About The Industry

If you are just starting out on your broking career, or are still pondering the possibilities, there is much to learn about becoming a broker. Here we answer some of your questions about the broking industry.

Finance and mortgage brokers play a critical role in the consumer loan market. Learn more about our industry and becoming a broker.

On this page:

• What brokers do
• Types of brokers and loans
• How brokers are paid
• How brokers source clients
• Costs involved in becoming a broker
• Support available to brokers

What brokers do

Brokers are a product distribution avenue for lenders, and facilitate loans for customers by being a go-between for lenders and customers. Brokers work with a customer to determine their borrowing capacity, then research current loan products to find the best fit for the customer. The advantage of using a broker versus a bank is that brokers have knowledge of a broad range of products from multiple lenders, to ensure the loan product recommended is the best solution.

 A broker is the facilitator between the borrower and the lender, supporting the borrower from application through to settlement.

The nature of finance and mortgage broking is self-driven, with brokers managing all tasks of broking and business ownership. Starting out, you may complete these all yourself, then as you grow you will outsource parts of the process and business operations.

What brokers do, as a broker:

• Assess a client’s financial situation to understand needs, goals and borrowing capacity
• Match the client’s needs and situation with the best loan option
• Submit the loan application
• Manage client expectations, and explain loan products and costs
• Marketing and networking
• Lead generation
• Meet compliance and legal obligations
• Learning and professional development
• Put the client’s interests first, always

What brokers do, as a business owner:

• Strategy and planning
• Marketing and advertising
• Human resource management
• Sales and lead generation
• Accreditation and administration

Types of brokers and loans

A broker is a subject matter expert, who works to understand a customer’s situation and researches and compares the best loan options available. These loans may be mortgages or other finance loans.

Types of loans brokers process:

• Home loans
• Reverse mortgages/equity release
• Self-Managed Superannuation Funds (SMSF) loans
• Equipment leasing
• Chattel finance
• Car and personal loans
• Business loans
• Debtor finance
• Commercial property finance

We refer to brokers as either mortgage brokers or finance brokers. While both can source you a home loan, and both require the same qualification, finance brokers can find you other loans.

Mortgage brokers:

• Home loans – construction, investment, owner occupier
• Reverse mortgages/equity release/seniors lending 

Finance brokers:

• Commercial property and development finance
• Business loans
• Car and personal loans
• Chattel finance
• Equipment leasing
• Debtor finance
• Corporate loans

Some finance brokers are also able to assist with:

• Structure finance
• Mezzanine debt
• Self-managed super fund (SMSF) loans
• loans
• Cross border transactions

Regardless of whether you use a finance or mortgage broker, your broker can explain loan products to you in Plain English and help you navigate the process. Brokers have to obtain accreditation with lenders in order to sell the lender’s products, they compare the products and recommend the best fit for you, so you know they are product experts.

How brokers are paid

Brokers are paid by the lender and receive an upfront commission and a trailing commission on the loans they settle. 

These commissions vary depending on the type of loan, lender and broker. It is generally 0.55% to 0.65% of the total loan amount as an upfront fee at settlement, and generally 0.15% to 0.25% per annum as a trail revenue for the life of the loan which is generally four years.

It is not standard industry practice for a broker to charge a customer for their service. However, if you do charge a fee you must disclose this to your client before they engage your services. In fact, you are obligated to disclose your remuneration with the client.

You will be paid your commissions with GST and will therefore need to register for GST. While GST is not compulsory until you generate $75,000 per annum income, as a broker you will likely exceed this target and should therefore set up your business for GST at the outset. Everything business related that you pay GST on can be credited against the GST you get paid.

How brokers source clients

A referral network is the most effective method of lead generation, whether you are part of a franchise or running your own business. By connecting with real estate agents, accountants, lawyers, insurance agents, your immediate community, and social groups you can create strategic alliances that stream leads into your broking business. There may be an expectation to remunerate your referring partner, which acts as an incentive for more referrals.

In the past decade many brokers have embraced social media to establish their brand, educate customers and build their online network. This can be extremely valuable for generating leads.

Costs involved in becoming a broker

There are start-up costs involved in becoming a broker, and those will depend on what credentials you have when you initiate this journey. As with any new business venture, you will need working capital behind you to get your broking business up and running.  

Costs involved in becoming a broker may include:

• Obtaining the required qualification – Certificate IV in Finance and Mortgage Broking (FNS40815) or Diploma of Finance and Mortgage (FNS50315)
• Business start-up costs or franchise fees
• Business and Professional Indemnity Insurances, licenses, AFCA and FBAA memberships
• Mentoring (if you hire a private mentor)
• Cash reserves to financially support yourself for up to 6–12 months

It is important to have cash reserves to keep your business running until you  are able to consistently submit deals and achieve good cash flow. We recommend having reserves to support you for up to 12 months.  

Support available to brokers

Industry associations provide advice, support and education for brokers, as well as advocacy. The FBAA is the finance and mortgage broking industry’s leading advocacy body.

FBAA membership is suited to brokers at every stage of your career, with a variety of membership options available.

As well as ensuring you are up to date on changes, requirements and are represented with industry regulators, the FBAA offers a range of support services from education to exclusive discounts and a member wellbeing program.

• FBAA Education Institute – tools, tips, blogs, resources and courses to help you as a broker and in business
• FBAA Member Benefits Program – deals and discounts on thousands of products, only for FBAA members
• FBAA Member Assistance Program, Assure – mental health and wellbeing program for members and their immediate families, offering confidential sessions with a psychologist, financial coaching and legal coaching
• Professional development summits, workshops and social events
• Broker Magazine, podcasts, email blasts and other communication to keep you abreast of industry news

Aggregators also offer support services to brokers.