After a 38-year career as a mortgage broker, long story short: I made some money; I lost some; and then I made some again.
Most brokers have a choice of two business paths: work for a bank/broker on a basic salary and have a manager, targets and, hopefully, a performance bonus; alternatively, go self-employed with no security, irregular income but a higher profit share.
The start of my career was the first path and now it is the second.
While the first route gave me security, the second gave me freedom. And I found I loved the freedom more than I loved the security, especially having a young family.
My wife said I needed to start charging. So I did: 1% of the purchase price. The clients happily paid
When I’d ‘made some money again’ (after the 2008 crash), I was playing tennis one day with the managing director of one of the largest letting agents in Worthing. I knew, when I restarted as a mortgage broker, I would be doing buy-to-let [BTL] mortgages, and therefore I wanted some work experience as a letting agent. I needed to meet landlords and tenants so I would know which properties rented well and why. It was the best three months’ work experience I ever did.
In 2009 I started my mortgage business from scratch without any clients, and in 2011 a landlord approached me for help in finding both a property and a tenant.
Similar to non-indemnity commission on a life sale, it is a slow burn to build up the monthly income
I found the client a great property through an estate-agent contact. I then outsourced the advertising on Rightmove, the tenant underwriting, the check-in inventory, the tenancy agreement and the lodging of the deposit with a government bonded scheme, and I simply charged the landlord a monthly management fee of 8%, which was market competitive.
The property has been under my management since 2011 and the total management income since then has been £10,586.00 — twice the proc and mortgage broking fee income. But the most important factor for me is that the property has paid me a guaranteed monthly income of £76.00.
About six years ago the lettings business overtook the mortgage business in terms of my income
Similar to non-indemnity commission on a life sale, it is a slow burn to build up the monthly income. But, unlike life business on non-indemnity, the monthly income does not stop after four years.
There have also been unplanned bonus income streams and bonus mortgages I could not have imagined when I started. The first were finder and sale fees. At the start I was simply finding the properties through estate-agent contacts as a local mortgage broker. But, in some cases, landlords were getting absolute bargains: executor sales, broken chains with desperate sellers, etcetera.
Long story short: I made some money; I lost some; and then I made some again
My wife said I needed to start charging. So I did: 1% of the purchase price. The clients happily paid.
Next I picked up mortgages for tenants looking to buy, and started selling properties in portfolios as some landlords wound down their BTL activity; again at 1%.
About six years ago the lettings business overtook the mortgage business in terms of my income.
Consider adding property management to your services. It is hard work, but it is rewarding.
This article featured in the March 2024 edition of MS.
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