Mortgage broking is an unusual business where the broker does not get paid until well after they have completed the work for their client. This is very similar to real estate agents who also have to wait sometimes for months for their commission to come through.

For the mortgage brokers this can mean long periods with no income, but of course if they have any big deals coming through then the cheques will be large. Brokers have to pay attention to their cash flow which can be sporadic at best and can be particularly problematic during December and January as property markets become very slow. Many mortgage brokers end up by going on holiday for much of December and January in New Zealand, simply because there is no demand for their services during this period. However once February and March arrives they had better be ready to get busy.

Mortgage brokers generally end up with about 30% of their clients making them any money, and the other 70% either postpone the project or cancel the project altogether. Brokers have very little idea upfront who is going to be in the 30%, and so they need to do all the work necessary for every client with a very real risk that the client will not proceed. However brokers can manage around this 30% conversion ratio, and they just need to make certain that they have enough new business to guarantee that they going to get a sufficient income for the year.

Brokers working for the very large mortgage broking firms have a quite different situation, as these firms have invested millions in intensive online marketing, web development and SEO. This investment may appear very risky at the time, but if the broking firm has employed the right web developers and SEO specialists then their investment should pay off enormously down the track. This is indeed the case with the very largest firms in New Zealand, whose websites are ranking in the top 3 for most major search terms. This means that they will be capturing at least 30% of all the Internet generated business for new mortgage brokers, and because of this they have the luxury of being able to pre screen all of the new clients and only taking on those clients who looked like dead certainties.

This is a completely different approach than independent mortgage brokers, who really need to accept every lead that they get and process them as far as they can go. Clients tend to get a better service because the mortgage broker is much more motivated to succeed on their behalf, because that is the only way they are going to get paid. The brokers in the large firm know that their leads are almost always going to be easy to make successful, and there will always be new leads coming through every day. For more information, check out