Spirit Food Christian Center
Great tips for Christians to improve their Christian lives!

Mortgage Brokers in Small Communities

Mortgage broking is specialist work that requires a deep understanding of the banking sector, of financing and of the residential property market and the sales process. To the casual observer the commission paid to a mortgage broker can appear exorbitant, as a 0.65% commission paid out on a 1 million dollar mortgage will earn the broker $6500 for what is probably a few hours work.

Jean Jenkins, Queenstown mortgage broker

Jean Jenkins, Queenstown mortgage broker

However million-dollar mortgages do not come around every day, and are in fact rare outside Auckland, and the work is generally only given to brokers with the right connections and reputation. For the smaller towns a $100,000 mortgage is more typical, and for this the broker will receive a paltry $650 for not much less work than for a million dollar mortgage.

While the high commissions for large mortgages can appear excessive, the reality is that mortgage brokers throughout New Zealand see less than 30% of their work actually come to fruition and earn them a commission. Around 70% of all clients either do not make the grade or walk away from any potential deal, or even just do not uplift the mortgage that the broker may have pre approved for them. The problem for the broker that is that they only get paid when the mortgage is uplifted.

The other problem for any broker is that in most cases payment does not happen for many weeks if not months after they have started work for their client, is in many cases the client has to first find a property to buy, successfully purchase the property and then settle the deal. For more information, be sure to visit www.NZMortgageBrokers.info. Mortgage brokers therefore have the problem of not only not getting paid for around 70% of their work but also not getting paid until some months after they have completed the work. The profession has a number of challenges, and one is certainly the problem of cashflow management.

Cash flow management is of course not really a problem if the broker is writing $2,000,00 or more in mortgages every month on the average, as this will be equivalent to a $130,000 salary. Of course they need to have new business coming in the door that generates this cash flow, but in Auckland this may mean only 4 or so successful clients every month with an average mortgage of $500,000. Of course at a 30% success rate this means they need around 13 new clients every month or around 3 new clients every week.

For a broker in a small community where the average mortgage might be $200,000, then to achieve the same income they need around 33 new clients every month. It will be nearly impossible to achieve this unless they have a very wide catchment area for their business, because there will simply will not be enough business in the community to support them.

No Comments on Mortgage Brokers in Small Communities