How to become a mortgage broker in Australia

Deciding on your career, and eventually pursuing it, is a constant process. Not only does it take years of extensive training, but also involves a lot of resources and effort on your part.

This equally applies to mortgage brokers. We’ll learn in this article that the steps on how to become a mortgage broker in Australia are not that easy, but also not impossible.

While this process may be challenging at first, becoming a licensed mortgage broker after all these efforts is equally rewarding.

What does a mortgage broker do?

A mortgage broker helps homebuyers (called the borrowers or clients) find a suitable home loan and interest rate from many choices of lenders. They help clients trim down their options from a wide range of mortgage offers.

They are licensed financial advisors who work for parties in a mortgage contract. This job entails many responsibilities, not just for their client-borrower, but also with the lender.

In Australia, mortgage brokers are licensed professionals. They undergo rigorous educational and practical training to get their licence before they can practice their profession.

The “go-between”

Brokers act as intermediaries in transactions between sellers and buyers. They are the go-between by either party to complete the loan or mortgage transaction.

In other words, mortgage brokers become the dealers or negotiators between the lender (such as a bank) and the borrower.

What is the role of mortgage brokers?

In learning how to become a mortgage broker in Australia, it’s important that you understand the role of brokers vis-a-vis the process of mortgage brokering.

First in the process is establishing the relationship between the broker and the buyer.

When a buyer reaches out to a mortgage broker, the broker’s first role is to ask for the specific needs (and wants) of their clients. This is to gather as many facts as possible, such as:

• the amount their client would want to borrow
• the type of property
• location of future home

A mortgage broker will also assess the client’s financial goals and personal circumstances, which will become useful later.

Next, a mortgage broker will research the possible and suitable mortgage options for the client. This can be done manually or through an aggregator comparison software. The mortgage broker then advises clients on what option is more appropriate, based on their goals and circumstances.

While a mortgage broker gives advice, this must be unbiased, impartial, and independent so that it will truthfully help their client.

The job of a mortgage broker does not end when the client has decided on the option they will be pursuing. After this decision is made, the mortgage broker will now deal with the bank or lender regarding their client’s application.

This will include the negotiation process, the pre-approval of the home loan, other last-minute bargaining, up to the settlement of the loan.

The job of a mortgage broker even extends after the loan is settled, such as when there is further liaising work, or when the client requests more guidance.

This video explains the mortgage brokering process from the perspective of a buyer:

Check out our page on Industry Trends in Mortgage as a resource for important news, features, and updates on Australia’s mortgage industry.

What are the steps to becoming a mortgage broker in Australia?

The steps on how to become a mortgage broker in Australia involve the following:

1. Studying to get the necessary qualification
2. Joining a professional association (e.g. MFAA or FBAA) and other regulatory bodies
3. Choosing an aggregator, dealer group, or franchise group
4. Getting the required licence for mortgage brokers in Australia

In short, you must complete the approved qualification, gain experience, and be acquainted with the necessary bodies, before you can obtain the required licence.

1. Get the necessary qualification

There are two courses that are required to become a licensed mortgage broker in Australia:

• Certificate IV in Finance and Mortgage Broking (FNS40821): the entry requirement for mortgage brokers in Australia. It is considered the qualifying certificate course in terms of industry knowledge
• Diploma of Finance and Mortgage Broking Management (FNS50322): the additional or advanced course to become a professional mortgage broker in Australia. Diploma holders can also engage in commercial lending after this course

These two courses will teach future mortgage brokers these procedures and principles:

• introduction to Australia’s industry on mortgage and lending
• Australian laws and regulations
• industrial ethics of mortgage and lending
• dealing with clients and lenders
• procedures in loan applications

There are several educational institutions that offer these courses, which can also be learned through online platforms.

More importantly, these courses will also allow you to apply for any of Australia’s professional association for mortgage brokers, subject to their specific requirements.

Watch this video to know more about these courses:

Head over to our Mortgage Industry Guides for more articles on different topics related to mortgages in Australia.

2. Join a professional association

While it’s not a strict requirement per se, joining a professional association will benefit your future career as a mortgage broker in Australia.

There are currently two bodies to choose from:

• Mortgage and Finance Association of Australia (MFAA)
• Finance Brokers Association of Australia (FBAA)

Read more: How to join for FBAA membership?

These associations provide new mortgage brokers with a lot of benefits, such as:

• mentoring services
• continuing education and training
• access to aggregators, dealer groups, or franchise groups

3. Choose an aggregator

One of the most important steps in becoming a mortgage broker in Australia is choosing an aggregator.

An aggregator acts as the intermediary between the lending institutions and the individual mortgage brokers. Aggregators are also called dealer groups or franchise groups in Australia.

They provide mortgage brokers with access to panel of lenders. A lender will then accredit the mortgage broker before the broker can offer the lender’s products to their clients. 

