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How Much Does It Cost to Become a Mortgage Broker?
Becoming a mortgage broker can be a lucrative career choice, but it comes with significant initial and ongoing costs that are crucial to understand before diving in. Whether you’re considering starting your brokerage or joining an established firm like Smartfinn, here’s a breakdown of what you can expect regarding expenses.
Initial Setup Costs
The journey to becoming a mortgage broker begins with several unavoidable costs that may surprise newcomers to the industry. These include:
- Licensing and Registrations: You’ll need the appropriate licenses to operate as a mortgage broker. This includes a credit license if you’re operating independently, which involves fees for regulatory compliance and consultant services. Additionally, you’ll need to undergo a police history check and register with the Australian Financial Complaints Authority (AFCA).
- Professional Indemnity Insurance (PI Insurance) As mandated by ASIC, mortgage brokers must carry PI insurance with specific coverage amounts. Premiums can vary significantly between insurers, necessitating careful comparison to find the best deal.
- Education and Certification Formal education is essential; you’ll typically need either a Certificate IV in Finance and Mortgage Broking or a Diploma in Finance and Mortgage Broking Management. Costs for these courses vary by provider but are a necessary investment to ensure compliance and competence.
- Industry Memberships Joining a professional association such as the Mortgage and Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA) is standard practice. Depending on the organisation, membership fees can range from $400 to $500 annually.
- Aggregator Fees If you choose to work with an aggregator—a crucial intermediary between brokers and lenders—you’ll encounter setup costs that vary widely, potentially reaching up to $150,000 for a franchise arrangement.