How to start a Mortgage Broking business in Australia

To operate as a Mortgage Broker you need to be licensed and accredited. The regulatory body responsible for overseeing mortgage brokers is the Australian Securities and Investments Commission (ASIC). You must meet the educational and professional requirements set by ASIC and obtain an Australian Credit License (ACL) or operate under an ACL holder. Let’s break this down further…

The minimum educational requirement to fulfil and commence a mortgage broker business is Certificate IV Finance & Mortgage Broking. Completing the Diploma of Finance & Mortgage Broking is not a mandatory requirement however, it is highly encouraged. If you choose not to complete the Diploma you may find that you’ll be precluded from obtaining a lending accreditation with the Commonwealth Bank (CBA). At the time of writing, all other residential lenders will consider accrediting a new-to-industry broker who just holds Cert IV. More on lender's accreditations soon.

With Cert IV in hand, the next step would be to align with an industry mentor. This is a key requirement for new-to-industry brokers. Cert IV provides the theory, but it doesn’t provide practical insight into the peculiarities of all lending policies, credit submissions, systems, and the cut and thrust of growing a mortgage broking business. This is where your mentor steps in. At Loans Only our Mentoring Program is Endorsed by the MFAA. There are currently only two other Endorsed Programs nationally. Peter Mastroianni is also an Endorsed Mentor with the MFAA and FBAA. You can obtain further details on our service offering HERE alternatively book a call directly with Peter HERE.

The next step is to onboard with an ACL holder. Typically this is an aggregation group that will provide the lending panel, origination software (i.e. the bit of kit brokers needs to submit loans to the lenders), compliance support, and facilitate the payments from the lenders. To obtain a Credit Representative (CR) status under an ACL the following items and/ or memberships will need to be provided:

1. Certificate IV and/ or Diploma in Finance & Mortgage Broking
2. Membership to the Australian Financial Complaints Authority (AFCA). Note: if you establish under an ACN, a Company AFCA certificate will be required in addition to your individual membership
3. ID – two forms of photo ID are required
4. Industry Body Membership – you must become a member of the MFAA or FBAA to become accredited
5. Professional Indemnity Insurance is required for a minimum total sum insurance of $2m for any one claim and $6m in the aggregate
6. National Police Check dated within the last 90 days
7. Comprehensive Credit Report (CCR) dated within the last 90 days
8. Resume
9. Mentor Letter of Appointment
10. ABN with GST registration in place.

Once the ACL obtains all these items, you would be appointed as a ‘Credit Rep’ under their license. This onboarding process can be completed in under a week. It could also take a couple of months. Onboarding speed is dictated by how quickly you wish to get started.

When onboarding is complete the information gathered is then distributed to each lender on the panel to obtain accreditation. Some lenders will give automatic accreditation. Others will require you to attend their new broker induction day. Or meet with their BDM/ Relationship Manager. Some require you to watch presentations on the products and policies to then complete a questionnaire at the end. Once you jump through those hoops and have the accreditation in place you can then introduce loans to that lender. In the month following your onboarding, you should have most if not all your accreditations in place.

For an overview of the costs associated with this process, you should read this article HERE.

Going through these steps just gets you started. From here the journey becomes more focused on:

1. Developing and implementing your business plan
2. Establishing relationships with lenders and building a network
3. Honing the marketing and sales strategy
4. Staying informed and compliant
5. Perfecting your credit analysis and submission process
6. Continuously educating yourself.

To get an idea of what the early stage of running a broking business is like, read this article HERE.

We have also created a FREE course on how to successfully StartUp! a broking business. In the course, there is an emphasis on marketing, business plans, templates, forecasting models, and explainers on how to pull this all together. It is worth a look, so enrol HERE and Start Your Journey today.