Claremont Funding is a mortgage brokerage firm serving the lending needs of real estate professionals, builders, and individual home buyers. We have access to a full range of mortgage sources and are dedicated to finding the right loan–with the best rates, terms, and costs–to meet our clients’ needs.

This firm is capitalized by two principal investors, Joan Billings and Maureen Shoe, licensed brokers with over 30 years of combined experience in the industry.

1.1 Objectives:

– Offer comprehensive mortgage broker services.

– Provide personal and specialized services to meet each client’s specific needs.

– Become profitable in the rapidly growing old town section of the city.

– Develop a solid corporate identity in our target market area.

– Become one of the top brokerage firms in the area by our third year of operation.

– Realize a positive return on investment within the first 12 months.

1.2 Mission:

Claremont Funding offers high-quality mortgage brokerage services to residential and business customers. Our aim is to provide fair mortgage rates at reasonable prices, while keeping our clients informed and educated throughout the process. We will become friends and mentors to our customers, as well as quality service providers. Claremont provides an excellent workplace, a professional environment that is challenging, rewarding, creative, and respectful. We ultimately provide excellent value to our customers and fair reward to our owners and employees.

Mortgage Broker Business Plan Example

Claremont Funding is a new company that provides expertise. We offer superior personal service to buyers and pride ourselves on our repeat clients and referrals.

As mortgage professionals, our responsibility is to determine a customer’s financial goals, not just quote a rate. We have access to hundreds of loan programs to arrange the most beneficial solution for the buyer’s needs.

The owners and brokers of Claremont Funding are Joan Billings and Maureen Shoe.

Our start-up costs include website design, office equipment, a main computer station with mortgage information for brokers, stationery, legal costs, furnishings, office advertising, and services. The start-up costs will be financed by direct owner investment and credit. Office space averages $1.10 – $1.60 per square foot, with a three to five year lease agreement.

Our personal goal is to break through barriers to homeownership and help buyers find the best mortgage loan for their needs. We match buyers to loan programs based on their wants and needs.

Due to the area’s strengthening economy and lower interest rates, more home buyers are looking to purchase homes. Residential construction is booming in the city’s Old Town section. We expect to become a recognized and profitable entity in the real estate market.

Our targeted market area, the Old Town area, shows stability and growth. We have a beautiful office located in the Old Town area.

The first quarter home values were up 12.5 percent from the same period in 2001, reflecting an increase from the previous quarter.

Claremont Funding serves two groups of home buyers: first-time homeowners and those seeking residential refinancing for purchasing, construction, remodeling, debt consolidation, investment properties, or refinancing.

Mortgage Broker Business Plan Example

Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
First-Time Homeowners 15% 80,000 92,000 105,800 121,670 139,921 15.00%
Residential Refinancing 10% 150,000 165,000 181,500 199,650 219,615 10.00%
Other Home Buyers 7% 60,000 64,200 68,694 73,503 78,648 7.00%
Total 10.87% 290,000 321,200 355,994 394,823 438,184 10.87%

4.2 Target Market Segment Strategy

We must focus on specific market segments whose needs match our offerings. Focusing on targeted segments is key to our future. We need to focus our marketing message and services offered. We need to develop our message, communicate it, and fulfill it.

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Strategy and Implementation Summary

Claremont Funding will focus on serving the mortgage broker needs in the Old Town section of the city and the surrounding areas. Our target customers will be first-time home buyers and existing homeowners interested in refinancing.

5.1 Sales Forecast

The following table and chart provide a forecast of sales. We expect sales to grow between January and March, with the most significant growth from March to August. Sales are expected to decline from September until the end of the year.

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Mortgage Broker Business Plan Example

Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
First-Time Homeowners $104,672 $150,000 $180,000
Other Homebuyers $52,336 $75,000 $90,000
Residential Refinancing $107,839 $140,000 $175,000
Total Sales $264,847 $365,000 $445,000
Direct Cost of Sales Year 1 Year 2 Year 3
First-Time Homeowners $0 $0 $0
Other Homebuyers $0 $0 $0
Residential Refinancing $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0

5.2 Milestones

The table below lists important program milestones, with dates, managers in charge, and budgets for each. The milestone schedule emphasizes planning for implementation.

