Mortgage Broker Business Plan

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?

The answer lies in diversifying. Now is a great time to consider working with a private lender and diversifying into the commercial
space.

Why should mortgage brokers diversify?

Diversification makes it possible to add more value to better serve more clients. Increasing the products you offer and exploring new areas of business will allow you to provide more to your existing customers, as well as attract new ones.

Many brokers seem to overlook the importance of expanding their product range in order to grow their mortgage business. But it is possible to grow your revenue by 30% - 50% by simply referring private loans.

Working with a reputable private lender and referring loans to them is the key. By diversifying into the commercial space through private lending, you’ll be able to serve a much larger customer base and be capable of meeting their needs with the additional commercial lending products you have access to.

What is private lending?

Private lending refers to the lending by an individual or group of individuals that’s not a bank or an institution.

Typically, people think of personal loans like a payday loan when they hear “private lending”. However, the private lending sector can service far more needs than that, such as commercial transactions for a business needing working capital, or a developer wanting to purchase or develop a property.

This can include loans to purchase commercial property, equipment, vehicles or assets. It could be loans to boost cash flow, fund business expansions or to help with running costs.

Lots of business owners find it hard to meet the strict lending policies of mainstream banks. Private lenders provide small and medium business owners with an alternative that lets them borrow the money they need for their business more simply.

Benefits of private lending

Understanding the strengths of private lending in relation to business and property development needs is essential for brokers looking to boost their income streams. Simply put, having access to commercial private lending options can allow brokers to increase their lending opportunities and better serve their clients.

Some benefits that are attractive to businesses include the following:

• Private loans for businesses have a faster application process.
• Private lenders don’t focus on credit history and serviceability, giving small business owners and property developers a better chance to get their loans approved.
• Loans are tailored to the specific needs of a business, which leads to better customer satisfaction.
• Brokers gain an opportunity to satisfy their business client’s needs that they otherwise might not have.

Plus, the good news is around 30% of residential mortgage brokers' clients are also small business owners. This means your existing customers present a great opportunity for additional revenue when you diversify into the commercial space.

How do you break into the commercial lending space?

Becoming an experienced commercial broker doesn’t happen overnight, but it is possible to diversify into the commercial market fairly quickly while still managing your residential transactions if you have the right structure and support in place.

One way to establish this structure for your business and expand into the commercial lending space is by collaborating with a reputable private lender.

Case in point, by partnering with a lender like Private Mortgages Australia, you don’t need to be an expert on private lending immediately in order to be able to help your clients. Nor will you need extensive knowledge of commercial lending when starting out. You simply refer your clients to Private Mortgages Australia and they’ll work with the client to secure the best private lending option for their circumstances. You’ll then be paid a referral fee once the loan settles.

By simply referring business clients, you can already open up additional revenue streams.

Finding the right private lending partner

Not all private lenders are created equal. And there are a few things you should look out for when considering what private lenders you’d like to partner with.

1. Look for a private lender with a good track record.
   A quality private lender will be able to find a solution for almost any business requirement and help the borrower to successfully complete the business activity or project that they are working on.
2. Know what interest rate they’re offering as well as any fees.
   Unfortunately, some private lenders have hidden costs, and Choose an experienced, professional, and trustworthy private lender that is transparent about the terms of your partnership from the outset.
3. Find a lender with a good reputation.
   Look for a lender that is a member of professional associations. Ask around and speak with other brokers who have dealt with a specific private lender previously. You can also do some research as most reputable lenders will have a fund-raising arm with an Australian Financial Services Licence number (“AFSL”) which can be verified via a free ASIC search.

By using a private lender to diversify into private lending, you’ll have more options to offer your clients and that means more revenue opportunities for your brokerage business. Plus you’ll be able to continue to focus on your core business of residential mortgages knowing that any commercial mortgage requirements your customers have will be looked after by experts in that area.

Diversify your broker business

With around only 5% of residential mortgage brokers offering commercial broking services only, there’s a lot of opportunities to diversify the services your offer and increase your income.

Scaling your business with commercial lending is smart. Especially when you partner with a reputable commercial lender like Private Mortgages Australia. That way you can still focus on your core business while also increasing your income through direct commercial referrals.

Get in touch to speak with our Head of Relationships to see how we can help you diversify your business.

This information is of a general nature and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.