It means that the more panel of lenders a broker has, as provided by the broker’s aggregator, the more options it has to offer for their future clients. This is why choosing the right aggregator is important for future mortgage brokers in Australia.

Choosing an aggregator is also related to the broker’s chosen professional association, since these associations work with their own partner aggregators.

In turn, the aggregator will appoint the new broker as an Authorized Credit Representative (ACR), under the aggregator’s Australian Credit Licence (ACL).

Aside from giving access to its panel of lenders, an aggregator also helps in the career development of the new mortgage broker. They provide platforms and tools for client management, processing loan applications, and marketing their services to the public, among others.

The aggregator can also help with the broker’s compliance obligations or even with professional indemnity insurance. These services vary with each aggregator, highlighting again the importance of choosing the right one.

4. Become a licensed mortgage broker

New mortgage brokers in Australia need to be appointed as an ACR under an ACL. Getting an ACL is done before the Australian Securities and Investments Commission (ASIC).  Aggregators can also help their appointees with this process.

This licence will allow a person to engage in “credit activities”, which includes acting as an intermediary between a lender and a client for a credit contract.

The licensing requirement is part of the government’s regulation of this profession. Penalties will be imposed on persons engaged in credit activities without the ACL.

Steps to get the ACL

According to ASIC, here’s a summary of the steps to get the ACL:

1. Access the ASIC website to start the online licence application
2. Complete an application (Form CL01) and lodge it with ASIC
3. Pay the application fee
4. Meet the requirements for a licensee, such as:
   • the general conduct obligations under the National Credit Act; and
   • be fit to engage in credit activities

Other requirements related to ACL application

There are other requirements set by ASIC that are related to your ACL application.

First, your external dispute resolution (EDR) scheme membership must be current. As such, you must be a member of either the:

• Financial Ombudsman Service
• Credit and Investments Ombudsman

Also, you must have professional indemnity insurance. A certificate of currency or a summary of your insurance policy must also be submitted to the ASIC.

Your aggregator and your professional association can help you comply with these requirements.

Reasons for denying an ACL application

An ACL application may be denied by the ASIC based on the following grounds:

• applicant did not meet the requirements under the National Credit Act
• a banning order or disqualification order is in force under the National Credit Act, the Corporations Act, or the relevant State Criminal Organisations Acts

Other optional requirements

Studying business-related undergraduate degrees can give you the edge in a career in mortgage broking.

You may want to take the following courses when studying in college, to help you with your plans of becoming a broker:

• Bachelor of Finance
• Bachelor of Business
• Bachelor of Economics
• other similar or related courses

What skills are needed to become an Australian mortgage broker?

If you’re really set on becoming a mortgage broker, here are some important skills that you may want to develop as early as now:

Financial knowledge

An Australian mortgage broker must be good with numbers, to say the least. To effectively guide their clients, the broker must be able to explain these figures to their clients in a clear and concise manner.

Otherwise, clients – who themselves are overwhelmed by these lending calculations – would not be getting the services of mortgage brokers in the first place.

Legal knowledge

Knowledge of Australian laws on mortgages and lending is another plus in becoming a mortgage broker in Australia. Mortgage brokers can help clients more if they can educate clients on certain legal points related to their loan applications.

Negotiating skills

The most basic role of a mortgage broker is acting as an intermediary between the homebuyer and the lender. That is why it’s important that the broker knows how to effectively negotiate between the two parties.

As for the client, the broker must convince them that the lender’s products are suitable and perfect for them. As for the lender, the broker must also convince them that the client is financially capable according to the broker’s assessment.

How are mortgage brokers paid in Australia?

In Australia, mortgage brokers are paid through commissions by the lenders, usually through their aggregators.

The commission of mortgage brokers in Australia consists of two parts:

1. upfront commission:

• • paid upon the successful settlement of the loan
  • for the new client brought by the broker for the lender
  • calculated using the percentage of the loan’s total value
  • usually at 0.65% to 0.7%

2. trail commission:

• • paid annually during the loan period
  • for the customer service cost of retaining a client by the lender
  • calculated using the percentage of the mortgage
  • usually at 0.165% to 0.275%

There are cases where mortgage brokers also charge their clients a certain fee (or upfront fees), aside from the commission they’re getting. While this is not prohibited, it’s not the usual standard in Australia because brokerage is a commission-based job.

Ready to become a mortgage broker?

Becoming a mortgage broker in Australia isn’t just about securing loans, it's about changing lives. If numbers excite you and if helping people motivates you, this profession is for you! Start with the Certificate IV course, join a professional association, and find a supportive aggregator. Remember, dedication and continuous learning are key.

Are you an aspiring mortgage broker? What excites you most about this profession? Let us know in the comments.