The mortgage business is no longer exclusive to banking. During the last few years, and especially in the last five years, a good number of new mortgage brokers have emerged. These are intermediary agencies specialized in obtaining financing at a good price for their clients. Now, do banks really offer more attractive conditions if the applicant hires a broker? According to the financial comparator HelpMyCash.com, these professionals do usually meet that goal, although they qualify: they cannot perform miracles and, furthermore, they may charge fees for their work.
Better interest or higher financing
In Spain, traditionally, those who have little money saved go to a financial intermediary. Banks, as a general rule, finance up to 80% of the home purchase, so you have to have enough funds to pay the remaining 20% plus an extra 10% for formalization expenses. In these cases, brokers do know which banks to go to to obtain financing of up to 90% or 100% of the purchase of the house, so these clients have more likely to be given the loan if they hire their services.
However, there are also many clients with a medium or premium profile who choose to request their mortgage through a broker. And it is that these professionals, due to the contacts they have in banking and their knowledge of the market, are capable of negotiating with entities to obtain better conditions than a private individual could obtain on his own: lower interest, fewer commissions or additional products, etc.
For example, the broker Housfy Mortgages ensures that you can get a variable rate from Euribor plus 0.65% and a fixed rate from 1% to 30 years. On the other hand, if a person goes to the bank on their own, from HelpMyCash they state that, normally, they will be able to obtain a variable interest of around Euribor plus 0.90% or a fixed interest of around 1.40% at 30 years (1.15% if they have a very good profile), in the vast majority of cases.
Even so, the analysts of this comparator remember that banks also impose certain limitations on brokers. Therefore, although these tend to get better conditions, they cannot obtain a price much below the market price nor can they force an entity to offer financing to a poorly solvent customer.
Brokers don’t work for free
As we have seen, financial intermediaries can, in general, get better terms for their clients. Now, it is important to know that they don’t work for free: in most cases, charge a commission of between 1% and 5% on the amount of the mortgage obtained, although there are brokers who choose to charge a fixed fee of about 3,000 or 4,000 euros.
Those fees, by law, must be communicated to the client before hiring intermediation services. What’s more, they are usually collected on success, that is, only if the mortgage is signed. Usually, if the broker achieves good conditions, its cost is offset by the savings obtained, although HelpMyCash advises making numbers to assess whether it is worth asking for financing through this professional. In case of not seeing it clearly, the applicant can freely reject the offer presented by the intermediary.
Over the past few years, however, there have been certain financial intermediaries like Hipoo the Helloteca that do not charge customer fees (They only apply a commission to the bank). It must be said, yes, that these brokers usually limit themselves to presenting the offers to the applicant, without taking care of the subsequent procedures (negotiation of an even better price, organization of the firm, etc.).
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