Becoming a broker for products such as mortgages and bridging loans is an attractive career option that offers flexibility and the potential for substantial earnings. Whether you're a one-person operation or decide to hire a team, the industry provides different pathways to success.
This involves understanding the regulatory landscape, the decision to handle regulated or non-regulated loans, and additional opportunities to diversify your offerings, such as life protection and insurance products.
This guide explores the steps, considerations, and options for someone interested in starting as a broker in this niche.
Choosing Your Business Structure: Are You Going Solo or a Team?
One of the first decisions you’ll need to make is whether you want to operate as a solo broker or build a team. As a one-person operation, you have full control over your business.
Being solo means you can be remote or constantly out in the field, compared to having a team which likely requires a centralised office as a starting point.
You’ll directly manage client relationships, negotiate with lenders, and process inquiries yourself. This can be appealing due to the low start-up costs and the ability to build strong, personal relationships with clients.
On the other hand, hiring a sales and outreach team can help scale your business faster. A team of skilled professionals can increase your lead generation, manage larger volumes of enquiries, and expand your client base.
This route requires a bigger initial investment, as you’ll need to account for salaries, training, and the technology infrastructure to support your employees.
However, the payoff can be significant if you're looking to grow a business rather than just run a small operation. With a team, you can specialize, with salespeople focusing on client acquisition while others focus on packaging the loans.
How Do You Handle Enquiries? Do Pass On or Package?
Another key aspect of brokering involves deciding how much of the client and loan process you handle yourself. Some brokers simply act as introducers, passing on enquiries to lenders or larger brokers and taking a commission on the referral.
This model minimizes the need for technical expertise in packaging loans, as your job is mostly to connect interested clients with financial institutions.
However, packaging the loans yourself offers more control over the process and typically results in higher commissions.
In this scenario, you would collect all the necessary client information, liaise with lenders, and ensure that the loan application is as complete and compliant as possible before submission. Packaging requires deeper knowledge of the products you're brokering, a higher degree of regulatory understanding, and a greater time investment, but the financial rewards can be more lucrative.
Regulatory Licensing: Do You Need One?
Whether or not you need a regulated licence depends on the type of loans you plan to broker. Mortgage brokers, for example, must be authorised by the Financial Conduct Authority (FCA) in the UK.
This is because mortgages are considered a regulated financial product, and the FCA ensures that brokers operate within the guidelines that protect consumers.
To become FCA-authorised, you’ll need to pass specific exams, such as the Certificate in Mortgage Advice and Practice (CeMAP), and adhere to ongoing compliance regulations.
By comparison, how bridging loans work means that they can be both regulated and non-regulated. If you’re brokering bridging loans for individuals, they fall under FCA regulation, requiring authorisation.
However, if your bridging loans are primarily for businesses or buy-to-let investors, these can often be non-regulated, meaning you won’t need FCA approval to broker them. That said, even for non-regulated loans, adhering to best practices and maintaining professional standards is crucial to building a trustworthy reputation.
Offering Additional Products: Life Protection and Beyond
Diversification is a smart strategy for brokers who want to maximise their earnings and provide comprehensive solutions for their clients.
If you’re already offering mortgage brokerage services, investment strategies, expanding into related products like life protection, critical illness cover, or income protection can be a logical next step.
Many clients taking out mortgages are also looking for ways to secure their financial future, and these products provide valuable peace of mind.
Offering life protection or insurance products requires additional certification. For example, if you want to offer life insurance, you’ll need to gain a license to sell insurance products. This is often an easier and quicker process compared to mortgage and loan regulations, but it still involves studying, passing exams, and adhering to compliance rules.
By branching out into these areas, you also increase the “lifetime value” of each client. Rather than a one-time commission from a loan or mortgage deal, you can create a longer-term relationship with clients by serving more of their financial needs, which can lead to higher overall earnings.
Conclusion
Becoming a broker for products like mortgages and bridging loans involves several important decisions, including whether to operate alone or with a team, whether to pass enquiries on or package them, and whether to operate in regulated or non-regulated markets. Additionally, expanding into related areas like life protection can enhance the value you offer your clients and increase your earning potential. Success in this field requires a combination of strong market knowledge, regulatory compliance, and a client-focused approach, but with the right strategy, it can be a highly rewarding career path.