The first steps to starting a mortgage broking business

You are now a mortgage broker!

After lots of planning, thinking and careful consideration and soul-searching, you are now ready to take the leap. You have finally made the decision to become a mortgage broker.

And what a privilege that would be.

Think about this for a moment. If you believe in yourself and your own abilities as a finance professional, you have made the first (and most important) step, to take action and become a self-employed mortgage broker.

Many people let excuses and fear stop them from even taking this first step.

Despite the excitement, keep your feet on the ground. Understand the journey ahead. Establishing yourself as a mortgage broker and making a living from this may not happen overnight.

But it will happen. With lots of planning, time, effort, dedication and a lifelong devotion to learning new skills, you will make it.

Here are some steps you should follow to when starting a mortgage broking business and setting up for success.


Plan everything – and I mean everything

When many people enter the mortgage industry, most of them don’t behave as if they are actually starting their own business. Unfortunately they may have a mindset and behaviour of an employee. But if they change this and realise that they are starting and running a business, then they have started on their journey to becoming successful.

Like all business startups before you, you will need to put together a marketing plan. This will form the back bone of your business (and the eventual business plan).

Start by jotting down what your customers are going to be buying from your mortgage broking business. Draft out your value proposition and point of difference. Ask this question: “why would a customer come to you (instead of going to the bank branch or another mortgage broker)?”.

This can be intimidating. It may cause you to re-think about what you are doing.

When starting a mortgage broking business, we cannot stress this enough.  But if you do not plan this out, you will not succeed.


Start by defining your mortgage broking business

What does your mortgage broking business stand for? How will you define success? What are your short-term and long-term goals? And how will those goals help you achieve your success?

Be specific. Stay true to what you want out of your business. Every mortgage broker will have a different definition of what success means for them. For each and everyone of us, we will have our own version of what success means to us.

Write down the reasons why it was so important for you to start your mortgage broking business.

These answers will help you draft the “About” section of your website. It will also help outline why customers may want to use your services.


Not everyone who wants a mortgage is your customer

Despite popular opinion, mortgage brokers do not “sell” mortgages. In all my 20+ years in the business, I have very rarely had a customer come to me and say, “Andrew, I want a mortgage”.

The reality is that most customers usually want to buy a home, or refinance debt to save money for some purpose.

You will need to identify who your Target or Ideal Customer is.

When you figure which customers are most likely to utilise your services, you will start to understand how you can promote your business better. Work out which lenders/suppliers will help you meet this need, and actually make money!

Here is a warning: Do take this step carefully. Your entire business plan will be reliant on how well you define who your Target or Ideal Customer is.

There are a myriad ways of marketing your mortgage business – email marketing, social media, networking functions, blogging etc – but not all of them may help you reach your ideal customer.

And not all lenders may be able to provide mortgages for these customers.

That is why your marketing strategy must complement your mortgage business activities.

Consider this as a key part of your planning whilst starting a mortgage broking business.


Know your numbers

Plan ahead to work out how your cash flow will work. Remembering that your may not have your first commissions from your first home loan for at least 6-12 months.

  • How many customers do you need to generate enough revenue?
  • What will your average home loan amount be?
  • How many loan applications will you need to submit each month?
  • How many leads will you need each week?
  • What are your expenses?
  • Will you need to rent an office?

Write down all your business costs – from compliance costs, fuel, IT, professional fees etc. Make also a separate list for your personal expenses – mortgage payments, food, date nights, etc.

Then formulate a plan on how you will pay for these during the first 12 months of your business. You may need to use your savings, or take out a loan, or rely on your partner’s income etc.

This is a very important step. Most mortgage brokers fail in their businesses inside the first 3 years – because they run out of cash. If you don’t plan this out properly, you may not achieve success.

Planning for financial success is the best way to make it happen.


How many mortgages will you settle?

Working backwards from the gross amount of revenue you want to generate each year.

For instance, if you want to generate $100K of revenue a year, and assuming that your average loan size is $500K:

  • Gross revenue = $100,000
  • Average mortgage = $500,000 x 0.5% upfront
  • Average upfront commission = $500K x 0.5% = $2,500/settlement
  • Number of loan settlements required = $100,000 / $2,500 = 40 per year.
  • Or around 4 settlements per month

Once you have worked this out, then you need to be able to answer the question: “How many leads or referrals do I need to settle 4 mortgages each month?”

To generate these leads from your target market, will you be running workshops? Writing blogs? Establishing referrals arrangements with other professionals?

Conducting annual reviews on your mortgage customers?

The most successful mortgage brokers will have established a reputation for their business. As a startup mortgage broking business, you will need to quickly establish your own reputation as the “go-to” broker for your target market.


This is a regulated industry

Once you have worked out your marketing and business plans, the next step is to ensure that you are a Credit Representative and have all your compliance requirements in plan.

Do your research on this. You will not be able to operate as a mortgage broker if you do not have all your licensing and compliance in place.

And if you fall foul of the law, you will not be able to practise in the industry.


Measure everything

As a professional mortgage broker, you will need to measure how well your business is tracking.

  • How many contacts did you call each week?
  • How many referrers did you meet with?
  • How many leads are you getting?
  • How many loans have you submitted each month?

Use your CRM to help you track this. Manage your customers, contacts, referrers, and loan submissions tasks. Keep track of your finances and revenue.

If you do not measure, the analogy here is like jumping into your car and driving down a highway with no speedometer or odometer. Would you know how fast you need to drive to arrive at your destination on time?

It is very important to have these systems in place. Not only to keep you organised and running a professional mortgage business but to save you time and effort.

Wouldn’t you prefer to enjoy the fruits of your success than working hard to only keep your business afloat?


Running a mortgage broking business can feel like a lonely venture.  But it doesn’t have to be like this.  Contact us and see if we can work with you to help you achieve success.  Here are some reviews from brokers who we have help start their mortgage broking businesses.

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