A mortgage aggregator plays a vital role in the Australian home loan market. They provide an essential service for mortgage brokers, helping to streamline the process of sourcing loan products from multiple lenders. Mortgage brokers, in turn, work directly with clients, offering advice and assisting with loan applications.
But how much does it cost to engage with a mortgage aggregator, and what are the factors that influence these costs? This article will delve into the costs involved with mortgage aggregators in Australia, as well as the various factors that can impact pricing.
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What Is A Mortgage Aggregator?
A mortgage aggregator is an intermediary that connects mortgage brokers with lenders. They essentially ‘aggregate’ loan products from multiple financial institutions and present them to brokers who can then offer these products to their clients. Aggregators have relationships with a wide range of banks, credit unions, and non-bank lenders, which allows brokers to access a broader selection of home loans than they would be able to on their own.
For mortgage brokers, partnering with an aggregator simplifies the process of loan product sourcing, reduces administrative workload, and helps to stay competitive in the market. Aggregators typically provide brokers with access to technology platforms, marketing support, compliance services, and a range of other resources that help brokers run their businesses efficiently.
Cost Structure Of A Mortgage Aggregator
When it comes to the costs associated with a mortgage aggregator, the pricing structure can vary depending on the services provided, the aggregator’s size, and the nature of the broker’s business. Below are some of the key cost factors that can influence how much a mortgage aggregator costs:
Upfront Fees (Joining Fees)
Some mortgage aggregators charge an upfront or joining fee for brokers who want to become part of their network. These fees can range from a few hundred dollars to several thousand, depending on the aggregator.
For example, joining a larger, well-established aggregator may come with higher initial fees, but this could be offset by the volume of business the broker is able to generate due to access to a wide variety of loan products.These joining fees are typically paid once at the beginning of the relationship. They may be used to cover the cost of onboarding, initial training, and access to the aggregator’s platform and tools.
Ongoing Fees (Monthly Or Annual Fees)
Mortgage aggregators generally charge ongoing fees to brokers. These fees are usually charged on a monthly or annual basis and cover the ongoing costs of maintaining the broker’s relationship with the aggregator. These fees can vary widely, with some aggregators charging as little as $100 a month, while others may charge several hundred dollars per month.
The fees charged by aggregators typically include access to their software and platforms, compliance and legal support, marketing resources, and training programs. In addition, aggregators often provide brokers with dedicated support teams to help with operational issues and business growth strategies.
Commission Split
One of the most important aspects of the relationship between mortgage brokers and aggregators is the commission split. Mortgage brokers earn a commission for each loan they successfully broker, which is paid by the lender. Aggregators typically take a percentage of this commission as their fee for facilitating the connection between the broker and the lender.
The commission split can vary, but it is generally in the range of 10% to 30% of the broker’s commission.
Larger aggregators with more lenders on their panel may offer a higher split to brokers, while smaller aggregators may charge a higher percentage to brokers for access to a smaller pool of lenders. Brokers must carefully consider the commission split when choosing an aggregator, as it can significantly impact their earnings.
Some brokers may prefer aggregators with lower fees and higher splits, while others may prioritise access to a larger range of loan products or additional support services, even if this means paying a higher percentage of their commissions.
Additional Charges For Services
In addition to the basic costs mentioned above, mortgage aggregators may charge additional fees for specific services. These can include:
- CRM Systems: Customer relationship management (CRM) systems help brokers manage their client base, track leads, and stay organised. Some aggregators provide these systems for an extra cost, although many offer them as part of their standard service.
- Marketing and Advertising: Some mortgage aggregators offer marketing and advertising packages to brokers, helping them promote their services and attract new clients. These packages may include websites, social media content, lead-generation tools, and other promotional materials. The cost for these services can vary depending on the level of support and customisation the broker requires.
