What is an aggregator and do you need it?
An aggregator is essentially an intermediary between lenders and brokers, lessening brokers’ risk exposure through secured investments. To help mortgage brokers find success, an aggregator also offers numerous marketing materials and business resources. Because mortgage brokers earn more commissions based on the loan applications they convert, volume is the name of the game.
For the average small business, however, taking on too many loans can be cost prohibitive and ultimately overwhelming, particularly for mortgage brokers who are new to the industry. Aggregators can help secure leads to build high-volume portfolios and commissions and clients before it becomes overwhelming.
Accredited loan-writing businesses, aggregators—a.k.a. mortgage franchise groups or mortgage dealer groups—give brokers access to securitised mortgage options and lender panels. Aggregators also take over a significant portion of any initial administrative cost of originating loans and, because of the sheer number of loans, are better positioned to negotiate terms. For this reason, utilizing aggregators is popular for lenders and brokers alike.
Previously, giving brokers access to lender panels has been the main purpose of aggregators, since they lower overhead costs for mortgage brokers to verify loans and businesses. This arrangement benefits both the lenders and brokers because it makes the loan process profitable and more manageable. They have also expanded their services, offering member benefits that include compliance, CRM system, back-office administration, general business support, loan comparison platform, marketing and promotions, training and mentoring, and education, among others.
What is the purpose of an aggregator?
The purpose of an aggregator is usually to provide access to lenders, commission process functions, and provide software. In some cases, an aggregator can provide leads, training, and a brand. Typically, an aggregator will have up to 40 lenders on its panel. Premium brokers will often have at least 10 lenders per panel.
Because lenders have compliance requirement obligations and have such a high volume, the typical mortgage broker would be unable to meet the need. And since clients require banks to provide them the home loan product, they usually want to know that the broker is regularly recruiting qualified borrowers.
However, aggregators often fulfill other purposes, including: providing Client Relationship Management, or CRM, to help you manage your business; managing the upfront or trail commission payments to ensure full and prompt payment; providing Business Development Manager, or BDM, support to help grow businesses; compliance and IT support; and hosting Continuing Professional Development (CPD), otherwise known as professional development days, to ensure continuing educational requirements within the industry body are met.
Usually, you need a minimum of two years of industry experience to join an aggregator. Otherwise, you could become a mortgage broker employee who is already a member of an aggregator—perhaps the easier option.
The importance of working with mortgage broking aggregators
Whether you choose to work with mortgage broking aggregators depends on your particular situation and the sorts of support services you want to compliment your mortgage broker business. It is entirely possible that the mortgage broker aggregate that works best for you may not work well at another firm. Remember: the most attractive aspect of joining an aggregator for most mortgage brokers is to access their members panel.
To point out the obvious, mortgage brokers do not access their own lenders because each lender has differing accreditation requirements. Brokers have to approach non-bank lenders and banks one at a time, submitting stack upon stack of paperwork just to offer the lender’s loans. The other option is to work with a mortgage brokering aggregator—and a reputable one at that—that has deals and relationships in place already. If you want to work directly with lenders as a way to forego a mortgage aggregator, there are also lender volume requirements (and other considerations) to account for.
Because choosing the right mortgage brokering aggregators to work with will save you money and time, it is important to ensure you choose carefully, considering the aggregator’s fees, support, and the services they provide.
Things you should consider when choosing an aggregator:
When choosing the right aggregator for you, it is important to consider the different variables. You will want to choose an aggregator that aligns with your own particular set of goals, resources, and priorities. Regardless of where you are in building your mortgage brokering business, there are signposts that you can follow when choosing.
For instance, one thing to consider is member package options available. Another is to look for an aggregator that is cost-effective, offers flexible ongoing fee structures, and has reasonable up-front fees. Finally, you might want to partner with an aggregator that provides high-qualify business guidance and membership.