One for the Brokers on here

UK007BullDog

I am thinking of starting my own brokerage by the end of the year.

Now I need to get my head around the things I need to look at like going AR or DA. If AR which is the most cost effective way at the same time the best for compliance?

A business plan, premises to rent as I do not want to work from home. I want to take on one or two others as well. When choosing premises what should I look out for area wise?

What do clients prefer when visiting a broker? Parking?

Is there anything else I need to consider? Please Message me for things that are more private. This is going to be one huge step for me but was always my dream to work for myself. So I need some tips as there is no need for me to duplicate other peoples mistakes they have made starting up.

Thanks!

D.

dunstonh

I have toyed with the idea of a premises a number of times but keep ending up ruling it out due to cost.

If you go with a lease you could be looking at £8000-£20,000 a year. Then you have business rates which can be more than the lease.

Then you have to man the office during working hours. That either means you 6 days a week 9-5 or paying someone else whilst you do appointments and home visits.

You also have to kit the office/shop out with equipment and furniture. Ongoing costs of insurance etc.

I would put a figure of £50,000 in the first year as being a cost. So, you if you do it you need to be sure you are going to get people walking in. One shop I looked at was next door to LloydsTSB and I had this fanciful moment of owning that and sticking "buy your Scottish Widows & C&G mortgages cheaper here". Of course, compliance wouldnt allow that even though it is true.

As for AR or DA, there are pros and cons to both. DA requires more admin, more responsibility for yourself. Some networks under AR status can be overpowering whilst others are light touch. You also have the middle ground with some of the networks now where you are DA but you buy the services from the network on an ad-hoc basis rather than going for all full network AR status.

If you are going to be mortgage (and protection) only, then its a lot cheaper than investment class as for as industry costs go. However, if you have a shop that is just mortgages, you could be turning business away.

MortgageMamma

Hi D

I've just done this with the exception of premises, although thats on the agenda shortly and I've also just took on my first AR, if you want to email me I'll give you my perspective

Good luck

Lisa

UK007BullDog

Yes, thanks. I will contact you tonight. My fear is working from home where to get the leads from as I do not have a client bank. Got to dash now for the morning meeting.

MortgageMamma

We all start somewhere, I am just about to invest a lump sum in radio advertising - I dont have a premises and am not linked to any estate agents as such although I do get introductions from them therefore locally not many know of my existence - I figured a special offer on radio was a good medium

I also use a property website and some local websites which are free to advertise on, and quite a few people contact me through my husbands shop and through the kids school

I'll speak to you mre about it tonight, I have some handy standard letters etc that you can use to introduce yourself to the EA's

As for AR or DA, I chose AR as I wanted the support of a network and so far they have been absolutely brilliant and I know now I made the right choice

Catch you later

Lisa

toonfish

I started off renting an upstairs office for £300 per month in an insurance brokerage - as part of this the girls also took 'phone calls for me when I wasn't there which was great - people don't like leaving messages on an answerphone.

When I moved to a shop front premises however my turnover literally doubled so, even though costs are much higher the net gain was well worth it. We get a lot of "walk in" business and you become a familiar face to local people who pass by you regularly. People think they "know" you and there is an instant barrier breakdown.

We find local advertising and sponsorship to be the best way of keeping our name about but rarely get any specific rersponse to an advert. Most business is by referalls, walk ins or from existing clients.

Inrroducers are, in the main a pain in the !!!! and we tend to avoid them apart from a couple of solicitors. They want a big slice of the cake, and try to get involved in the deals.

Buying leads we found to be a complete waste of time, we only tried leadbay, but most turned out to be internet timewasters with ideas in the realms of fantasy.

My favoured business is first time buyers, offer them a hand holding process and they will get you loads of referalls. Your biggest competition will be the estate agents so you need to have an edge. Stress your independence (assuming you are) and that you can put together a personal package.

As for AR or DA then AR all the way for me - it might be more expensive, but an awful lot less hassle. Let someone else worry about it, your "job" is to write business.

JoeK_3

Running a mortgage brokerage can be taxing in a number of ways:

1) Mortgage/ Remortgage Enquiries/Leads
2) Compliance
3) Back Office Facilities

I fully understand your situation, having started up in my bedroom. Now some 17 years after having a national team of mortgage advisers, I am still wearing the tee shirt.

