Mortgage brokers are no different from any other businesses in that they need to enhance and protect their sources of revenue. Fortunately, there are now more and more ways of generating streams of additional income. To cope with new regulatory requirements and stay ahead of the competition a mortgage business needs to take advantage of all of the associated products and services. I have taken a look at the opportunities that can be derived from the mortgage and associated insurances, as well as introduction fees from other professionals and related industries, and how a busy mortgage broker can best take advantage of these opportunities.
Ways to increase income
- Take advantage of all available potential revenue sources:
- Mortgage broker fee charged to the client by the broker for giving advice and/or arranging a mortgage.
- Mortgage procuration fee paid by the lender for completing a case.
- Enhanced procuration fee paid by a specialist mortgage packager for completing a case.
- Life assurance commission paid by an insurance company for introducing a life contract.
- General insurance (GI) commission paid by an insurance company for introducing a GI contract.
- Solicitors introductory fees paid by a law firm for introducing a client for conveyancing work.
- Overseas property referral fee paid by an estate agent for introducing a client purchasing overseas.
- Overseas mortgage/loan referral fee paid by a lender/intermediary for introducing a client who overseas borrowers funds.
Maximise your time and that of your staff, by working as efficiently as possible. There are some obvious and some not so obvious items that you should have in your toolbox:
- Windows PC/laptops networked and connected to ADSL Broadband.
- Mortgage case management and workflow software.
- ourcing software with two-way link to case management software and links to life, GI and e-conveyancing.
- Phone system linked to case management software for PC caller display, dialing and recording.
- SMS facility built into case management software for two-way SMS text messaging for updating clients and other advisers.
- Interview recording for recording advice given to clients.
- Shared diary for appointments and automatic task reminders.
- Double-sided multi-feed scanner to scan documents replacing paper files and filing cabinets.
If you retain your clients year-on-year, you will earn more simply because they come back to you and not the guy down the road. How you interact with your client during the advice process and how you communicate with your client in the months and years after the mortgage or insurance deal is completed determines how likely they are to come back to you for repeat business. These ideas were employed by my team during my 12 years as a broker and are based on common sense and good business practice.
Client retention is not a strategy or a tool; it is a philosophy, a way of life and sound business practice. For your clients to value you and your service, firstly you must genuinely value your service yourself and feel confident about your offering. When you first meet your new prospect, take time to explain what you do and how your service works. Make sure that you elaborate on how the advice and mortgage process works, be sure to introduce information about the Financial Services Authority (FSA). You must also explain what duties and regulations you have to conform to in order to reassure the client as to your business processes and responsibilities. The client needs to feel that you are acting in their best interests, to relax and buy into you and your business.
Quality service includes offering advice on GI, life and income protection – in other words, a holistic approach to giving advice. This will result in your clients being properly protected, confident and happy. Happy clients refer their friends and family, and come back time after time.
Charging fees
When I was broking mortgages I always charged fees. There are a number of reasons for this – obviously charging fees increased my income, but it also made my clients feel the service I offered was valuable, if they ever lost the property, or had delays in the house buying process, they never thought of going to another broker, simply because they had paid me to do the work. It is true that some clients did not want to pay fees and naturally they went elsewhere. But perhaps they would have done the same to me during or after I had advised them, because they would not have felt committed to me in any way? If your client pays you a fee, then you know they are genuinely committed to the mortgage and to you doing the work for them. If you want to, you can refund fees on successful completion when you receive your procuration fee. When it comes to retaining clients, why not offer a voucher for a discount off the fees for future repeat business on mortgages or remortgages.
Attitude to Fees
When a customer sells a house and buys another they will pay the following fees:
- Estate agent’s fees: 1-3 per cent of the sale value.
- Stamp Duty: 1-4 per cent of the purchase value.
- Solicitor’s professional fees: £350.
- Removal fees: £350 upwards.
- Valuation and survey fees.
- Lender’s mortgage fixed or discount rate fee or similar.
In order to confidently charge fees, you must first believe in the value of the services that you provide. If you believe your fees are fair then your clients will too.
Communications during the mortgage process
The most successful brokers will invest time and resource into the communication process. Throughout the mortgage process, clients appreciate regular updates so why not send regular e-mail or SMS text message updates to your clients to keep them informed of the key stages of the mortgage. For example, ‘case sent to lender’, ‘lender acknowledged receipt’, ‘valuation instructed/received’, with any relevant comments, such as ‘property valued for sale price’; ‘mortgage offer received’, ‘contracts exchanged’, etc. Mortgage case management and workflow software can do all this automatically so you don’t have to think about it.
Ongoing communications
Send a newsletter to your entire database twice a year using the mail merge facility in your mortgage case management software. Include industry information in the newsletter, e.g. interest rates and housing market movements, and add some commentary as well as making sure that any commentary is expressed as an opinion, not as a fact or as advice. Text messaging is the ideal way to quickly and reliably update clients of the status of their mortgage applications without spending the time chasing the client on the phone. You can also use SMS messaging to send one message to your entire client bank.
Protecting your income
To protect your business from complaints or speculative compensation claims, you could record your phone calls. At the point of the mortgage offer, you can ring your clients with a client care call’ – many lenders do this. Ask your client if they have 10 minutes free to run through the offer and make sure that all is as it should be. Run through the basics and confirm the customer understands what they are taking on board with the mortgage.
In the client care call, go through the key points of the mortgage product and at various points ask, ‘does that make sense’, ‘are you happy with that’ and at the end, ‘is there anything that you don’t understand or that does not fit in with what you wanted?’ Log the call in your case management software in the case notes, with time and date added for audit purposes. Make sure you regularly back-up your call recordings to CD Rom, DVD or similar medium. If you are unlucky enough to get a complaint, you can prove that you gave the correct advice and that the client accepted and was happy. This will help protect both your business and your income.
To increase and protect your earnings, offer your clients a wide ranging fee-based mortgage and insurance and protection advice service, utilising the best case management and workflow software. Fully equip your office and employ motivated professional staff.