- Compliance Services: Given the regulatory environment surrounding mortgage broking in Australia, compliance is a significant concern. Many aggregators offer compliance services to help brokers adhere to the required standards. These services might include ongoing training, document audits, and access to legal advice. Additional fees may apply for these services.
- Training and Education: Mortgage aggregators often offer ongoing training to help brokers stay updated with industry trends, product knowledge, and compliance requirements. Some aggregators provide this training at no extra cost, while others charge for advanced or specialised courses.
Volume-Based Pricing
Some mortgage aggregators structure their pricing based on the volume of business a broker generates. This is particularly common with larger aggregators who work with high-volume brokers. As brokers generate more business, they may qualify for reduced fees or more favourable commission splits.
Volume-based pricing is a way for aggregators to reward high-performing brokers. It also provides an incentive for brokers to grow their businesses, as the more loans they settle, the less they pay in fees and the more they keep in commissions.
Comparing The Costs Of Mortgage Aggregators
Given the differences in cost structures, brokers should carefully assess the options available before choosing an aggregator. Larger aggregators, such as AFG (Australian Finance Group) or
Connective, may offer a wide range of loan products, software tools, and support services, but they may also come with higher fees or a more complex commission split.
Smaller boutique aggregators may offer more personalised service and better commission splits, but they may not have the same extensive panel of lenders.
Here are some key questions to consider when comparing mortgage aggregators:
- What is the commission split?
- What are the upfront and ongoing fees?
- What services are included in the fee structure?
- Are there additional costs for training, CRM systems, or marketing tools?
- How many lenders are included in the aggregator’s panel?
- Are there incentives or discounts for high-volume brokers?
The Value Proposition Of Mortgage Aggregators
While mortgage aggregators charge fees for their services, the value they offer can outweigh the costs. Mortgage brokers can benefit from the expertise, resources, and technology that aggregators provide, which helps them save time, stay compliant, and offer a wider variety of loan products to their clients.The ability to access a large panel of lenders means brokers can find the right loan products for clients more quickly and efficiently.
This can lead to increased customer satisfaction, repeat business, and referrals—ultimately growing the broker’s business and improving their bottom line.Moreover, mortgage brokers who use an aggregator have the advantage of being part of a larger network, which often provides access to higher-quality resources, exclusive deals, and marketing support that they may not be able to afford or access on their own.
Conclusion
The cost of a mortgage aggregator in Australia can vary depending on the size of the aggregator, the services it offers, and the broker’s individual needs. While upfront fees, ongoing costs, and commission splits can add up, the value provided by mortgage aggregators—such as access to a broad panel of lenders, advanced technology platforms, compliance support, and marketing resources—can significantly enhance a broker’s ability to grow their business.
For brokers, the key is to find an aggregator that provides the right mix of services and costs that align with their business model and goals. By carefully evaluating the offerings and costs, brokers can ensure they’re making the best choice for their practice, their clients, and their long-term success in the industry.
Frequently Ask Question
How Much Does It Cost To Use A Mortgage Aggregator In Australia?
The cost of using a mortgage aggregator in Australia varies depending on the aggregator and the services they offer. Generally, there are membership fees, which could range from a few hundred to several thousand dollars annually. Some aggregators charge additional fees based on loan volumes or offer commission splits between the aggregator and brokers. It’s important to carefully review the fee structure before committing to an aggregator.
Do Mortgage Aggregators Charge Borrowers Directly?
Mortgage aggregators do not typically charge borrowers directly. Their primary function is to work with brokers to provide access to various lenders and loan products. The cost to borrowers usually comes in the form of interest rates or fees set by the lenders. However, brokers may charge borrowers a fee for their services, which is separate from the aggregator’s fees.
What Services Do Mortgage Aggregators Provide To Brokers?
Mortgage aggregators offer brokers a range of services, including access to multiple lenders, competitive commission structures, compliance and training support, and marketing resources. They also provide technology platforms to streamline loan processing and management. Some aggregators may also offer business growth tools, helping brokers expand their networks and client base.