To start up in the high street, you will need to be well capitalised, as you well know, it can take up to 8 weeks to get paid in the mortgage industry.

pm me for some personnal questions.

JoeK

dunstonh

Inrroducers are, in the main a pain in the !!!! and we tend to avoid them apart from a couple of solicitors. They want a big slice of the cake, and try to get involved in the deals.

Introducers were a significant part of my early business. I had 6 within the first 6 months. 3 were pretty useless, 2 were ok but 1 provided about
15 cases a week. He still sticks around 3 cases a week to me all these years on. He has a near 100% conversion ratio. That said, I dont know how useful introducers would be on mortgage business only.

Buying leads we found to be a complete waste of time, we only tried leadbay, but most turned out to be internet timewasters with ideas in the realms of fantasy.

I would never buy a lead. Every business model that has bought leads and relies on them as their primary source of income has failed.

When I moved to a shop front premises however my turnover literally doubled so, even though costs are much higher the net gain was well worth it.

Thats the positive. Get the right location and you are laughing. Get the wrong location and it could be expensive.

Every time I get on this subject I think, shall I. Shall I not. Think of positives, think of the negatives and end up carrying on where I am. However, to be fair, I don't need to get business. It comes to me handed on a plate. So, in my case, the need for a shop would is very low and it could take away from the business model I have built over the years.

You need to remember that all advisers will have different business models. So, what is right for one, may not be right for another. Do you know any other advisers locally to you who you could perhaps go in with together. That would split your costs (although it would split your revenue as well). It would reduce your risk and help with manning the shop as you wont need to be there all the time as you can take it in turns.

One thing though to avoid is the business unit. I know a number of firms that sit in business units which they pay varying amounts for. They dont get any footfall from potential clients at all. Yes you have a meeting place if they want to come to you but it doesnt generate any business.

MortgageMamma

Yes I agree with business units - I too considered one and whilst it is advantageous to be in a unit with lots of other businesses, they are cheap and help keep costs down, it is right you get no footfall.

When I was employed I worked in a business unit for 4 months and in that time the whole company only had one enquiry from the building

I have also worked in a shop front back in March/April 2006, I only stayed for 8 weeks as it was a trial - I took on a retiring mortgage brokers premises - nobody came in in the whole 8 weeks except to ask directions!! That cost me £1200 plus rates - the location wasnt the best to be honest, I think if you are going for a walkin type premises you need to be right in the centre of town and the rent will cost you a fortune

Again a valid point from DH about getting someone to come in with you, I currently work alone but am taking on a new AR who I've known for quite a while and who I get on with. The long term aim is to develop a strong working relationship and eventually he will become a shareholding director in my company, and me in one of his. I think it will work out well as our skills sets compliment eachother, we have the same principles and ethics and having someone else to make decisions with can get you thinking outside the box

JUst another thing, if you are goig to do this and need capital apply for a grant from your local busiensslink partnership - they get all their funding in April each year but it tends to be gone before christmas! I applied for one beginning of April this year - they are not means tested exactly so don't feel you cannot apply for one

MM

toonfish

I have a "partner" although legally I own 100% of the company and employ him. We split our income 50/50 which avoids any disputes over leads etc. Worth bearing in mind if you go in with someone else.

dwight-van-man

Hiya, I went out on my own in 2002 (although I no longer work as a mortgage broker) working from home and largely meeting clients in their own homes. Mistakes I made were to initially go through a large national broker firm who promised fabulous leads and admin back up in return for a 40% cut of my turnover. If you're going to go out on your own - do it properly! I also made the mistake of buying in leads - although you do get a few decent ones, they're largely rubbish, regardless of whta the lead generatiob firm say. Also, do not rely on the friends and family who promise they'll get you to do their mortgage - I'm still waiting for a lot of these offers to materialise. If I was doing it again, I'd definately get a shop front, get a few guys working for you an a self-employed basis with a good commission split on the basis they bring ina client bank and self-generate in return for some leads. Offer something your competitors don't - sounds obvious but in my current job I see regular cases where a client is shopping around brokers so maybe you go for a fee free model, or simply take a bit extra time to fully explain the process etc etc. One of my more successful broker connections offers a property finding service, so they actively trawl property listings to find property that suits the clients remit, all inclusive in their broker fee. Anohter who set up from scratch with no client bank explains to clients that instead of charging them a broker fee, he asks them for names of three people they think he could help and gives out Ikea vouchers for successful leads...

Good luck!!