For millions of Australians, the ultimate dream is to own their own home. But not many of us have a spare few hundred thousand dollars just lying around and will need to borrow money in order to finance our homes.
Shopping around for mortgages can be confusing, and it’s very expensive to get it wrong. Mortgage brokers work with their clients (whether individuals or businesses) to connect them with the best possible lending solution.
What’s the job?
As a mortgage broker, you will meet with your clients to discuss their current financial situation and assess their borrowing capacity.
Your clients might have a specific borrowing amount or property in mind, though ideally, clients will come to see a mortgage broker before they start looking at houses.
Using your specialist knowledge of the mortgage market, you’ll help connect your clients with a home loan product and a lender that suits their needs. A mortgage broker will also negotiate a deal on the behalf of the client, locking in attractive rates, special conditions or features.
One of the important parts of the job is explaining the product to your client. Of course, the lender will be required to explain the terms and conditions of the loan to your client, but having the ability to clearly communicate your recommendation will help you seal the deal.
You’ll support your client during the decision and application process and help your clients lodge the necessary paperwork with the lender.
Mortgage broking is a significant part of the lending landscape in Australia. According to the Mortgage & Finance Association of Australia (MPAA), mortgage brokers settled $51.77 billion of all residential mortgages in the September quarter of 2017. That’s 55.7 percent of all home loans!
Mortgage brokers make their money through commissions from lenders. The amount varies by lender; however, the commission is generally between 0.3-0.5 percent of the total loan value.
In 2017 the average loan was over $374,000 according to the Australian Bureau of Statistics. So on the average loan amount with a 0.3 percent commission, you would earn $1,122 in upfront commission.
Plus, many lenders also pay a trailing commission of between 0.1-0.2 percent each year on the remaining amount of the loan!
There are some employers who offer a base salary instead of commission (in order to give borrowers extra certainty that brokers are not being swayed by commission rates). However, the vast majority of mortgage brokers are earning a commission.
How to become a mortgage broker
Mortgage brokers need to meet a number of requirements set out by the Australian Securities and Investments Commission. The minimum education requirement is to hold a Certificate IV in Finance and Mortgage Broking. There are plenty of Registered Training Organisations where you can get qualified – check out what’s available near you!