How to become a mortgage broker
At last count there was over 19,000 mortgage brokers in Australia (MFAA 2023). This is a 39% increase on the number of brokers in the industry since 2015.
The are several reasons for the growth in the industry numbers:
- Strong brand in Australia
- Borrowers like the idea of more choice
- Attractive career path that offers flexibility
- High earning potential
This article explains how to become a mortgage broker, plus I share the benefits I had from becoming a mortgage broker.
A surprising aspect about the path to become a mortgage broker is that there is no requirement to have a financial background. I am proof. My background was healthcare and not finance.
So, while there are some strict requirements to becoming a mortgage broker, they should not be regarded as high barriers. A good understanding of English, maths and some real-world finance is enough to start.
Oh, and be willing to work hard—really, hard. There is scope, in time, to work smarter not harder.
In addition to explaining how to become a mortgage broker, I also tell you about how my transition to mortgage broking benefited me. It changed my working life by giving me choice and flexibility around time and earnings. I guess you could say it changed my life—really.
The pathway to become a mortgage broker, is a clear one that I will articulate for you here. There are educational standards, memberships and various stakeholders to satisfy on your way to becoming a mortgage broker.
And once you become a mortgage broker, the next steps are up to you. It could be the challenge of carving out a career, building a business or a desire to make a big impact on a few. Either way, the many benefits that mortgage broking can offer will be yours to explore.
What does a mortgage broker do?
In simple terms a mortgage broker assists a borrower with a loan application.
In reality, a mortgage broker finds themselves central to property purchases, subdivisions, relationship breakdowns, refinances and more—from start to finish.
A mortgage broker assists a client to prepare and submit an application by taking into account their goals and objectives. It is always done so with the client’s best interest in mind—front and centre.
Here I list over 100 things a mortgage broker does, and that was me just getting started.
Australians using mortgage brokers more
If you become a mortgage broker, you are joining an industry showing a strong consumer-trend towards the adoption of the mortgage broking industry.
When I became a mortgage broker in 2008, 39% of new home loans were originated by mortgage brokers.
The graph below shows the trend of broker numbers from 2015 which shows a 36% increase in the proportion of new loans arranged by mortgage brokers. If we go back to 2008, there is a 79% increase in the adoption of mortgage brokers for new home loans over a 15 year period. Talk about a trendline.
Benefits of becoming a mortgage broker
With over 15 years experience in mortgage broking I have seen almost everything. There has been record breaking market share of mortgage brokers vs banks, there has been royal commissions as well as political proposals to effectively shut down the Australian mortgage broking model.
The mortgage broking model in Australia has come out of these challenges stronger, and with higher professional standards. It promises to be a reliable and impactful industry for years to come.
It is an industry 70% of Australians are now turning to for help with new home loans. A healthy position that stands to deliver the following benefits to any new entrants.
Benefit – Meaningful role
Becoming a mortgage brokers can place you at the centre of something much bigger than the home loan you are assisting your client with. There are families, dreams and hard work in every borrower’s story. The benefit to becoming a mortgage broker is to turn that into a successful home loan application—you can actually make things happen.
A good mortgage broker can help deliver the home loan approval that sees a couple move into their own home. It can also help a family buy a home that has space to grow. There are also investors to assist with growing a property or share portfolio they might leave to their family one day.
The great Australian dream would not happen for most if it were not for home loans—and mortgage brokers.
My experience – Playing a meaningful role
I have found most borrowers, especially new ones, share something in common—vulnerability.
When I became a mortgage broker I found meetings with clients were often the first major financial discussion they had ever had. Clients would disclose concerns and worries in equal measure to their dreams and aspirations.
There would be many queries on subjects I was not qualified to advise on like financial planning, superannuation, tax and insurance. I had no idea a mortgage broker could be so central to recognising the needs of clients and guiding them to the right person at the right time.
The cornerstone role of a mortgage broker is something I relished. I recognised that you do not need to know everything for everyone, just know when refer them to someone qualified to assist.
Meaningful to me was often impactful to the borrower, whether directly home loan-related or not. Here are some situations I found both enjoyable and saw firsthand the impact for clients.
- Saving clients significant sums of money through refinancing, lenders mortgage insurance waivers and guarantor home loans.
- Helping a client build an investment portfolio.
