Can I Become An Independent Mortgage Broker?gary
This article is aimed at individuals not currently working as an independent adviser, considering becoming a mortgage broker and wondering if it would be right for them. As well as advisers currently trading as registered individuals, working for an established mortgage broker and considering how easy or difficult it would be for them to start trading independently.
Firstly I would say that at Which Network, we regard a lot of the skills required for setting up as a successful independent mortgage broker are much the same as for any other business but with additional qualifications required and a lot of product knowledge. The image accompanying this blog post might be very cheesy but it is so true. Given this, the very first thing you should do is to consider if you are they right type of person to be running your own business. Having worked in the financial services sector for some 20 years now including a stint of 5 years as an independent mortgage broker and with a couple of businesses before that I have come across all types of people successfully running their own enterprises. I know mortgage brokers who seem to be impossibly polite, genteel and laid back but are earning in excess of 80K per annum with an established client bank that seems to almost run itself. On the other hand, I have also met some extremely focussed individuals with rapidly expanding brokerages who have left me in awe with their energy levels and business acumen whose gross income is six figures.
The truth is that almost anyone who is intelligent enough to pass the necessary examinations in intellectual terms could be an independent mortgage broker. But that doesn’t mean everyone is cut out for it. The common ground between all of the totally disparate individuals I have met running successful mortgage brokerages, is their ability to focus and keep going in difficult times, usually by trying various avenues to generate business.
Remember business levels will (not could) go up and down. You need to realise that although you may produce a good income for the year, on a monthly level you will find your income varies wildly with some months confirming your suspicion that you were always meant to become another Jeff Bezos running the Amazon of the mortgage world, to other months where you might well find yourself longing for the good old days when you received a fair days pay for a fair days work!
A little stress is a good thing, but if you are the kind of person who gets too easily stressed to the point where it affects your ability to function then becoming a mortgage broker probably isn’t for you. Think how you’ll feel when having indicated that one of your clients mortgages will sail through with no problems a lender suddenly turns around and informs you that the mortgage has been pulled, occasionally without even letting you into the reasons for it. You are going to have to tell that client that it’s all off, even if that is only until you can find another lender. Or what are you going to do if your business mobile hasn’t rang for 3 days? If the answer isn’t buy some leads, pay for some optimisation of your website, try going to that business breakfast meeting or looking into some other tactic for generating work then again you are going to have problems.
Having done my bit to address the negative side of the equation however if it’s done right then becoming an independent mortgage broker can be a very lucrative and flexible career. With a fairly typical mortgage deal, including some protection insurance, GI and a modest broker fee usually generating over £1,000 it’s easy to see that in the medium to long term it is certainly possible to make a good income from such a business. The fact that if you are running the business from home or a small office may mean that you have to do a number of appointments in the evening but again this can be a distinct advantage, allowing you some free time, or marketing time if you’re dedicated, through the day.
Set up costs for mortgage broking?
Well set up costs as an AR of a network, if you haven’t already got some of these, and assuming you’re working from home or you already have access to an office, initially include:-
Laptop £300 – £700 (I wouldn’t buy Apple as most financial software is windows based)
Printer £50 – £100
Stationery £150 (cards, headed note paper, complimentary slips)
DP registration £40
If you decide to go Directly Authorised (DA) the FCA’s application fee is £1,500 with annual FCA levy fees. PI cover, software costs and compliance support on top of this unless of course you are experienced enough or reckless enough to go it alone with compliance, without a wingman.
Other things you should be aware of are:-
You will need to be qualified and to have Competent Adviser Status (CAS)!!! To become an AR with almost all networks. If you don’t have CAS then one popular way to get it is to work for a local mortgage broker or IFA usually on a self employed basis until you obtain it. This can work very well but if you are writing lots of business and your employer hasn’t declared you CAS it could be that your compliance is rubbish, but it could also be that they are happy to get their share of the income from work you are bringing in and realise that as soon as you have CAS you will probably leave. This isn’t a common problem but you should be aware of the possibility. If you have been in this situation for more than 12 months you might like to get in touch with Which Network as, if an adviser has a proven track record in terms of business volumes and is experienced in all facets of the role such as sourcing or mortgages and insurance, product knowledge, completing the required regulatory documentation and working in a compliant manner it is almost always possible to place them with a network as an AR or if not, then as an RI within a network for a short while leading rapidly to AR status. But you do need CAS, there are now a number of firms offering to help you achieve this, Google will find them, however I must say we do not personally have enough experience with any of them to make a recommendation. This doesn’t of course mean any particular firm is good or bad, just that we aren’t currently in a position to recommend any of them.