Can I be a Mortgage Broker Part Time?gary
This is a very popular question Which Network gets asked from people thinking of becoming a mortgage broker as a career. The advantages of such a move are fairly obvious insomuch as you get to keep your income while building up the business and just this can dramatically reduce your stress levels by reducing the nervousness felt in a lot of start-up businesses.
There are however a few issues you need to consider in this scenario some general but others are financial services specific.
TIME- By which I mean the time you have to devote to your new business to successfully get it up and running. Every now and then Which Network will get contacted by someone wanting to start a new business as a mortgage broker but can’t seem to find the 30 minutes or so needed to answer a few questions so that we can get a handle on what they and their business need in terms of functions and support from a network. There’s nothing wrong with that of course and it’s usually good to be busy, but when this gets to four or five attempts to have a conversation you do wonder how they are ever going to find enough time to carry out business planning and setting up their marketing strategy when they can’t find enough time for a telephone conversation?
COMPLIANCE – The dreaded C word, but remember it’s not just making sure the cases you do are done correctly, you also need to do enough cases and have enough hands-on experience to accumulate the necessary Continuing Professional Development (CPD) points that demonstrate you are keeping up with and have enough knowledge of current regulatory framework.
COMMERCIAL VIABILITY – This is often the big stumbling block for new advisers seeking to start full time as well as part time. For a mortgage broking business. Generally, we say that the first year’s income should be at least between £30k and £40k. Now this isn’t carved in stone and some networks will allow a bit leeway on the lower figure, for example if in the first year you only completed £27k of business it’s unlikely a network would throw you out providing your figures are heading in the right direction but by the same token if you only did say £15k then it’s highly unlikely that your business would be profitable to the network and so you could be asked to leave.
We are also aware that these lower limits aren’t the same with all networks and that some networks might be happy with mortgage brokers, appointed representatives (AR’s) who are doing only £15k pa which is fair comment if they have sliding scale of charges and charge maybe 30% retention for AR’s with such low amounts of business. At a 30% retention figure the business relationship might work for some networks but it must leave questions hanging about as to why anyone would want to run a financial services business with all the associated regulation, marketing and systems requirements for less money than they could earn on the tills at Tesco’s? In fact, if you have business levels as low as this then you might like to consider just introducing business to a local mortgage broker on a commission split basis as a slightly less profitable but very much easier way of life.
COMPLIMENTARY BUSINESSES – Or carrots and peas as Forrest Gump might say, there are of course some businesses which are crying out for the addition of a mortgage brokerage. Estate agencies being the obvious one but you could add commercial loan agents, insurance agencies, accountants, will writers and IFA’s are all on the list of trades which could produce substantial income from the addition of a mortgage brokerage. With regard to the IFA’s, this might seem surprising at first since of course financial advisers are able to sell mortgage products themselves. However, we have noted an increasing trend to separate out mortgage and protection business from standard investment and pension business. This makes compliance systems a lot more clear cut as they do not have to deal with disparate product ranges as well as producing two separate income stream, thereby avoiding the requirement to put all their eggs in one basket as it were. Not generally a major issue but very handy if one of your trading partners has any cash flow problems.
Some of the less obvious second business we have come amongst our clients include firemen, teachers, car salesmen and an orchestral conductor. Basically, anything that brings you into contact with a potential client base as well as generating an income can do the trick.
As long as your second trade is legal and doesn’t place such demands on your time that you aren’t able to put the effort required for your mortgage broking business to generate the work levels required for compliance purposes ie continuing professional development and to keep the business commercially viable then keeping a second income if you feel you don’t have the necessary funding to support the business in its first few months or even if you just want to be ultra-cautious could be the way to go.