What does a mortgage broker do?
A mortgage broker (sometimes also called ‘financing broker’ or ‘loan broker’) sits between you and the banks. Instead of lending money on their own they look through offers from banks in order to find one that suits your needs. There are, however, differences in size. Large brokers (such as Hypofriend) for example work with 500 to 750 lenders - from national banks to savings banks (Sparkassen), cooperative banks (Volksbanken) and insurers.
Working with a broker typically works like this:
Understanding your needs: The broker first asks about your income, savings, the purchase price you think of and your plans for the next few years (such as children or a job change). This creates a context in which they can search for a loan that suits your situation and plans. Our free affordability calculator gives you a first impression of this.
Planning the financing: They recommend a fixed-rate period, a repayment rate and how much of your savings you should put in. Note: good brokers calculate several options.
Comparing offers: Next the broker collects terms from many banks and shows you which bank provides the cheapest option for your situation. Banks assess different types of borrowers differently, for example self-employed, couples or people without a German passport.
Checking subsidies: They then check whether you qualify for KfW loans or regional subsidy programmes.
Submitting the application: Towards the end they put all your documents together and submit the loan application to the bank.
Support until signing: At last they stay in touch with the financing bank until the loan contract is signed. Many brokers also will help you with refinancing later. In the end, you sign the loan contract with the bank yourself. The bank pays out the loan and later you go to the bank for any extra repayments.
What does a mortgage broker cost?
The commission is not added on top of your interest rate. Banks budget for sales costs whether you come through a branch or a broker. That is why rates through a broker are often as good as, or better than, going to the bank directly.
Mortgage brokers typically do not charge borrowers a fee. The one who pays the broker is the bank once the loan is signed. If you sign no loan contract, no fee is charged. This commission is not added on top of your interest rate. That also is why interest rates you got through a broker are often as good as (if not better) than directly going to a bank.
Is a mortgage broker independent?
Brokers are independent of any bank if no bank owns the broker and if it works with many lenders - in this way the broker is not dependent on one specific bank. You should still check two things: how many banks a broker really compares and who owns the broker. Why? Because some brokers belong to banking groups, which is not necessarily disadvantageous but you should be aware of it.
When you should be careful is when anyone asks for an upfront fee or pushes you towards one particular bank. For reputable brokers this is unusual behaviour.
Mortgage broker or your own bank?
Your own bank can offer only its own loans to you. A broker on the other hand can offer loans from a variety of (hundreds of) banks. Therefore, Finanztip recommends using both: getting an offer through a broker and then asking your own bank whether it can match this offer.
Finanztip uses an example that shows what such a comparison is worth. On a 300,000 € loan with the same monthly payment of 1,500 €, you still owe 226,375 € after ten years at 4.0% interest - but only 219,861 € at 3.8%. That is a difference of about 6,500 € for 0.2 percentage points. Using a broker hence can make a lot of sense.
How do you recognise a good mortgage broker?
Do look out for these five points when choosing a broker:
Licence under § 34i GewO: Everyone who brokers property loans is required to have a licence and to be listed in the IHK broker register. One way to check this online is at www.vermittlerregister.info.
Number of banks: The more lenders a broker compares, the more likely is it to find an offer which suits your needs.
Valuable recommendation: Good brokers do not just tell you which the cheapest bank is. They also recommend a fixed-rate period, repayment strategy and how much equity you should use - and they should also explain why that is.
Independent Feedback: Consumer sites like Finanztip and customer reviews from Google or Trustpilot show how satisfied other customers are and give you an independent impression of the service you're going to choose.
No upfront fees: Reputable brokers are paid only by the bank, and only if the loan is signed.
Note: If you do not speak German fluently, make sure the advice is available in your language and that the broker knows the banks that lend to expats.
Recommended mortgage brokers in Germany
For mortgages, Hypofriend is best rated on Finanztip. If you want to compare Hypofriend to other brokers, look at this comparison of the different mortgage brokers.
Hypofriend: a Finanztip recommendation with 750 lenders
Hypofriend is an independent mortgage broker based in Berlin. It was founded in 2017 by Nick Mulder, Pavel Jurasek and Dr. Chris Mulder, a former Senior Economist at the IMF and the World Bank.
What sets Hypofriend apart from other brokers?
Quantity: We compare offers from 750 banks. Other brokers compare only around 500 lenders.
Quality: Our recommendation algorithm analyses your current + future financial situation and suggests a fixed-rate period, repayment strategy and how much equity you should use. Our advisors then go through the result with you in person or by video.
Bilingual: Our advice is available both in German and English.
Free: As with all good brokers, the bank pays the commission.
Buyer’s agent: In Germany, the traditional real estate agents work mostly for the seller. With Hypofriend Plus a personal buyer’s agent works only for you - from property search to notary signing. They check the property’s value on site, review documents like the land register and owners’ meeting minutes, help you negotiate the price and coordinate the notary date with your loan payout. Read how a buyer’s agent differs from a real estate broker.
Reviews: We have an average of 4.9 out of 5 stars from over 1,000 Google reviews. Also on Finanztip all 25 customer reviews are positive.
Frequently asked questions
What do mortgage brokers do?
They compare mortgage offers from many banks, recommend the right financing, submit the loan application and support you until you sign. The bank, not the broker, grants the loan.
What do mortgage brokers cost?
Nothing. The bank pays the broker a commission if the loan is signed. Reputable brokers do not charge you a fee.
Will I get a better rate through a broker or from my own bank?
Often yes, because the broker compares hundreds of banks. Still, get an offer from your own bank as well and compare the two.
Which mortgage broker is the best?
It depends on your situation. Finanztip recommends Interhyp, Baufi24, Dr. Klein, Hüttig & Rompf and Hypofriend, among others. What matters is the number of banks, the quality of the advice and independent reviews.
Do I need a mortgage broker as an expat?
A broker is especially helpful, because many banks scrutinise borrowers without a German passport or with a temporary residence permit more strictly. A broker knows the banks that will still lend to you. Hypofriend advises in English too.
Does a mortgage broker need a licence?
Yes. They need a licence under § 34i of the Trade Regulation Act and must be listed in the IHK broker register.