Milestones
Milestone Start Date End Date Budget Manager Department
Lease Office Space 12/15/2001 12/28/2001 $3,000 Maureen Marketing
Purchase Office Equipment/Computer, etc. 12/1/2001 12/15/2001 $3,000 Maureen Marketing
Office Utilities 12/20/2001 12/21/2001 $250 Joan Web
Answering Service 12/13/2001 12/23/2001 $200 Joan Web
Stationary 12/1/2001 12/10/2001 $2,000 Joan Admin
Business Software 12/15/2001 12/28/2001 $2,000 Joan Admin
Advertising 12/1/2001 12/30/2001 $2,500 Maureen Marketing
Totals $12,950

5.3 Competitive Edge

Claremont Funding’s competitive edge is that both Joan and Maureen are highly visible lecturers to new homeowners in the city. Joan has a weekly column in the city’s newspaper, and Maureen lectures weekly to neighborhood councils and civic groups. Together, they represent the most recognizable faces in the city on the subject of homeownership and refinancing.

They have a base of 6,000 satisfied customers who continue to make referrals to the brokers.

The city has been growing at a rate of 15% annually for the past 10 years. With a current population of 1.3 million, the new construction in the Old Town section is valued at two billion dollars in home sales next year alone. Claremont Funding is well-positioned to capture a large share of the mortgage services demanded by the city’s growth in Old Town.

Management Summary

Claremont Funding is a two-member mortgage brokerage firm, with both brokers as equal partners.

6.1 Personnel Plan

The following table shows the personnel plan for Claremont Funding.

Personnel Plan
Year 1 Year 2 Year 3
Joan Billings $60,000 $80,000 $90,000
Maureen Shoe $60,000 $80,000 $90,000
Admin Assistants $46,000 $60,000 $80,000
Total People 3 4 4
Total Payroll $166,000 $220,000 $260,000

Financial Plan

We aim to finance growth mainly through cash flow.

The closing sales days are crucial for Claremont Funding. These dates are determined by the Seller and the Buyer, and a move-out/move-in schedule is followed.

7.1 Important Assumptions

The financial plan is based on important assumptions, most of which are shown in the following table as annual assumptions. Monthly assumptions are included in the appendix. We recognize that collection days are critical but not easily influenced. We are prepared to address this issue. Interest rates, tax rates, and personnel burden are based on conservative assumptions. Some of the key underlying assumptions include:

– A strong economy without major recession

– No unforeseen changes in the economy that would alter our estimations

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The following table and chart summarize our break-even analysis.

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Mortgage Broker Business Plan Example

Break-even Analysis:

Monthly Revenue Break-even: $19,975.

Assumptions:

– Average Percent Variable Cost: 0%.

– Estimated Monthly Fixed Cost: $19,975.

Projected Profit and Loss:

– Please refer to the table below for our projected profit and loss.

Mortgage Broker Business Plan Example

Pro Forma Profit and Loss:

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $264,847 $365,000 $445,000
Direct Cost of Sales $0 $0 $0
Other Production Expenses $0 $0 $0
Total Cost of Sales $0 $0 $0
Gross Margin $264,847 $365,000 $445,000
Gross Margin % 100.00% 100.00% 100.00%
Expenses
Payroll $166,000 $220,000 $260,000
Sales and Marketing and Other Expenses $7,800 $13,000 $19,000
Depreciation $0 $0 $0
Leased Equipment $200 $0 $0
Utilities $2,400 $2,400 $2,400
Insurance $2,400 $2,400 $2,400
Rent $36,000 $36,000 $36,000
Payroll Taxes $24,900 $33,000 $39,000
Other $0 $0 $0
Total Operating Expenses $239,700 $306,800 $358,800
Profit Before Interest and Taxes $25,147 $58,200 $86,200
EBITDA $25,147 $58,200 $86,200
Interest Expense $2,950 $2,550 $2,250
Taxes Incurred $6,659 $16,695 $25,185
Net Profit $15,538 $38,955 $58,765
Net Profit/Sales 5.87% 10.67% 13.21%

7.4 Projected Cash Flow

Cash flow projections are critical to our success. The annual cash flow figures are included here, and the detailed monthly numbers are included in the appendix.

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Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $66,212 $91,250 $111,250
Cash from Receivables $187,004 $269,352 $330,237
Subtotal Cash from Operations $253,216 $360,602 $441,487
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $4,500 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $12,000 $0 $0
Subtotal Cash Received $269,716 $360,602 $441,487

7.5 Projected Balance Sheet

The balance sheet in the table below shows managed but sufficient growth of net worth and a healthy financial position.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $45,287 $83,129 $137,040
Accounts Receivable $11,631 $16,030 $19,543
Other Current Assets $20,000 $20,000 $20,000
Total Current Assets $76,918 $119,159 $176,583
Long-term Assets $0 $0 $0
Total Assets $76,918 $119,159 $176,583
Liabilities and Capital
Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,430 $8,716 $10,375
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,430 $8,716 $10,375
Long-term Liabilities $27,000 $24,000 $21,000
Total Liabilities $29,430 $32,716 $31,375
Paid-in Capital $52,000 $52,000 $52,000
Retained Earnings ($20,050) ($4,512) $34,443
Earnings $15,538 $38,955 $58,765
Total Capital $47,488 $86,443 $145,208
Total Liabilities and Capital $76,918 $119,159 $176,583
Net Worth $47,488 $86,443 $145,208

