Mortgage Franchise UK – the TOP 10 MUST KNOWS about finding and running successful UK Mortgage Franchises.
After a period of chaos, the housing sector in the UK is finally finding its feet again. Find out how you can make the most of some great business opportunities with a Mortgage Franchise UK.
UK Mortgage Franchises have been a talking point of late.
For well over a decade, the housing sector – not only in the UK, but around the world – was put through a hard, turbulent paradigm shift. While millions of people suffered huge losses, there seems to finally be something of a proverbial silver lining to these years.
Many experts believe that this involuntary ‘purge’ was exactly what the global markets needed to bring the focus back on transparency, credibility and accountability. Since the world of finance is so precariously set on what the customers, investors and stakeholders think, it’s easy to understand why the housing market in the UK is on the brink of a definitive change.
What this means is that the entire eco-system of businesses that find themselves surrounding the huge housing market have, at long last, something to cheer about. The Brexit will have its impact in whatever way it comes down to, but one thing – for now, at any rate – can be held certain – there will come around new opportunities in this sector.
The lending industry, being the backbone of the housing market, can look forward to the next few years with great optimism. As a franchisee, you can explore ways of getting on board these changes through mortgage franchises UK. In this article, we’ll see what UK mortgage franchises are, how much they cost and what franchisees need to be aware of before signing the franchise agreement.
Mortgage Franchise UK – Where From Here?
To make sense of any opportunity, you must first start right at the roots.
And thus, understanding the potential of Mortgage Franchises is a process that we should ideally begin by understanding the housing market itself.
Asking yourself a few questions can, surprisingly, reveal a lot about this market. Here are a few examples:
- Do you own a residential property?
- If yes, how did you finance its purchase?
- How easy was it to get the mortgage? Were you happy with the interest rates offered?
- Have you been thinking of investing in residential properties in the present economic climate?
- What sort of returns do you think you should expect if you invest in residential properties today?
A simple market tenet states this: Sell unto others what you’d buy yourself. If you think the housing market has a lot to offer in terms of opportunities, go ahead with the market research to validate your opinions.
Moving on from instincts, let’s see what the actual numbers look like.
- First the negative points: the number of residential property transactions have been on a downward slope for quite some time. 2018 was one of the ‘slowest’ year in this regard. The ONS reported that the number of residential property transactions in 2018 showed a 3.2% decrease from 2017.
- Flats and maisonettes have been the poorest performers in this context.
- The housing price index published by the ONS reveals some interesting insights. Since June 2016, the index has been in a constant 12-month fall. November 2018, for example, showed a 12-month change in the housing price index of 2.8%. This is the stat that is a damning proof of the fact that institutional investors and private homeowners have been apprehensive about investing in residential properties.
- Now on to some good bits: The optimism we talked about earlier has pretty much everything to do with the cyclical nature of markets. Periods of slump are almost always followed by great booms. Statista estimates that the 2018-22 period could see the residential property prices go up by over 12%. While this is too small a number to indicate a boom, the signs of positive market sentiment are often found to be correlated to property purchase decisions.
- The UK mortgage market is valued at over £1.2 trillion, making it the largest of its kind in all of Europe.
- There are currently over 11 million active mortgages in the UK.
- An average UK mortgage amounts (approximately) to £125,000.
- Each year, more than 300,000 first-time buyers enter the residential property market, signifying the importance of a strong, robust mortgage sector.
How Successful Are UK Mortgage Franchises?
In almost every credit-oriented economy, it’s the lending businesses that are among the successful ones. Again, this isn’t to say that lending businesses are immune to failures (we have many instances of this to learn from).
The across-the-board success of quite a few mortgage and loan franchises UK has one underlying element: the ability to service the unserviced. Even in a top-tier economy like the UK, thousands – if not millions – regularly find themselves beyond the conventional credit bracket. Not being able to secure credit from banks, their obvious next move is to seek help from P2P lenders and mortgage providers.
Private high-street lenders made a windfall from these opportunities even before the internet came about. Today, thanks to the power of brokers and mediators, a borrower can easily know – often within hours – where their next round of funding is going to come from.
UK mortgage franchises combine this business model with the aggressive expansion model made affordable by franchising.
Recommended: How to Raise Money for Your Franchise Business?
The Lending Market Is Difficult to Break Into for Individuals
Lending and borrowing money are pivotal concepts that our modern economy is built on.
Borrowing money makes individuals and businesses fuel their purchases, while helping lenders get higher-than-average returns on their capital. This is one of the reasons why the lending market is extremely difficult – nearly impossible – for an individual with some money to spare to get into.
For starters, there are dozens of regulatory checks to pass. If you manage that, it’ll still take you years to establish a decent level of market credibility and reputation. Combine all these factors and you begin to see what UK mortgage franchises really bring to the mix.
By buying a franchise unit of an established mortgage lender, you can instantly associate yourself with the brand value, trust and reputation of the franchisor, making it far easier to engage and close clients than it otherwise would be.
How Do Loan and A Mortgage Franchise UK Work?
