Mortgage brokers help clients navigate the often confusing world of loans and connect them with the right lenders. With Australia’s competitive property market, this service is invaluable. Whether it’s first-time homebuyers or property investors, people need brokers they can trust. By starting your own mortgage brokerage, you not only help others secure their dream homes but also position yourself for a fulfilling and lucrative career.
Let’s take a look at the key steps involved in starting your own mortgage broker business.
Research and Planning
Before diving in head first you need to get a feel for the industry by conducting the appropriate market research and evaluate the potential profitability of your project through detailed feasibility analysis. Assess risks such as changes in interest rates, housing market fluctuations, and regulatory shifts that could affect your business.
You’ll need to identify key market trends and analyse the competition for your chosen area. Pinpointing your target clients, such as first-time homebuyers, investors, over 60’s or refinancers, will help shape your services, marketing and overall business strategy.
Next, develop a solid business plan outlining your objectives, services, target audience, and financial projections. Download our free business plan template to help! This plan will serve as a roadmap for your business, helping you stay focused and measure your progress.
Legal Requirements
Starting a mortgage broker business in Australia involves meeting specific industry standards and obtaining the appropriate qualifications. While we recommend you research the necessary licences and requirements thoroughly, a good starting point is familiarising yourself with key industry associations like the Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA).
For information on the legal and regulatory requirements, visit official government resources such as the Australian Securities and Investments Commission (ASIC) or consult the relevant guidelines under the National Consumer Credit Protection (NCCP) Act, which outlines responsible lending practices.
Registering Your Mortgage Brokerage Business
First of all, to operate as a mortgage broker in Australia, you’ll need an Australian Financial Services Licence (AFSL) if you’re dealing in financial products, such as credit or loan services. This licence, regulated by the Australian Securities and Investments Commission (ASIC), ensures that brokers meet specific compliance and financial standards to protect consumers. The process includes meeting qualification requirements, preparing legal documents, and demonstrating financial stability.
Alternatively, as an authorised representative, you can operate under the licence of another entity, streamlining the process while still complying to industry standards
Choosing a Business Structure
Selecting the right business structure is a key decision when starting your brokerage. In Australia, options include sole trader, partnership, or company. Each has its own tax, legal, and financial implications. Many mortgage brokers prefer setting up as a company due to the benefits of limited liability and its scalability for future growth.
How to Register a Business
- Choose and register Your Business Name (If Applicable): If you’re setting up a business as a sole trader or partnership, you’ll need to choose and register a unique business name that doesn’t infringe on existing trademarks. For companies, the registration process includes securing a company name as part of incorporating the business.
- Register for an Australian Business Number (ABN): An ABN is essential for invoicing clients and managing your taxes.
- Register for Goods and Services Tax (GST): If your mortgage brokerage is projected to earn over $75,000 annually, you must register for GST. This allows you to charge GST on services and meet tax obligations.
Find out more about when to register your business for GST.
Tax and GST Basics
Tax obligations are an inescapable part of running any business, and when you’re figuring out how to start a business, understanding tax basics is key.
- Registering for GST: If your annual revenue is expected to exceed a certain threshold, you’ll need to register for Goods and Services Tax (GST). This involves charging your clients an additional percentage on your services and reporting it to the tax office. Find out more about registering your business.
- Basic tax liabilities: As a business owner, you’ll be responsible for various taxes, such as income tax, corporate tax, and payroll tax for any employees you hire. Learn how to keep up with tax payments.
- Deductions: There are numerous tax deductions available to businesses, like business-related expenses and home office costs. Make sure to take advantage of these to reduce the amount of tax you pay.
Understanding tax and GST is a complex task, and staying on top of it can help avoid any tax or financial troubles in the future.
Running and Growing Your Mortgage Brokerage
Successfully growing your mortgage brokerage involves leveraging the right technology and tools. Implementing a CRM system helps manage client interactions and streamline communication, while mortgage broking software ensures compliance, automates document collection, and boosts operational efficiency.
Building a strong network with lenders offers your clients more loan options and strengthens your service offering. Fostering lasting client relationships builds trust and encourages referrals.
Effective marketing is essential. Establish an online presence, engage on social media, and attend industry events to expand your reach.
Finally, managing finances through careful budgeting and forecasting, bookkeeping and cash flow management ensures your business remains sustainable and poised for growth.
Get Started with JD Scott + Co
JD Scott + Co provides specialised accounting and financial services catered to the needs of mortgage brokers. From helping you manage cash flow and tax planning to offering advisory services for business growth, our team can guide you at every stage of your business journey.
For more information on how JD Scott + Co can assist your mortgage brokerage, get in contact with the team today!