7.6 Business Ratios

The table below provides important ratios for the industry, according to the Standard Industry Classification (SIC) Index, 7389, Business Services.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 37.82% 21.92% 8.50%
Percent of Total Assets
Accounts Receivable 15.12% 13.45% 11.07% 20.90%
Other Current Assets 26.00% 16.78% 11.33% 55.70%
Total Current Assets 100.00% 100.00% 100.00% 81.60%
Long-term Assets 0.00% 0.00% 0.00% 18.40%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities
Accounts Payable 2.43% 8.72% 10.38% 48.20%
Long-term Liabilities 35.10% 20.14% 11.89% 15.50%
Total Liabilities 38.26% 27.46% 17.77% 63.70%
Net Worth 61.74% 72.54% 82.23% 36.30%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 94.18% 89.41% 86.91% 82.60%
Advertising Expenses 2.27% 2.74% 3.37% 0.60%
Profit Before Interest and Taxes 9.49% 15.95% 19.37% 1.50%
Main Ratios
Current 31.65 13.67 17.02 1.57
Quick 31.65 13.67 17.02 1.13
Total Debt to Total Assets 38.26% 27.46% 17.77% 63.70%
Pre-tax Return on Net Worth 46.74% 64.38% 57.81% 1.90%
Pre-tax Return on Assets 28.86% 46.70% 47.54% 5.20%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 5.87% 10.67% 13.21% n.a
Return on Equity 32.72% 45.06% 40.47% n.a
Activity Ratios
Accounts Receivable Turnover 17.08 17.08 17.08 n.a
Collection Days 59 18 19 n.a
Accounts Payable Turnover 34.28 12.17 12.17 n.a
Payment Days 31 19 28 n.a
Total Asset Turnover 3.44 3.06 2.52 n.a
Debt Ratios
Debt to Net Worth 0.62 0.38 0.22 n.a
Current Liab. to Liab. 0.08 0.27 0.33 n.a
Liquidity Ratios
Net Working Capital $74,488 $110,443 $166,208 n.a
Interest Coverage 8.52 22.82 38.31 n.a
Additional Ratios

General Assumptions:

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12

Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss:

Sales $6,150 $6,300 $14,170 $22,000 $26,750 $36,500 $44,000 $53,000 $28,033 $12,137 $8,952 $6,855

Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Gross Margin $6,150 $6,300 $14,170 $22,000 $26,750 $36,500 $44,000 $53,000 $28,033 $12,137 $8,952 $6,855

Gross Margin % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Expenses

Payroll $13,000 $13,000 $13,000 $13,000 $15,000 $15,000 $15,000 $15,000 $15,000 $13,000 $13,000 $13,000

Sales and Marketing and Other Expenses $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650

Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Leased Equipment $200 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Payroll Taxes 15% $1,950 $1,950 $1,950 $1,950 $2,250 $2,250 $2,250 $2,250 $2,250 $1,950 $1,950 $1,950

Other $0 $0 $0 $

Pro Forma Cash Flow:

Cash Received

Cash from Operations

Cash Sales

Cash from Receivables

Subtotal Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received

New Current Borrowing

New Other Liabilities (interest-free)

New Long-term Liabilities

Sales of Other Current Assets

Sales of Long-term Assets

New Investment Received

Subtotal Cash Received

Expenditures

Expenditures from Operations

Cash Spending

Bill Payments

Subtotal Spent on Operations

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out

Principal Repayment of Current Borrowing

Other Liabilities Principal Repayment

Long-term Liabilities Principal Repayment

Purchase Other Current Assets

Purchase Long-term Assets

Dividends

Subtotal Cash Spent

Net Cash Flow

Cash Balance

Pro Forma Balance Sheet:

Assets

Starting Balances

Current Assets

Cash

Accounts Receivable

Other Current Assets

Total Current Assets

Long-term Assets

Long-term Assets

Accumulated Depreciation

Total Long-term Assets

Total Assets

Liabilities and Capital

Current Liabilities

Accounts Payable

Current Borrowing

Other Current Liabilities

Subtotal Current Liabilities

Long-term Liabilities

Total Liabilities

Paid-in Capital

Retained Earnings

Earnings

Total Capital

Total Liabilities and Capital

Net Worth

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