- Helping with loans to start a business.
- Getting loans approved for clients who approached me after receiving a declined home loan application straight from their bank.Helping out friends and family.
- Helping borrowers in the financial aspects of a relationship breakdown. Difficult but also sometimes empowering for the client.
- Understanding when a mortgage broker is the right person for a client, or another finance profession is better placed to assist.
- Finding lending solutions for clients who thought they would never own a home.
- Arranging loans for kids, who’s parents I helped years ago.
- Helping growing families into a bigger home.
Benefit – Flexibility
Flexibility – whose flexibility exactly? Mortgage broking can be flexible for both client and mortgage broker.
Clients often reach out to mortgage brokers because they can meet on their terms—location and time.
Mortgage brokers can play a valuable role for clients without having to navigate the nine to five constraints of an office-based finance role.
How the client-broker dynamics are shaped will be up to the broker. Night meetings can lend themselves to morning surfs. Working from home and online meetings can mean avoiding traffic.
My experience – The flexibility of mortgage broking
Becoming a mortgage broker offered perhaps the most significant change of all. Unlike my previous role in healthcare, much of my work could be done without a client in front of me.
Instead of 90% contact time with patients, and 10% paperwork, mortgage broking flipped this time-allocation on its head. I could now work at the same time as doing other things, like take a personal phone call.
The flexibility of a mortgage broking role offered me so much more out of each day:
- Time with family (like saying yes to coaching sports teams, assemblies)
- Being able to do life admin tasks (think banking, groceries)
- Work from home before work from home was a thing
Benefit – Mortgage broker salary
Mortgage brokers can earn normally, differently, substantially.
The most intriguing aspect of a mortgage broker salary is it has the potential to correlate with something other than hours worked.
Due to the commission-based nature of earnings in the industry, a mortgage broker salary can differ depending on the type of customers and products you deal with. Take home loans for example—bigger loans can have bigger commissions.
Much has been said about the growth in Australian household debt making up a big part of disposable income when compared to other countries. Rather than be on the receiving end of household debt and all the income pressures that come with it, becoming a mortgage broker allows you to align your salary to debt growth.
I have put together a graph that shows the average home loan size from 2005. I have compared this to the loan sizes if they grew at the annual inflation rates from the Australian Bureau of Statistics. Same starting point (2005)—two very different outcomes.
While inflation may be the guide for incremental salary increases across many industries, becoming a mortgage broker allows you to have a salary indexed to home loan growth rates.
Sure, there can be competition, risk, and uncertainty in any business, but becoming a mortgage broker provides earnings opportunities other industries cannot.
The potential for a mortgage broker salary to be substantial comes down to so much more than being in the game. Participating in the game is not enough. There needs to be effort, strategy, processes, and skills if you want to succeed.
My experience – Mortgage broker salary
Time is something you can’t get back.
Becoming a mortgage broker was my foray into the finance industry, where earnings have the potential to be related to a high value product—not time.
Becoming a mortgage broker offered me an opportunity to earn a salary not tied to time. Don’t mistake this to read, easy money for not much work.
All commission-based jobs are not equal.
My health job role was commission based. The more patients I saw, the more I could earn. But, my earnings potential was limited by the number of hours in a day. The exchange was clear: time for money. Sure, I could earn more if I gave up more of my time.
It frustrated me. I got very restless.
At first glance, mortgage broking was similar. Anther commission-based role. The key difference was how the commission was calculated.
Mortgage broking paid commission based on loan size—not the number of loans I assisted with. And, commission was commonly paid in two instalments: Upfront commission paid at the initial loan funding, plus a smaller trail commission paid monthly.
Becoming a mortgage broker gave me the option to stop the flat exchange of my time for money. Instead, I could use my time to target high value transactions. How I got paid for my time was something I could now control.
The salary benefits I saw for me were:
- No earnings limit based on hours in the day
- Significant upfront commission potential
- Passive-type income potential in trailing commission
However, starting as a mortgage broker while the 2008 global financial crisis was still playing out tempered my expectations.
I had enough savings to see out any lean periods for the first 18 months.
Just as well, because soon after I started, lenders reduced their commission structures. Any forecasting I had done around potential earnings were reduced by 20% to 30%.
Ouch.
