able to hire support staff.
You need to have a great mobile office set up, with the connectivity to make phone calls and send emails wherever you are and access sensitive financial information.
Once you have all of this in place, you may be in a position to reduce your hours and enjoy a better work/life balance.
Why do people choose to work part-time?
If you’re young or you’ve gained minimal experience in the banking or finance industry, you generally want a more flexible work/life balance, whether it’s for lifestyle or for travelling.
Others want to work part-time because of family commitments.
Then there are others who have a desire to supplement their income and take on a broking role as a second job.
This is typical of people who are running their own business and particularly financial professionals like accountants or financial planners.
The fact is, mortgage broking is a business and a particularly expensive one at that.
With the money you outlay for getting set up and the upfront and ongoing educational requirements, you’d be crazy not to devote your full attention to the role.
Is it possible to work a second job?
In the real world, money talks and this is particularly true if you have a family or other financial commitments.
Those who have come into the mortgage broking later in life simply can’t afford to live on such a drastic cut to their income as they bear the costs of getting set up.
When you start out, it can take months to generate an income.
That’s why many new brokers hold down second jobs.
Of course, you should discuss this with your employer (the brokerage) before signing their contract or agreement.
From our experience, having a second job rarely pans out for someone wanting to succeed as a broker.
However, if you need to supplement your income, you have to be careful about the second job you choose.
If you’re on salary in your second job, you can’t just step outside to take a phone or leave work early to meet a client, at least not on a regular basis.
Second jobs that are casual or on a shift work basis, allowing you to switch hours with a colleague, may be more feasible.
These kind of jobs include security work, bartending or other night shift work.
Experienced accountants or financial planner may be the most eligible to take on a mortgage broking role because many skill sets overlap and you’re offering a second service to the same clients.
Ultimately, your role as a mortgage broker needs to be your main priority so you need to be disciplined so as not to burn yourself out.
You’ll also really only be able to handle ‘vanilla’ deals rather than the more complex applications that require more of your time and may be potentially more profitable to you.
Have you considered the costs of being a broker?
You’ll have to calculate the amount of outlay to actually start broking as well as the ongoing costs.
Can you put enough back in your pocket to recoup these costs and start heading in positive territory?
These costs and fees include:
- Cert IV or Diploma: $1,295 or $1,145, respectively (see the Mortgage Broker Training page for more information).
- Aggregator joining fee: $0 – $150,000 for a franchise.
- Monthly aggregator fee: Typically $1,000 per month
- Credit licence (if operating under your own): Approximately $2,000 in ASIC fees and up to $8,000 in consultant fees.
- Mentoring: $500-600 a month depending on the program
- Professional Indemnity Insurance (PI insurance): Check out insurers like CGU, Scott & Broad and GIO.
- Professional industry body membership (MFAA or FBAA): $470 and $420, respectively.
- External Dispute Resolution (EDR) membership: Upfront fee of $350 with an annual fee of $140 for Credit and Investments Ombudsman (CIO) and an upfront fee of $165 with an annual fee that varies depending on when the application is made with Financial Ombudsman Service (FOS).
- Credit history check: $79.95
- Police Check: $42
As a general rule, you’re looking at upwards of $10,000 in the first year.
Then there are operating costs.
It’s generally accepted that IT, administration and other support will cost you around 50% of your commissions in the first year or two.
The industry change on a regular basis so you may find yourself having to wear these changes with higher regulatory costs.
You may be supplementing some of these costs with income from a second job.
However, you could recoup these costs and start earning a better income much faster if you were to put all of your efforts into becoming a more experienced broker.
Want to achieve a better work/life balance?
Home Loan Experts is Australia’s leading specialist brokerage and we’re always looking to hire the right mortgage specialist to join our team.
We can provide you with the IT, administration, support, software and training to become an experienced mortgage broker.
We make no empty promises about being a mortgage broker – it’s tough!
However, with the right attitude, you can build the life you want and we can help you get there.
Check out our careers page to learn more about the role and our company and then send through your resume to email@example.com.