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Companies or persons, generally called brokers in real-estate loan, make the intermediary between the lender and the borrower. They put in relation, via privileged agreements, the future buyers of property, and the institutions of the banking environment. Because of their know-how and important volume of affairs, they exercise an important role in the negotiation of loan, notably on the parameters of the rates, affordability, fees and amount, so the repayment. They allow realizing important savings and can bring to banks a new customer.

So everybody finds an interest there. In parallel, some companies can offer loan adapted to the financing of exempt of taxations products, allowing increasing all the realized savings.

In France, there are several companies the activity of which is only dedicated to the brokerage in real-estate loan, but rare are the ones which have an international dimension.

Brokers have different working attitudes

Brokers compare the offers of mortgage loans; negotiate with banking circles to obtain the best conditions for their customers.

However we can distinguish two big types of brokers’ organization.

These differences result essentially from their development and from their method of work.

In the first category :

We are meeting advisers. These last ones are going to receive, to analyze and to take care of the customer in order to propose him the best personalized proposition. These financial agents are going to play their intermediary's role between the bank and the future owner. That is why a mandate including payable fees, is established during the first contact between the broker and the private individual. This process allows a confidentiality of the information, which will be passed on through a finalized study, to the partner the most adapted to the profile of the customers. This guaranties that the mortgage broker is acting in fully independency.

In the second category :

The actors of this category suggest good rates (and possibly other services) to their clients. They redirect the customers to the banks to be able to obtain the adapted financing. Once the bank was determined by the customer if however the mortgage application was successful, the bank will have to pay a percentage to the broker company. This method allows in principle the customer to obtain privileged conditions with banks, but does not guarantee the confidentiality of its data. Furthermore, the brokers tend to forward the costumers to the bank were they know their own commission is higher, regardless the best financial deal for the borrower.

As a fact :

The second category of brokers will never renegotiate with the banks who offered the initial mortgage because there is no new mortgage and the bank will not pay anything to the broker.

While the first category will start contacting the bank who gave the initial mortgage. The cost of renegotiation could vary substancially.

It belongs to the costumer to choose according to his project, the best adapted service to his needs and according to the type of service he is expecting…

We‘ll keep in mind:

The first category of brokers are first of all advisers. They are mandated and paid a fix fee by the costumer in order to find the best financial mortgage deal, and the bank percentages don’t influence their choices.

In the second category 100% of the mortgage brokers income is paid by the bank . This is obviously not the best guaranty of independency.

Veronique Kouznetsov | Date Published : 2008-02-22 15:03:08

Brokers have different working attitudes

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However we can distinguish two big types of brokers’ organization.

In the first category :

In the second category :