Throughout our blog, we have seen some unique ways in which UK franchises make money. The business model of franchising may be the common denominator for all these sectors, but each brings on board special strategies.
Loan and mortgage franchises UK are no different. The basic building blocks of franchising are all there – the franchise agreement, the commissions, the support and the marketing. But on top of those, UK mortgage franchises offer their franchisees something unique – performance-based rewards that literally eliminate the upper cap to your earning potential.
In simpler words, when you buy a mortgage franchise UK, a large share of what you make for the franchisor will go directly to you. The performance metrics will vary from one franchisor to another. Some franchisors expect franchisees to only generate leads for them, while others prefer to share a part of revenue generated as an incentive.
Regardless of the model, it’s safe to say that loan and mortgage franchises UK can potentially offer some of the best rewards in the world of franchising, in terms of every pound invested.
What Will Your Role Be As A UK Mortgage Franchise Owner?
As a mortgage franchise UK owner, your role will – in most cases – be to oversee the local operations, be the face of the business in your territory, expand your network of clients and onboard customers on a weekly/monthly basis. Essentially, you’ll act as a local unit soliciting business on behalf of the franchisor’s mortgage broker/lending company.
It’s important to know here that there are no easy wins in this industry. The competition is usually fierce and it may take weeks or months of pursuing for each successful acquisition.
How Much Do UK Mortgage Broker Franchises Cost?
The cost of a loan and mortgage franchise in the UK depends largely upon the business model chosen by the franchisor. If the franchisor just wants to expand in new territories, their franchise units often don’t cost much.
On the other hand, if we’re talking about franchisors that want to aggressively build new customer relationships across the UK, you’ll be looking at a minimum initial investment to the tune of £20,000 to £30,000.
Types of UK Mortgage Franchise
It’s important here to note that when we talk about mortgage franchises, we also talk about other similarly built finance franchises.
Based on this, UK mortgage franchises can be categorised as below:
Residential Property Mortgage Franchises
These are the most common types of mortgage franchises UK.
A residential property mortgage franchise unit allows you to facilitate the private lending transactions in your given territory. There exist multiple sub-specialities in this sector. These aim to serve various financing needs of homeowners and would-be homeowners, ranging from re-mortgaging existing mortgages into cheaper deals to offering short-term conversion finance.
Commercial Property Mortgage Franchises
The commercial finance sector in the UK offers a variety of diverse financing tools, and these UK mortgage franchises reflect this diversity.
A commercial property mortgage franchise typically deals with commercial property owners and developers. As a franchisee, you would most likely be tasked with networking in your given territory, spotting opportunities, negotiating the terms of contract with your prospects and helping your franchisor sell their financing products.
Some of these include HMO finance franchises, buy-to-let finance franchises and development finance franchises.
Mortgage Broker Franchises
Not all mortgage franchises UK lend money directly. Many mortgage broker companies now offer franchising opportunities to skilled and experienced franchisees.
UK Mortgage Franchises: Who Are They Best Suited To?
Running a successful franchise business means handling multiple business fronts at once.
Mortgage franchises UK are best suited to those who have some prior experience in the industry. Even if you’re planning on hiring staff to do all the ground-work, you’ll still be required to steer the business in the right direction and negotiate with important customers.
To be able to achieve this, you need to not only be a people person, but also have networking skills. As we have mentioned multiple times while discussing various finance franchises, most of the business you generate will be coming from referrals. So, it’s essential that you maintain a valuable local network of colleagues and influencers.
Top Loan and Mortgage Franchise UK
Here is a short list of some of the most popular UK mortgage and loan franchises.
- Minimum Initial Investment: £16,495 (plus VAT)
- USP: Whole of market commercial finance broker with UK-wide operations
- Exclusive territories
- 2-day residential training
- Full marketing, admin and IT support
- Chance to break even within months
- High volume, recurring business with high commissions
- Diversity through working with both Property Based clients as well as SMEs
- Minimum Initial Investment: £4,995 (plus VAT)
- USP: Commercial finance brokers
- Full training provided
- Business development support
- Wide range of commercial and residential finance and mortgage products
- Large lender portfolio
- Minimum Initial Investment: £19,995
- USP: Mortgage and finance advisors
- Dedicated territory
- Online lead generation solutions
- Marketing support
- Can be home-based
Loan, Mortgage and Broker Franchises UK – The Takeaways
- Make sure you have the necessary soft skills to deal with a variety of people on a daily basis.
- An average mortgage franchise breaks even within 1=2 years of inception. So, ensure that you have enough capital to run the business before you’re profitable.
- Choose a franchisor that has good market standing and high acceptance rates.
- Prepare your business plan carefully.
- Study the terms of contract with the franchisor well. Consult with qualified business advisors if you aren’t sure about how you’ll get paid or how the commissions will be split.
At franchise4u, our efforts are to educate franchisees through in-depth guides and information. If you have any experience of running a mortgage franchise, do feel free to share it with us by getting in touch with us. Selective entries will be prominently displayed on our popular franchising success stories page.