Construction financing broker or bank: advantages/disadvantages etc

Hello everyone,

we are currently in the process of buying an existing property. It’s already quite concrete!
We are also in a very good financial position and can afford the property well.

Now I have enquired at 2 banks and 2 mortgage brokers. I am now in a very strange situation with one of the banks and one of the brokers. For simplicity’s sake, let’s just call them C-Bank and real estate broker...
Now it’s like this: the real estate broker presented us with an offer from C-Bank. So I basically have two offers from the same bank... Although the data is exactly the same (repayment etc.), the interest rate differs by 0.1% (advantage real estate broker).
1st question: It doesn’t really make sense to me why the real estate broker is better?

The real estate broker also called me immediately and we clarified further details.
Now C-Bank also called and I immediately said that I had already spoken with the real estate broker. I hadn’t mentioned anything about interest rates yet... The employee immediately changed his tone and tried to scare me and told me to drop the real estate broker. His arguments were:
- If the financing doesn’t work out with the real estate broker, I can no longer apply directly at C-Bank? (Why should a second attempt directly at the bank then work?)
- The support at C-Bank is much better and I don’t know the people from the broker personally? (I don’t know the staff at C-Bank personally either?)

Since I don’t like being scared, I then withdrew my inquiry at C-Bank and will continue with the real estate broker...

Somehow the situation unsettled me, it’s still the same bank after all? But maybe a different department/people? What are your experiences? Do I have to watch out for anything if I now continue with the real estate broker?

Thanks!

The intermediary is really only the intermediary and no longer your contact once the contract has been signed. He only forwards the application and if it is rejected, it does not matter by which means it was submitted. I believe the times when a bank employee you know could still influence something are long gone. There are several reasons for the interest rate differences. Work attitude, commissions, kickbacks, offer from the local branch or head office, etc.

The broker is really just the broker and no longer your contact person once the contract has been signed. He only forwards the application, and if it is rejected, it does not matter how it was submitted.
I believe the times when a bank employee you know could still influence something are long over.
There are several reasons for the interest rate differences. Work attitude, commissions, kickbacks, offer from the local branch or headquarters, etc.

Our broker explained to us that the lower interest rates are explained by the fact that the bank has less work with the documents. They basically get everything ready-made (provided the broker does a good job).

However, one should avoid inquiring directly at the potential bank oneself, because then the broker can no longer apply at the same bank (two different brokers told us this). Your application might possibly then be rejected for this reason. Probably depending on who was faster.

Oh, by the way... our broker is very committed and is there for us even after payout. So I wouldn’t generally say that they are out of the picture then.

Our broker explained to us that the lower interest rates are due to the bank having less work with the documents. They basically receive everything ready-made (provided the broker does a good job).

However, one should refrain from inquiring directly with the potential bank because then the broker can no longer approach the same bank (two different brokers told us this). Under certain circumstances, your application might then be rejected for this reason. Probably depending on who was faster.

Oh, and our broker is very committed and is also there for us after the disbursement. So, I wouldn’t just say that they are out of the picture then.

That's how it is...

Moreover, banks nowadays often offer two different prices:
Once in the branch
Once through external parties (brokers, etc.), and since this is often a "competitive market" (the broker can compare directly with other banks), the conditions are often better here than on-site.

And as already said:
If you do it at the branch:
then you have to factor the following costs into the conditions
- maintenance of the branch
- maintenance of the employee (who costs money even if they make no sales)
- etc.

If the broker basically prepares everything and forwards it to the bank, then it is often checked by other employees whose only job is creditworthiness/property evaluation, and then they approve it, contracts are created.

Thus, the bank's workload is much lower = they can calculate with lower costs = better interest rate!
(not always, but very often)

However, one should refrain from inquiring directly with the potential bank because the broker then cannot request the same bank anymore (two different brokers told us this). Under certain circumstances, your application might be rejected for this reason. Probably depending on who was faster.

It was the same for us. The C-bank was significantly more expensive in the direct offer than the financial broker. The broker also warned us that we might have to submit a written declaration to the C-bank stating that we want to proceed with the financing through the broker. We had already inquired directly at the C-bank first and only afterward went through the broker channel. I sent this declaration as an informal two-line email to the broker, and they took care of everything else. After that, we were forwarded to the headquarters anyway – I think Frankfurt? – where we were assisted with the disbursement. That is where you end up anyway, no matter who mediates you. So if the broker's conditions are good, just go for it. Only hard facts matter, check the contract and go for it.

We have done nothing directly with the bank. The payout instructions also went through the intermediary.