Grow Your Mortgage Broking Business

Increase your broking revenue by 60% by diversifying your offering

Like most mortgage brokers, you probably spend a lot of quality time thinking about how to grow your business. Existing networks, extensive marketing, and providing a quality experience for your customers can only get you so far.

Now with interest rates in Australia on the rise and a flattening property market, it’s not surprising that we’re likely to see customers take a more conservative approach to borrowing than what we’ve seen in recent times. People will be erring on the side of caution for a while and that means less mortgage loans being converted by brokers.

To scale your business in the current economic environment, you might need to look at alternatives and think outside the box a little.

So how can you, as a mortgage broker, scale your business and bring in additional revenue?

Have you heard the saying: 'The best customer is the one you’ve already got.'

Winning new business and building lasting relationships is no easy feat, but clever businesses know that the best returns come from repeat customers over a lasting period. So how do you get your customers to come back and to consider your business the place to go when they need a problem solved?

Diversify your mortgage broking business

The answer is: mortgage brokers should diversify – and there aren’t many industries where this is more relevant than in property and mortgage broking.

Diversification is about building products and exploring new areas of business – it allows you to offer more to your customers. This, in turn, means you gain access to another source of income, greater business growth and deeper customer relationships.

Mortgage brokers can be left vulnerable by changes in the market – and since transactions are typically one-off, mortgage brokers often put considerable effort into building relationships with minimal long-term return.

Offering a broader service doesn’t just help to bolster your business, but increasingly, customers expect comprehensive access to financial services – and will be drawn toward those who offer it.

So what are some ways that you can diversify your business in order to add value to clients and bring in additional revenue? Here's a few examples:

• Personal loans
• Car loans
• Business loans
• Insurance

While offering personal and car loans are going to involve a similar process to arranging home loans, the commission earned by the broker is a lot less. Offering insurance products is also a popular choice for a lot of mortgage brokers (so you certainly won't have a unique proposition there), however, it requires an in-depth knowledge of insurance products and therefore additional training.
That leaves diversifying into business loans.

Diversify to provide business finance

Did you know that around 30% of residential mortgage brokers' clients are also small business owners? This presents a great opportunity to be able to provide financing solutions for clients you already have on your books.

Not only does working with existing clients mean that you don't have to spend time and money trying to find new clients, but you already have a good understanding of their financial situation and a working relationship with them - saving time and effort.

Your ability to provide a broad range of solutions will differentiate you from the “average” broker and keep your clients coming back.

Why should mortgage brokers diversify into commercial lending?

Residential mortgage broking is a saturated market - there were nearly 20,000 licensed credit representatives in 2020 according to the Finance Brokers Association of Australia (FBAA), however, only 5.3% of these are involved in the commercial broking space. Meanwhile, a report from cloud banking platform, Mambu, suggests that 50% of SMEs struggle to get finance and 43% of SMEs are looking to access funding in 2022 (RFI Global).

Now, we're not suggesting that you change your entire business plan and give up residential mortgage broking, but by partially diversifying to provide your clients with more finance options you're going to open up opportunities to grow your business.

Take the easy route and partner with a private lender

If you're worried about all the additional hours of training you're going to need to understand business lending, then don't be. In the instance of Private Mortgages Australia, if you have a client you think we might be able to help just let us know (we can deal with them directly if you prefer), we'll do all the hard work and once the loan is settled you'll receive an upfront commission within 24 hours.

Increase your mortgage broking revenue by 60%

Let's take a look at how much you could earn by referring an SME client to a private lender like PMA.

• Say you have 120 clients on your books and 30% of those are SMEs = 36 SME clients.
• Mandate Fee of 1% + 1% Referral Fee = $20,000 per client scenario
• Say a conservative 20% of those had a need for finance during the year = 7 SME clients needing finance
• Say half of those ended up settling a loan = let's go with 3 settled loans
• Average SME loan size is $1M x 3 = $3M loan volume
• $20,000 x 3 = $60,000 in additional fees each year

If you could earn an additional $60,000 a year, do you think it would be worthwhile asking your SME clients if they are looking for finance?

If you’re interested in finding out more about diversifying and bringing in additional revenue for your mortgage broking business then download our free guide to ‘Building a Better Brokerage’. The guide will provide you with everything you need to know about private lending and which of your clients Private Mortgages Australia can help and how we reward our referrers (hint: upfront commission paid within 24 hours of settlement with no clawbacks).

Or if you’d rather hear about how you can earn $20K just by referring one client then you can register for our ‘on demand’ webinar – ‘Grow Your Mortgage Broking Business’ or book a call to speak with our Head of Relationships, Shanta Lobo.