What do you actually need to do to become a Mortgage Broker in Australia?

That’s a good question and one that’s asked a lot. The answer is a long one however as there are quite a few things you need to do now to become a Mortgage Broker. It used to be that you joined the MFAA, did some training with the lenders and then you could start writing loans straight away but all that has changed in the last few years.

Let’s break down exactly what you need to do in 2009/10 to get into the industry. Before I do though you need to start thinking about how you are going to work, there are two main paths; firstly you can join a franchise and they will do pretty much everything for you – at a price of course! Secondly you can choose to start your own business and take home a larger portion of your earnings.

Typically in the Mortgage Broking industry choosing the second option meant going it alone, which was a long hard road. These days however there are companies available that will help you do everything from planning how you’re going to run your business, right through to getting you trained, accredited and joined up with everyone necessary and even mentoring you for the mandatory two year period.

I’ll try to break this article into advice for both of these areas although I do have a preference for encouraging potential Mortgage Brokers to start their own business rather than buying a franchise.

Become a Mortgage Broker – Step 1: Training

Official Training

You need to do a course to become a Mortgage Broker in Australia, the minimum course you’ll need to complete is a Certificate IV in Financial Services (Finance/Mortgage Broking) FNS40804.

There are many authorized providers of the Certificate IV course throughout Australia with both face-to-face and correspondence type courses available. However if you’re just starting out then you will definitely need to do the course face-to-face to get the maximum out of it. It does really help to have the trainers there to answer questions and talk about different scenario’s and experiences, often the trainers are brokers themselves which helps.

To find this course in your area just do a Google search for “Certificate IV in Financial Services (Finance/Mortgage Broking) + [insert state or territory here]” i.e. “Certificate IV in Financial Services (Finance/Mortgage Broking) + Brisbane”.

Non-Official Training

Completing the Certificate IV course above gets you a piece of paper, in reality though it doesn’t really teach you how to be a Mortgage Broker. There is a lot more training that needs to be done to teach you things like:

  • How to identify the best loan for a client
  • What you actually say to clients in different circumstances
  • Whether to start a shop front or work from home
  • How to calculate real life scenarios for potential clients
  • How to run your business effectively to be able to spend most of your time with your clients
  • Etc, etc (it’s a long list, much to much to list out here)

Having someone who is competent in these areas is a obviously a necessity but you’ll also need someone whom you get along with well and who can teach effectively; someone to show you how to conduct yourself in a professional manner and someone who can show you how to make money in the industry having been there themselves.

There are two options here to get this non-official training, firstly if you are lucky the franchise company you are looking into will provide it to you as part of your franchise training. Secondly there are companies out there who will train you correctly that do not require you to buy a franchise from them. Personally I prefer the later and if you go down to the resource box at the bottom of this article you can follow a link to one such company.

Become a Mortgage Broker – Step 2: Association Membership and Mentoring

The next thing you need to do is to become a member of the Mortgage and Finance Association of Australia (often called the MFAA). Being a member of the MFAA and providing proof of this is often mandatory for you to become associated (called “accredited”) with a lender in Australia.

To become a member of the MFAA means that you’ll need to become an Accredited Mortgage Consultant or AMC, if you have less than two years experience as a Mortgage Broker in the last five years then you’ll need to be nominated for membership by an existing MFAA member who will undertake to mentor you into the industry.

Your mentor will help you apply for MFAA membership as well as practically help you put together loan applications and help you with the client interviews, etc.

The MFAA require the following for you to apply for membership

  • A copy of your current External Dispute Resolution (EDR) Scheme membership certificate (i.e. COSL)
  • A copy of your Professional Indemnity (PI) Insurance certificate
  • A certified copy of your National Criminal History Record Check
  • A certified copy of an Identification Document
  • A copy of your Credit Report
  • A copy of your current Resume / Curriculum Vitae (CV)
  • Evidence of State license or registration (WA and ACT applicants only)

Become a Mortgage Broker – Step 3: Joining an Aggregator & Obtaining Lender Accreditation

Once you have your MFAA membership, your Professional Indemnity (PI) insurance and your COSL membership then you need to join what’s called an aggregator.

Firstly let me explain what an aggregator is; an aggregator is an independent company that sits between the lenders and the Mortgage Brokers, kind of like a middle man but instead of taking a slice of the pie they actually make the pie bigger, let me explain.

Once upon a time in Australia a Mortgage Broker would go to a lender and say I want to bring some clients your way how much are you willing to give me if I “introduce” some business to you. The answer from most lenders was “it depends on how many loans you bring to us”. Most of the lenders then started to put in place a tiered commission structure whereby if you introduced a small amount of business to them you’d get paid a very small commission for each loan but if you introduced a large amount of business to them then you’d get paid a larger amount of commission for each loan.

Hence the rise of companies called aggregators who would bundle up many loans from brokers and submit them to the lenders allowing a larger commission to be paid. The aggregator would then take a portion of the commission (typically 20%) and pass on the rest to the Mortgage Broker.

Today aggregators are so entwined in the Mortgage Broker / lender relationship that they do much more than just provide better commission for brokers. Some of them provide access to different products like personal loans, and insurance, they also provide a lender accreditation service, Mortgage Broking software which enables a broker to function in a professional manner, even paperwork and processing support and rarely lead generation.

So the bottom line is you need to join an aggregator, there are some good aggregators and inevitably there are some really bad aggregators. Finding the right one depends largely on what and how much help you need from them. If you are joining a franchise then the aggregation will be tied into that, if you decide to start your own business and have no experience then you’ll need an aggregator that can provide a bit more. This is really something you need some advice on so speak to a few different people in the industry and see what they recommend.

OK let’s recap

Let’s bring this all together…  đŸ™‚

  1. Firstly you need to decide which way you are going to work, franchise or your own business
  2. Then you’ll need to do the Certificate IV course (preferably face to face)
  3. Next you’ll need to get all your requirements together for your MFAA Membership
  4. If you haven’t already you’ll need to find an existing broker to train and mentor you
  5. You’ll need to find an aggregator that suits you and join
  6. You’ll then need to start getting accredited with the lenders – your aggregator will help you do this

Become a Mortgage Broker – some other considerations

Skills and Attributes Required

There are two main attributes of a good Mortgage Broker;

  1. The first is you have to be good with people,
  2. And the second is that it’s really indispensable for a Mortgage Broker is to be good with numbers.

You are helping people arrange their home loan or investment property loan and in doing so you’ll often sit in people’s lounge rooms or at their dining room table and give advice on what they should do and which lender they should use. So people skills are a must, but also equally important is being numerically or mathematically competent, working out complex numbers is an everyday part of a Mortgage Brokers role so being skilled in this area is imperative.

Finding people skilled in these two areas is difficult, people are often good at one and not the other, however as long as you are really good with one and passable at the other you’ll still be OK. Don’t despair too much as these are skills, not intrinsic talents, which means they can be taught. Just remember to find a good teacher!

Always be learning

While your mentor will make sure that you’re on the right track with your training it’s also good to get some additional training in running a small business. A short course in small business management and some sales training are two that will give you the most relevant tools to get your new business running at its full potential.

Of course as it is your own business, you’ll be self-employed so you’ll need to learn to be self-sufficient if you aren’t already. Some good books on organization and motivation will go a long way to getting you in the right frame of mind to make the most of your new venture.

Conclusion

Well that about does it, I hope that gives you enough information to get you started or at least point you in the right direction. It’s a rewarding industry, well done for getting this far and I hope that your road is an enjoyable and prosperous one.