Loan Broker Faces Home Truths

Sydney Morning Herald

Friday November 5, 2004

Janine Perrett

Worried about the mortgage? Just ask the Missus, writes Janine Perrett.

Over 20 years' experience as a management consultant didn't totally prepare Jennifer Schelbert for the harsh reality of running her own mortgage broker business from home.

And even experience as a marketing manager didn't guarantee start-up success for the catchily named Mrs Mortgage.

"I thought if I put up my shingle and said 'Here I am' - I expected they would fall over themselves," she says. "I have to admit it's been a lot tougher than I expected - it's tough to make money."

And this coming from someone who spent most of her working life in the corporate world advising others; then at age 55 decided she wanted a career change.

"Being in the consulting industry gave me a bucketload of experience. I found the issue that most often came up was always about the dollar so I wanted something that would give me a chance to assist on financial matters," she says.

One of her favourite clients was chairman of a large real estate company but he advised her against going into that business and suggested she become a mortgage broker.

"The best way to start is to join one of the large companies which take on rookies," Schelbert says. However, she admits that many of her application letters went unanswered.

In the end, she joined a two-week induction program with a major mortgage minimisation group and worked for them for almost a year before being headhunted to open the Melbourne office of the Money Shop. When that general mortgage broker was taken over months later, she decided to set up as an independent business working from home.

"To go it alone, you need a phone, computer, fax, email; luckily I was pretty well set up because I had been in business before," she says.

While the overheads for a micro business can be small, in this case they did add up. Schelbert changed homes so that the new home was more comfortable to work in and more presentable for visiting clients.

"I ended up with a line of credit from my investment property to tide me over," she says. But ever the optimist, she believes it should only take about 12 months to establish her business and from it should then be "very profitable".

Until then she needs to overcome a few challenges, such as explaining exactly what it is she does.

"I think a great problem for mortgage broking is that the general public doesn't really know what it is," she says.

Basically, when a property buyer wants to find the best deal they ring a mortgage broker to shop around for them and the broker makes their money on the commission they charge the mortgage provider. The problem is that because virtually anyone can set up as a broker, and the business is commission-based, there are those who will tip you into the loan that suits their bank balance rather than yours.

"I'd like to see better government legislation," Schelbert says. "There's not a lot, but there are some dodgy operators and I constantly have calls from people who have been given bad advice."

She cites one particular risk for small businesses in "low-document loans" where the borrower makes a statutory declaration estimating their future income. While these were designed to help businesses get a loan by forecasting their profits, it has also led to problems with the tax office when audits reveal a discrepancy between the bank documents and tax returns.

Schelbert makes the necessary calls to check quotes, which can be time-consuming but she believes is all part of the service.

"You have to like talking to people; everyone is different, no two mortgages are the same and everyone who rings in, I welcome as a chance to learn," she says.

It also raises another issue which she rates as one of her main challenges - the isolation of working from home.

"It's the lack of feedback. If you work in a big office, you have many senior people to help, to talk to, but when you're on your own you have to ring and check with people like Choice," she says. "While that's fine and the result is the same, I miss the physical interaction with people.

"And of course there's no one to pat you on the back," she says. "To work from home, you have to be able to take the ups and downs. You have got to be able to get yourself going."

Schelbert makes the effort to get out of home regularly and network with others in the industry but that also requires an effort, as she discovered. "In Melbourne, they like to network at breakfast, which means getting up early in the morning and driving into town," she says.

She admits she is lucky that her chef husband also works inhospitable hours so she is less concerned than others who have to field calls from potential clients at any hour.

"I also end up doing my filing at 10 or 11pm because we are required to lock up all our clients' financial details," she says. (Although one wonders whether dodgy operators do the same, given there are no snap inspections by any regulators.)

Schelbert's work experience has been of benefit when it comes to the other great challenge of expanding her client base by marketing her Mrs Mortgage brand successfully. One idea she got from the Money Shop in Sydney was to write a weekly advice column in a local real estate newspaper.

"I've emerged as something of a Dorothy Dix for the mortgage industry," she laughs. "It doesn't bring a lot of business for me so far but it is good exposure."

This has been more effective than her community newspaper advertisement, which ran for eight weeks with no impact. She now uses handbills to advertise her service in neighbouring suburbs.

"I use a delivery company, which costs me about $1500, which is not cheap," she says. "The first one I had I suspect they were not actually handing them out or delivering but when I changed to this one, I immediately started getting calls so knew they were hitting the market."

One question she now asks herself is whether she should purchase a commercial "list bank" to help her find more clients and generate leads.

"Australia Post did a lifestyle survey, a five-page questionnaire and you can purchase that mailing list for $1500," she says.

While Mrs Mortgage is decidedly upbeat about her prospects and micro-business challenges, there is one area she finds particularly time-consuming and frustrating - dealing with the major banks, which are a key part of her business.

"There is so much bureaucracy, I often feel like you're just a number and you can get sidelined," she says.

CHALLENGES FOR

MRS MORTGAGE

* Lack of physical contact and feedback working from home

* Marketing home-based business

* Expanding client base

* Dubious competitors

* Dealing with major bank bureaucracy

© 2004 Sydney Morning Herald

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