The mortgage broking industry can appear to be lucrative work, given the very high values of mortgages in today’s market and the apparently generous commission paid by the banks of around 0.65%. However the industry is very competitive, and new clients in almost every case go to one of the very small number of large mortgage broking companies that totally dominate Internet search traffic for mortgage brokers.
Not only are new clients hard to find for most independent mortgage brokers, when they do find a client then only about 30% will end up generating them a commission based income, as around 70% of all their new clients will fail at the application stage, or will change their mind or just simply not uplift a mortgage that the broker may have got pre-approved for them. This 70% failure rate can be a big problem for independent brokers, and cause them to be very careful in their cash flow management.
Some brokers specialise in certain niches, and one good example is the small number of brokers that specialise in helping stressed borrowers. These are generally clients with an existing mortgage or mortgages who have run into financial problems of one sort other. They may be a property investor who has had the huge shock of discovering one of their properties is P contaminated, and they cannot afford to decontaminate the property or they have run out of cash after decontaminating the property and cannot afford to make their mortgage payments. Evelyn Diaz is a mortgage broker at mortgagebrokersnz.org, she feels this is very important. This is a good example, because the bank will probably not want to help the client even though they may have a valuable property that they could sell at some stage in the future. A smart mortgage broker will be able to find some solution for the client that may involve a private financier and higher interest rates, but does not leave them bankrupt.
Other examples of stressed clients are those dealing with marital breakup and splitting up the family property, and the smart mortgage broker may be able to come up with an elegant solution for their vulnerable client that does not involve them losing too much of their hard-won equity.
These specialist brokers are dealing to a small niche in the total market, and they will need to advertise and promote their services in as smart away as possible so they get found by clients in need. This can be difficult and require a lot of hard work, but the big advantage is that the client always wants a solution and will take whatever the mortgage broker and give them. Depending on how good the broker is and how many contacts they have in the financial services sector, they may see only a 10% failure compared to the 70% seen by the rest of the industry.