Sign in to follow this  
Followers 0

Property Purchase: my experience with mortgage "brokers"

4 posts in this topic

This post doesn't want to generalize or be a useless rant. No intention to attack or offend a professional category or single people in this forum. I want just to report my experience hoping this could help other expats that are in the process of buying a property and need a loan.

Oh by the way one month ago we went to the Notar for signing the purchase contract, what remains now is just bureocracy :lol:

 

My idea of a mortgage broker was the one of a professionist that bust is ass to put in competition different banks when it comes to propose a mortgage offer to his customer. I hand over to him/her what I should do by myself.

Actually it was not and it is not the case. We know there are here in Germany at least 3 main companies specialized in mortgage brokerage for expat, I am not going to say to which one of them I went, it is not necessary (actually I went to several companies). But it exactly the same soup everywhere.

 

They do the videocall, they show you what are the best offers "their" software propose and then they simply say "Ok, look, this is the best offer with a green light beside (It means straight forward process, no issues), do you want to take this ?".  

Really ? Why you don't take the first 3 best offers, contact the respective banks, and start to put them in competition to have better rate for me, your customer? What is your added value here ? I could have said "the language...the english instead of the german.." but actually i also contacted "german" mortgage brokers like dr klein, baufi24, Interhyp and I had  consultancy meeting in english without any problem.

As I said the same soup everywhere...even the software they were using for interfacing with the banks. Apparently all these mortgage companies uses a software from Prohyp. The Interyhp consultant, upon my demand, clarify me that Prohyp is a company they created detaching from Hynteryp the division that was developing and mantainng (and selling to other mortgage brokers) this Prohyp software. Even the template of the printed offer were the same but with different logos :D

 

So at the end I had to put in competition different mortgage brokers. "Hey you know i have an offer from this bank through a broker, can you do better?". And here the miracle happens. Suddenly they were starting to literally bust their asses to not lose a good customer (financialy me and my wife were a very good case, we knew that).They were calling the bank and the bank was making better offers. When the fight between offers became tough, in order to beat the offer of the competitor they were starting to cut their own fees. "They" here means the bank internal mortgage salesman but, surprise surprise (not really), also your own mortgage broker. Yes in their website they state "we don't ask you any fee, is the bank that pay us fee if we close the deal with you !". This is absolutely true but you have to know that they can contribute to give you a better loan offer by cutting the fees the bank will provide them. De facto that is an hidden fee.

 

Anyway this "hidden fee" is totally fine for me (of course any job need a proper remuneration) if only they were acting really like a broker and not just showing the offers on their software and ask me to choose.

 

So my humble suggestion is to not go to a single broker and trust him totally. Just do your homework ask for different offers (Konditionsanfrage not KreditAnfrage) directly to bank or through brokers and put all of them in competition. If you are going through a broker ask him, according to his experience:

 

  •  how likely a certain bank will accept your potential mortgage application
  • what is the processing time of your mortgage requests (also this is in this prohyp software but better an answer based on real experience of the broker) and if the bank has some sort of priority path for certain cases

 

Also evaluate things like mandatority of opening lifeinsurance (typical postbank stuff), how many time (if any) you can change the repayment rate across your fixed rate period, how much time the bank is offering you between the signing of the mortgage contract and the effective utilization (by transfering the money to the seller) of the loan sum. For this last one the word in german is  "Bereitstellungszinsfreie Zeit". After this period you start to pay (high) interests on the money parked and not used.

It happened to me that some brokers by mistake were printing/preparing offers with just one month of Bereitstellungszinsfreie Zeit, totally not enough in a Purchase of an existing property.

 

As I said this is just my experience, it can't be the description of a generic situation.

My feeling is that these brokers were used to a long time of very low interests in a crazy real estate market and this means: tons of customers, easy deal with each of them.

I guess that the raise of the interest rates will wake up these people and they will realize that it is time to do the broker for real if they want to bring the bread at home.

0

Share this post


Link to post
Share on other sites

Banks and mortgage lenders are like any other business; they compete based on their own interests.  Nothing new here.

Whenever there is a non-fixed priced product or service there is fine print.  You don't see fine print when you buy an apple.

That fine print is deliberately difficult to understand for many reasons (clink this box if you agree to our terms of service) as is the complexity of the entire buying process.  You may think you got a "deal", but the broker/banker might have given you some sort of discount from the start, but you didn't ask, so they didn't volunteer one.  

0

Share this post


Link to post
Share on other sites

Maybe was not clear in my post.

What is the sense of a mortgage broker is the only thing he does is just query standard bank offers and propose to accept the best ? At least make an attempt to do what is supposed his job, talk with banks and try to have a REAL best condition.

Broker i am talking here is not the finance consultant of a bank, the guy employed in the bank with whom you talk about mortgage offers of that bank.

He is supposed to be an impartial third party interfacing me with the banks and doing is the best to obtain a good mortgage offer.

0

Share this post


Link to post
Share on other sites

Ours took on all the finding out and the communication with the bank. Which we could have done ourselves but chose not to.

 

They found us a great deal with a bank we didn't know existed in our town, so we were happy.

 

Did we 'need' them? No, probably not. The bank dude couldn't believe we had a broker in the mix, like, what was the point? Now he has had 6 years of experience of our cluelessness, he probably gets why :lol:

 

As with most things, you make choices. We felt incapable of going through the process on a mortgage in Germany, which was a big deal for us. Going with Cie and Cie (always happy to give them a plug) just gave us the confidence we needed. In fact, had we found the bank ourselves and taken out an account with them first, we could have got it cheaper. But these are 'if's - we didn't know about that bank, we wouldn't have approached them, and the optimal thing wouldn't have happened. As it is we have a 'better than we could have hoped' thing, so we're happy bunnies. 

 

Life is full of this stuff. People get other people to do things which they could do themselves. This is just another example. 

The health insurance thing is a case in point. We went and had a chat with the local Barmer dude when it came time to join a local KK, and all went smoothly, because he had done the exact same thing 6 months before. Had it been complex, we'd have asked john g. for help, and happily paid for his services (although I don't think it works that way for public KK). Most people are better off getting that professional help immediately, before making a mess of it themselves. We just happened to be sufficiently capable and partner with a Barmer chap who was also sufficiently capable. Luck amongst other things, I suppose.

 

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now
Sign in to follow this  
Followers 0