Mortgage Advisor Earnings

Graeme7777

Hi,

I have been considering for some time a career change to become a mortgage advisor. I recognise that this would probably be the worst time to get into such a career and so I have no plans to any change now.

However, I am starting to investigate the job to see if in a better future environment it would be the right one for me.

To this end I have a few questions with which I'd be very grateful for some help:

1. How much would a self-employed adviser earn on a standard mortgage of £100,000?

2. How important is selling related insurance to the earnings of an advisor?

3. Is Mortgage Advising a declining career - the internet and increasing consumerism is driving borrowers to make their own choices?

4. Are advisers likely to take on a part-time intern? I was thinking that it would be a good idea to ease into becoming an adviser rather than giving up my current job straight away?

5. Which are the most lucrative areas of the mortgage advice industry and which, if any, should be avoided?

6. How different will the operating environment be for mortgage advisors in 5 years?

7. Is advising borrowers on secured and unsecured loans a sound alternative to being a mortgage advisor?

As you can tell from my post I know very little about this part of the financial services industry, but that's why I have posted this.

Thanks!

_Andy_

Graeme7777 wrote: »

Hi,


1. How much would a self-employed adviser earn on a standard mortgage of £100,000?

Around 0.35% (assuming it's a prime deal). If you're part of a network they'll take a cut of that.

2. How important is selling related insurance to the earnings of an advisor?

Very.

3. Is Mortgage Advising a declining career - the internet and increasing consumerism is driving borrowers to make their own choices?

Yes (IMHO)

4. Are advisers likely to take on a part-time intern? I was thinking that it would be a good idea to ease into becoming an adviser rather than giving up my current job straight away?

I very much doubt it.

5. Which are the most lucrative areas of the mortgage advice industry and which, if any, should be avoided?

Possibly commercial. Subprime is lucrative but increasingly hard to place.

6. How different will the operating environment be for mortgage advisors in 5 years?

Who knows. Probably flat fee-based.

7. Is advising borrowers on secured and unsecured loans a sound alternative to being a mortgage advisor?

Possibly although secured loan leads are getting increasingly expensive as more brokers are diversifying into them

Tiddler_2

Agree pretty much with what Andy has said, however whilst at the moment with the dual pricing the placing of mortgages often consists of telling a client to go direct, I think that the need for an adviser is actually on the increase.

Personally, I would prefer the lenders to move away from paying us commission (or proc fees) so that any accusations of recommending based on size of commission are completely removed - plus it may also offer
brokers the chance to offer the deals they currently can't offer.

The earnings can then be fee based, with the fees being paid by the customer, rather than being hidden in the interest rates they pay.

Commercial is very lucrative, but we recently received notice from the RBS group to say they are to stop paying commissions on their deals, and therefore expect brokers to charge customers fees.


Being a part-time adviser is quite difficult as deals tend to need to be sorted asap to stop customers going elsewhere. If you worked in a bank part-time then you may be able to do it.


Not many networks publish the proc fees/commissions that they receive but I found the attached

http://www.limeservices.com/mortgages_fees.asp

The net fee is what you would receive. You will also notice down the right hand side, the links to the insurance commissions they pay.

I'm sure someone will come along and explain how LAUTRO rates are calculated on protection policies (I just put a premium in a calculator and it tells me what I earn!!).

I think if you base earnings per case on averages it would give you an idea of earnings.

£100k mortgage = £250 to £350
£350 Buildings & Contents premium = £70 to £100
ASU cover of £40 p.m = £100

So without life, critical illness insurances you could earn around £400 - £550 per case.

For a £30 life cover policy you would earn around £550.


People will have different take up rates of policies, but I would think that if you managed 1 in 2 as an average, that would be pretty exceptional. So that would give you an average of around £600 - £700 per application taken.

You then have to work out how you will obtain your business - do you pay for leads? These can cost anything from £1 upwards, people may give you an idea of how much they pay for a lead but I have heard reports of people paying £100 - £150 a lead. Based on signing up 1 in 4 that means each case you sign up could cost around £200 if you pay £50 per lead, so your £600 - £700 earnings has actually come down to £400 - £500 per case.

How many cases you can do a week .........how long is a piece of string. I would think an average of 2-3 per week would be very good.


Hope that helps - sorry if its a bit long winded!!

Graeme7777

Thank you both very much. That's very helpful!

Conrad

Graeme

I used to sell protection policies. A few Brokers I'd known for years stopped selling insurance and at first I thought this was idiotic, however in time I too ceased dealing in insurance.

People have polarised views on this but for me it was the right decision, with the benefit being that I could dedicate all my time to mortgages and secured loans, and not have my energy dilluted by time spent on the very considerable burden of insurance.

I earn approximately £1400 per case, and my average mortgage size is c£170,000.
I charge fees which vary from case to case and I guess people are willing to pay them as they percieve I have the knowledge and skills appropriate. You cant just go on a course and pick up this knowledge, it takes a lot of hard graft and motivation. For example I have a very large file which is updated every time I meet a lender rep, and I spend quite a bit of time meeting all the reps I can. I listen very carefully to every detail and have to constantly stop them in order I can update my notes.

Reps tell me I am unusual as they find mosr brokers are reluctant to fit them in, most especially reps from the lesser known lenders.
What this means in practice is I can place cases that others have turned away, and also find solutions as quickly as possible. Ive been around a while and seen many brokers not taking any notes in these crucial meetings - apparantly they have perfect memories!

Perhaps as I do not transact insurance I have more time for meetings with reps.

Graeme7777

Thanks very much Conrad