Any advice from self employed mortgage brokers?

el_capitan_2

Hi everyone,

This is my first post here on MSE. I have been reading through plenty of previous threads, and can see how helpful some of you other brokers are. So I thought i would ask for some advice myself.

I am a mortgage broker, working for a small independent firm in the south east. I have 18 months experience in the industry (12 based in an estate agents). While I am aware i will be learning until i retire, i feel i am a good broker, with good market knowledge and people skills.

It was always the goal of mine to eventually go it alone as a one man band, joining a network as an AR.

I suppose my question really, as i reach the 2 year mar in the industry, is would any of you brokers who have decided to start your own companies got any advice or experiences you can share?

How long had you been in the industry? did you do the right thing? How did you choose a network? what were the rough set up costs (working from home initially)?

I would really appreciate any guidance you can offer me.

Kind regards.

MortgagesInc

I would say the single most important factor is how you will get clients - without them, it doesn't matter how much you know.

With regard to Networks, most will be similar from a compliance point of view - it's all really down to the financials - they depend on your individual turnover, and split of business.

Any questions don't hesitate to ask

sarkin

I work from home the hardest bit of the job is lead generation. You may have all the knowledge in the world but as MorgageInc said no leads no deals. My mate works for a local estate agent has leads provided and his knowledge is better than mine.

I spend more time working on my website to generate traffic. When I need to find a deal I just source through trigold, double check with the BDM and quote to client, Its not rocket science.

If you do set up, a website is a must. remortgave advisor was one of my best keywords but has slipped recently. I also had some traffice from cheap remortgage. But if you can get your site to rank for local search you can pick up some business i.e "mortgage broker bournemouth" which works for me and variations on this

I am with a small network so you get to know all the other AR's, we meet up every 3 months for compliance roadshows. Some of the larger networks can be inpersonnel and you have targets to hit.

I like working from home, as it gives you the freedom you want but with house prices about to drop I think we will have tough times ahead, but good luck if you do go for it

el_capitan_2

Hi guys, thanks for the quick response.

I couldn't agree more that the lead generation will be the hardest part. Have you tried any of the leads sold through various websites? I've heard mixed responses.

Sarkin, while i agree that knowledge isn't everything, i do feel you have made a rather sweeping generalisation by saying we just source from trigold/mortgage brian, then confirm with the bdm. 7 out of 10 cases aren't that simple. Not where i work anyway.

I am interested to know however, did you start out as employed, or go straight to work for yourself?

MortgagesInc, what about yourself? did you start out employed? If so what was the change like?

I really apperciate this guys.

sarkin

Hi el captain

Sorry about the sweeping statement I was trying to get accross that with no leads you have no business so it does not matter what you know because you cant tell anyone.

I have purchased leads they are expensive and poor quality although some people do have success with them. Some people post on forums by being a guru to generate business.

Refferals are the best leads once you get your name about people recomend you and they are free.

I started out cold calling for a mortgage broker about 6 years ago before regulation. Sat the CeMAP exams worked for a couple of brokers and decided to go for it my self.

The biggest problem starting up is, you can not work before you are FSA approved then you have to genereate leads convert into business, sign the deal, submit wait for completion then chase your proc fee.This can take upto 3 months and with bills of over £1000 a month the credit card can take a bit of a pasting to start with. If you buy poor quality leads ad I did you can start having a bit of a hairy time between juggling finances.

Another good source of leads is the local estate agent, you can do a 50/50 cut on commision and then take repeat business on the next deal and maybe get a refferal

Dan_Collins_2

I am currently a self employed broker, but I work with a company so I give a % away. I am on a good deal and would not go it alone until I know what this market is doing. As said on this thread while you are waiting to get signed off you cant right business so you will be starting over again.

Working at home is the best start but I would look to get an office asap. You could try to find an estate agent with an office up stairs, rent it from them and pay them for leads. I have two agents, but both are quiet at the mo.

Good luck whatever you do and remember the grass is not always greener when you get over that fence!

el_capitan_2

very good points, i have to admit i hadn't thought about the amount of time it will take to be authorised.

I'm not looking to make the move for at least the next 6-12 months, i should have a bit of working capital coming through then, and hopefully the market will have picked up by then....!

Just trying to work out if it is the right thing to do, but then i suppose only i am able to answer that question.

I'd say 95% of leads i get now come from refferal, so your right, it's all about getting your name out there.

How long did it take you to get authorised out of interest?

I'm assuming the basic set up costs are going to be:

-Consumer Credit License
-Initial network fees
-advertising
-IT etc
-Website set up

Are there any glaring ommissions i'm making?

HelpWhereIcan

I would probably say that 2 years is a little too short to be thinking about going it alone completely unless you have a reliable and sizeable client bank to take with you.

Some of the mistakes I made:

1. Completley understimating the amount of time I would spend doing admin (not just chasing but also to do with the day to day running of a business - paying bills, compliance etc etc)

2. Paying tooo much for some forms of leads - in my case Yellow Pages but also internet leads from an expensive source just 'cos I knew who they were. Add to that paying for leads upfront rather than a pay as you go basis.

3. Listening to the various crooks that run internet marketing firms that promise more traffic than you can handle and give you boloc all for the money. Ditto certain Affinity schemes and charity advertising (no matter how good it makes you feel).

4. Getting bogged down in the little details (websites, free gifts, presentation folders etc etc) rather than concentrating on what you get paid for - talking to customers and doing the business.