Nevertheless, the challenge for me was to accelerate my earnings by writing more loans or bigger loans—or ideally, more big loans.
Writing vast volumes of big loans looked great on paper but required a strategy, processes and a lot of working harder—followed by working smarter.
Becoming a mortgage broker has allowed me to build up a client base, a valuable mortgage broking business, a passive income and a salary beyond what I could have done in my previous health profession.
Instead of working for time, I “work with my time”. Working with my time is my approach to working where and when my time is best served, and increasingly my time is spent doing the type of work I want—or not working at all.
Something I was trying to imagine not too long ago.
Mortgage broking industry – Who does what?
There are many different groups involved in the industry—each have their purpose. Here is an overview of the different groups you might deal with in your path to becoming a mortgage broker.
ASIC
The Australian Securities and Investment Commission (ASIC) oversee licensing and compliance for the industry. They provide guidelines around mortgage broker standards and expectations that are in line with the National Credit Code, which includes a best interests duty for mortgage brokers.
While ASIC does not expressly mention specific work experience required to become a mortgage broker, it does outline minimum education standards required to become a mortgage broker. It also makes clear that recently inexperienced mortgage brokers need an adequate support structure.
ASIC manages all requests for credit licenses in Australia. All mortgage broking businesses will need an Australian Credit Licence (ACL) somewhere along the line. Most mortgage brokers will not ever hold a credit licence directly, because ASIC allows mortgage brokers to operate a business as a representative of another licence holder.
Aggregators
If mortgage brokers are the go-between for borrowers and banks, then aggregators help mortgage brokers deal with the banks.
After becoming a mortgage broker, you will likely align with an aggregator to get you going. If you work for a mortgage broking business, they will already have an aggregator relationship.
Aggregators provide many services to mortgage brokers like:
- Record management systems
- Compliance resources
- Lender information
- Lender application access
- Commission agreements and payments
- Lender accreditation
- Credit licensing services
To give you an idea of the size and scope of an aggregator, one of Australia’s largest aggregators, Connective, has over 3700 broker members.
Professional associations
The Mortgage and Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA) are the two major industry professional associations. Both associations require a full two years of mentored work experience before recognising a mortgage brokers ability to operate independently.
Membership of these bodies require at least the minimum education standards prescribed by ASIC—sometimes more.
For example, the MFAA requires both a Certificate IV in Finance and Mortgage Broking and Diploma of Finance and Mortgage Broking Management to be a member. Maintaining membership requires both good practice and a level of continuing professional development to more than meet ASIC standards.
These groups offer ongoing education and training, networking opportunities, and access to industry resources. Becoming a member of a professional association can also help mortgage brokers stay up to date with the latest industry trends and regulations.
Lenders and aggregators value memberships with either the FBAA or MFAA. Memberships of a professional association can help verify that someone has passed the high standards of qualification and experience required to become a mortgage broker.
Lenders
When you become a mortgage broker you will require accreditation with a lender before they accept loan applications from you. Your aggregator usually assists with this.
Lenders are an obvious stakeholder in the mortgage broking industry. However, when becoming a mortgage broker, they are usually the last piece of the puzzle.
Different lenders can different accreditation standards. Some will might require work experience and others may require a higher level of education., like the Diploma of Finance and Mortgage Broking Management.
Requirements to become a mortgage broker
Here are the key requirements for how to become a mortgage broker.
First – Start a discussion
Start a discussion with someone in the industry.
A good starting point could be Connective, one of Australia’s largest aggregators. They helped me build my business for over 10yrs.
It could be me. Send me a message.
A discussion around becoming a mortgage broker could even lead to an introduction to a future employer.
Whoever you talk to, hopefully they point you in the right direction.
Education
The guidance from ASIC is that to become a mortgage broker who provides home loan credit assistance, you require at least a Certificate IV in Finance and Mortgage Broking. There are no formal pre requisites for enrolling in this mortgage broker course.
This mortgage broker course provides a comprehensive understanding of the lending industry, regulations, and ethical standards for those wanting to become a mortgage broker.
Once you have done your mortgage broker course and attained your Certificate IV in Finance and Mortgage Broking, you are one step closer to becoming a mortgage broker.