No matter how hard you work on certain things they will never produce the business you hope they will in the time you need them to. Concentrate on the basics.

Get some introducers (Estate Agents ok but also IFAs, Solicitors, Accountants etc), keep your advertising local,basic and short term commitment (ie the local property guide will normally want no more than a commitment to 4 weeks advertising at a time).

Use your exisiting customers - let them know that you are looking for referrals. Ask early in your relationship with them and take care of them and anyone they introduce to you.

Use internet leads (PAA, Leadbay etc) as a boost to business levels, you may well struggle if you are completely reliant on them as conversion rates are much lower than they all claim and you have to be prepared to call the customer within 30 mins (immediately if poss).

Keep your phone on 24/7 - always answer it. You are never off duty and customers will often be surprised when you answer at 9 pm but will never forget tat you did not make them feel bad for ringing (I always say "If I answer I'm willing to talk").

Do the basics right and the rest will follow - once you have the money to pay for them properly. Otherwise you will spend your life chasing your own asre and getting into debt, all the while thinking "It will get better soon".

As a first step, I would always work for another firm on a self employed basis first. You get most of the freedom, most of the rewards and much less of the risk.

I am talking to one adviser now who will get a very generous commission split from me with no set hours or targets and the ability to walk back into an employed position whenever she gets tired of it.

I am stuck with it. I have admin staff to pay, rent to pay, all the other costs of business to pay and all the debt that it cost me to get here to pay back.

I thought too little about it - does not mean I regret it - it is a huge step to be a one man band.

Conrad

I was employed about 7 years having worked my way to regional Manager, then took the plunge. I hooked up with an EA and used his desk and paid 25% or less of earnings per deal. At this time my 'office' was my home, but I spent 90% of my time in the EA. I also found other EAs willing to introduce but this takes a lot of persistence and luck.

As with every Human endeavour, people achieve very different outcomes. The mega star 'A list' actor / the extra. The successful property developer / the skint builder. The £30,000 pa Solicitor, the £1,000,000 pa Solicitor.

Mortgage broking is no different. I found I had to immerse myself in the EA's business and see every interaction with an EAs punter as potential business for myself (eg; answering thier phone, registering and applicant and then introducing myself, you cannot wait for any business to fall into your lap). I also used to cold call the EAs applicants and vendors but hated doing this.

Then about 5 years ago I decided after much deliberation to rent a shop myself. I was terrified, but thanks to having a large client bank and a good visible location I prospered. My sign was very professional in the vien of a NEXT shop - you cant get away with a pokey painted wooden sign really, and the shop was professional fitted with attention to detail (nothing brass or brass coloured, everything even door screws & letter box were brushed metalic - not shiny 1998 metalic) as this conveys many positive flavours.

After that I bought a larger shop and so on.

I always ensure clients are written to about 4 months prior to thier previously arranged deal expiring. Advertising I have not found to be worthwhile and I get practically nothing from the Web.

My Accountant refers quite a lot of business but you will find an Accountant will only do this if you are succesfull in helping thier clients, which Im afraid means you have to have a very open mind.

I do not sell life assurance as I found the time and effort involved to do it properly, ate into the time I wanting to spend sourcing mortgages.
I do charge fees which clients dont seem to have an issue with as I have built a reputation for being able to place cases others cannot.
I am not interest in clients that expect me to work for a couple of hundred pound commision only. That model is just not cost effective and often such freeloaders want masses of unneccesary quotations.
With all trades there are high and low fee earners. I do a good very thorough job and in return enjoy an income to reflect this.

A key point is to recognise almost all business is placeable. I often find packagers will insist a potential case is not doable, however if you keep thinking it through sometimes for weeks, you invariably find there is a way.
This is particularly true of secured loans where 9 out of 10 loan packagers will 100% guarantee a case cant be done and then sure enough I find it can - but it takes a lot of work.

Sourcing systems as you correctly point out are merely a VERY blunt tool, just a minor help really. No serious broker would ever rely on them, for a start the filtering systems can only cope with a fraction of possible inputs.


ONE MAN BAND;
I personally never wanted to employ other brokers, I instead write all the business and employ a couple of administrators. 2 freinds did go on to employ other advice givers however I'm very sure they actually make less profit than I do. I prefer the simplicity and reduced stress of working my way.

THE FUTURE;
Currently I am hearing of many brokers being made redundant and some call centre type organisations laying off 90% of thier staff.
Compliance is likely to become more robust yet at the same time you need to be able to satisfy your clients wants, not an easy balance.

MONEY IN THE BANK
If there is one thing that can make the difference between sucess and failure in any business, I would say it is having plenty of money in reserve for the hard times. So many people become complacent and spent all thier money. If I were you I would want 12 months living expenses in the Bank IN ADDITION to money you reserve from each piece of income for Tax and expenses.

dpesky

Hi, I now own a nationwide mortgage brokerage lending in excess of £30 million per month and started as a sole trader similar to you. A client bank is a must to 'go it alone' and 2 years may not be a long enough period and remember your current employer will 'own' those clients so be prepared for a few snotty letters when you leave. Network choice is hard and best speak to as many AR's as you can as many AR's are rewarded for bringing people into the network. I am an AR and have been for 2 different companies - its a tough choice!

I am a Mortgage Adviser

You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.

el_capitan_2

thanks so much for all the advice, from what you have all said i think i'm best to wait at least another year and see how i am doing then. Still sure that working for myself is what i want to do though, which is encouraging it think.

Thank you again, and any more advice on the topic would be greatly appreciated.