Another mortgage broker course is the Diploma of Finance and Mortgage Broking Management. This mortgage broker course is more comprehensive. This mortgage broker course can help if you want greater options around lender accreditations, association memberships and running a business in the future. Again, there are no specific requirements your must meet before enrolling in this mortgage broker course.
Here is a list of Registered Training Organisations provided by the MFAA that can offer both mortgage broker courses:
- Certificate IV in Finance and Mortgage Broking
- Diploma of Finance and Mortgage Broking Management
Work experience
This requirement is an easy one. There are no work experience requirements to become a mortgage broker. You can even enter the industry from the outside—like I did. I was in health before becoming a mortgage broker.
As soon as you meet the minimum mortgage broker course qualifications and membership standards you can start working as a mortgage broker. Given you will be inexperienced, there is a generally accepted two-year period of loan writing under a mentor.
After the initial two-year period of mortgage broker mentoring, professional associations should recognise this so you may now work without the same level of supervision.
Credit licence
When you become a mortgage broker you can work under a few different business and licensing arrangements. Licensing of credit in Australia is something that falls under the administration of ASIC.
Firstly, it might help to understand the common licensing structures required to operate a mortgage broking business.
An Australian Credit Licence (ACL) is required to operate a mortgage broking business for those valuing empowerment and control. The is considered the ultimate level of both control and responsibility within mortgage broking.
Alternatively, mortgage broking businesses can be operated as a Credit Representative of an ACL holder. There may be some restriction around processes, lender options, marketing. This is because the ACL holder will ultimately be responsible for the actions of any of its credit representatives.
The ACL route is considered the more time intensive and costly type of authority under which to operate a business. This would depend on the size and complexity of the mortgage broking business.
More commonly, new mortgage brokers will be employees or subcontractors of a business operating under one of the above structures.
So, when you become a mortgage broker you need to operate within a licensed environment that should provide the structure and support to succeed.
Association memberships
There are multiple stakeholders within the mortgage broking industry that require your membership or accreditation as part of becoming a mortgage broker.
The below memberships can be part of the final steps to becoming a mortgage broker.
Professional industry associations
Membership with either the MFAA or the FBAA is normally required by both lenders and aggregators.
As mentioned above, the MFAA requires the mortgage broker course qualification, Diploma of Finance and Mortgage Broking Management, to become a member.
External dispute resolution
The Australian Financial Complaints Authority (AFCA) is an independent body to assist with credit related disputes.
A mortgage broking business will usually need membership of AFCA to operate. If you operate as an employee mortgage broker, actions usually fall under the AFCA membership of the business.
Other checks
There are some other checks to expect before you become a mortgage broker. Namely, credit checks and police checks. Checking for bankruptcy and criminal records makes sense when a key aspect of mortgage broking deals with sensitive personal financial information.
Final word
In conclusion, becoming a mortgage broker can be a challenging and rewarding career choice for those interested in the financial industry. As with any profession, it requires a strong commitment to ongoing education and training, as well as a passion for helping others achieve their financial goals.
Mortgage broking has been good to me, delivering benefits above and beyond my initial expectations.
By understanding the requirements outlined in this article, those wanting to become mortgage brokers can gain the skills and knowledge necessary to succeed in this dynamic and exciting field.
With dedication, hard work, and a commitment to excellence, anyone can become a successful mortgage broker and help people achieve the dream of homeownership.
References
Australian Bureau of Statistics (ABS) , Consumer Price Index, Australia, viewed 12th April 2023, https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia
Connective 2023, Why join Connective?, viewed 12th April 2023, https://www.connective.com.au/mortgage-broking/why-join-connective
MFAA, Data provides insights on broking industry, viewed 12th April 2023, https://www.mfaa.com.au/news/data-provides-insights-on-broking-industry
Fujitsu, Credit crunch causes banks to scrutinise mortgage profitability (March 2008), viewed 12th April 2023, https://www.fujitsu.com/au/about/resources/news/press-releases/2008/20080319-01.html
Graphs
Proportion of new lending by mortgage brokers – information sourced from MFAA. https://www.mfaa.com.au/news/data-provides-insights-on-broking-industry
Number of mortgage brokers in Australia – information sourced from MFAA. https://www.mfaa.com.au/news/data-provides-insights-on-broking-industry
Average home loan size vs Home loan growth at inflation – information sources from ABS. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia
