Is it worth to use the services of a mortgage broker? How can you find a good and reliable one? What’s the average quality of the services provided? The market varies across countries. In this article you’ll learn how it works in Poland and what you can gain by hiring a mortgage advisor.
Mortgage broker industry in Poland
In Poland brokers help their clients with every kind of credit – starting from home (mortgage) loans to debt consolidation, car finance and acquiring a personal or a business loan. In 2016 more or less 50% of the mortgages taken out in Poland were handled by mortgage brokers.
On the Polish market we have big credit brokerage companies with branches all around the country such as Expander Advisors, Open Finance or Notus as well as many smaller firms including one-person entities. The regulatory agency overseeing the mortgage broker firms is the KNF (Financial Supervision Authority) which keeps a list of the verified mortgage brokers.
The mortgage brokers collaborate with the commercial banks (sometimes with the cooperative banks as well). Each agent is obliged to provide you with the full list of banks that he or she works with. In most cases the list will comprise of close to all commercial banks on the market.
Before we go any further, let’s clarify the terminology first. When you browse through the website you may came across various terms used interchangeably – “mortgage broker”, “financial advisor”, “credit advisor”, “credit specialist”, “credit expert”. They essentially mean the same thing and refer to a person who will help you get a loan.
Since 22 July 2017 the Act on Mortgage Loan and Supervision over Mortgage Brokers and Agents has been amended and since then brokers can’t refer to themselves as “advisors” any longer. The same goes for the bank employees. The title “advisor” can only be used if a person does not receive any commission from the bank and is paid for their “advice” solely by the client.
Most clients take no notice of such distinctions, they’re just looking for someone who will help them choose the best offer on the market and will take care of the paperwork. When you look at the data from the Google Keyword Planner you’ll find that the most commonly used phrase next to the “mortgage broker” is “mortgage advisor”. That’s why to make sure that this article could be easily found also by those who type into their search engines the phrase “mortgage advisor” I’ll use the both terms interchangeably.
What does the service of a mortgage advisor actually look like in Poland?
First of all, don’t hesitate to contact mortgage advisor. Even if you at the very beginning stage of thinking about buying a property.
After first meeting with mortgage broker you will learn:
- how much cash do you need to cover initial expenses (down payment, bank’s fees & charges)
- what is your mortgage affordability (how much credit you can get) in every bank
- how to improve your mortgage affordability and creditworthiness (if needed)
- what are 3-4 mortgage offers suited best for you
- what documents do you need to complete mortgage application
- answers to any other questions you have
Now you know basics and you can look for apartment or house to buy. You can always contact your advisor if any queries pop up in your mind. When you finally find your property it’s time to submit mortgage loan applications.
On the second meeting:
- your mortgage advisor will help you to fill all banking forms
- he/she will help you to complete all docs needed
After you signed all application forms it’s time for your broker to do the job. He has to prepare your applications carefully, because any mistake may cause delay in application process. When I prepare my client’s applications (mainly to the three bank simultaneously) it take me almost whole day and I use something about 200 sheets of paper :-).
Application process – mainly broker’s job (4 – 6 weeks):
- submiting aplications to the banks
- handle and coordinate communication with all of the banks you applied
- pick up and pass on all the required additional documents
- keeping you up to date with the process
You’ve finally signed an agreement, then what?
The long awaited moment is finally here, you’ve managed to sign a mortgage agreement with the bank. Of course your mortgage broker should be with you at the meeting, it is after all the very goal you both work so hard on achieving. Your partnership, however doesn’t end here (at least it shouldn’t).
After signing a mortgage agreement, there is still plenty of things that need to be taken care of, and your broker’s help could be invaluable at that point. I for example establish my clients’ mortgage records at court. If your loan is paid in installments, your broker should offer his or her assistance up till the last payment.
Here, you can also read how the whole process look like: Buying a flat on a mortgage in 5 steps (secondary market)
Why do we apply to several banks simultaneously?
It is a common practice in Poland to apply for a mortgage to 3 banks at the same time. Why is that? To avoid the risk of being rejected. The Polish banking regulations allows the lenders to reject credit application without giving any reason (and they often do).
I can tell from my own work experience that the application has never been rejected by all of the 3 banks we applied with client. It is however common for at least one bank to refuse to lend or to put forward requirements that cannot be fulfilled / accepted by the client. That’s why we need to have more options available at the same time.
There is also another advantage of applying to more than one bank. Banks carry out the application process more vigorously when they know that client applied not only to them. Competition works in client interest.
I’m really curious how it works in your country of origin. Do you apply to several banks at the same time as well? Feel free to leave a comment below the article and let me know.
What do you gain by hiring a mortgage advisor?
By hiring a professional mortgage broker you can gain a lot. First and foremost you’ll save an abundant amount of time.
You’ll save tons of time
You don’t have to spend weeks browsing through the internet, comparing offers from different banks, trying to establish your creditworthiness and so on. You don’t need to gather information from each bank individually and visit them a several times. You will acquire all the necessary information just after one meeting at the broker’s.
If you are dealing with an experienced advisor, you’ll soon learn that he knows each bank’s offer almost by heart. What is more, such a person has access to tools, that you won’t find on the internet such as mortgage calculators, banks internal procedures and requirements made accessible to the brokers by the banks.
If you’re buying a property from a developer, your advisor will collect all the necessary docs directly from him and if it’s on a secondary market he’ll be in contact with your real estate agent.
During your mortgage applications are proceed, you also won’t have to worry about being in constant communication with several banks, emails, phone calls, arranging meetings… after a while it can become really strenuous. Your mortgage advisor will take care of it.
It’s also worth mentioning, that using a mortgage broker may speed-up your application process. The reason is simple – all the broker’s commission is paid after the deal is finalized, so it is in his/her best interest to do it skillfully and effectively.
Show me the money!
By hiring a mortgage broker you can save not only time, but also money! We spend so much time deciding on the best possible offer because we know, that bad decision can haunt us for decades. Quite literally, since most mortgage loans are paid over 25-30 years. That’s why it is vital to choose wisely, because the difference in cost between each offer can be quite significant.
Let’s say we take out a 30-year loan for PLN 300k, on the Polish market the difference in cost between the best and the worst offer can amount up to PLN 100k! It is an extreme case, but even mortgages that may seem identical on the surface, can differ in total cost significantly.
By using a broker your increasing your chances to find better mortgage offer. Once call me a client. He already submit an application to one bank and just wanted to confirm that there was no better offer. It took me a few minutes to figure out a mortgage offer with total cost over 30k lower than one he chosen. I bet he had better idea of spending this money than paying it to the bank as a mortgage cost…
How much does it cost?
In Poland mortgage brokers get their commission from the banks, this way you won’t pay anything for their help. If a mortgage advisor says that you need to pay him extra… run away from him as fast as you can 👿
You may be wondering how on earth is this profitable for the bank and whether the total cost of your loan won’t be higher because of that. It won’t be higher. Regardless whether you go directly to the bank yourself or whether you decide to use the services of a middleman the offer will be identical. How is it possible?
Well, thanks to the brokers the banks can downsize their own sales network and that way they can afford to pay the commission to the brokers. They also don’t have to open their branches in each small town in order to win over clients from that area, the brokers come with new clients, along with fully prepare application, so the bank’s employees won’t have it on their shoulders.
How to find a good broker?
The same way you look for a good doctor, plumber, lawyer, builder or any other professional. Ask your family members or friends if they could recommend someone. When you get some names check the candidate’s testimonials and how long he/she’s been working in the business. It’s obviously good to choose someone who is experienced – no offence to the fresh faces 🙂
In your case it is also important to check if your (potential) mortgage advisor speaks English. It probably narrow down your options.
Allright, let’s sum this up:
I showed you some advantages of hiring a mortgage broker. I wish all people use mortgage broker services because that’s my business – I’m a mortgage broker. But also because it is my business I know exactly what value my work brings to my clients and I truly believe it.
If I didn’t convince you, or there is another reason that you want delve into the loan process on your own, I’m sure that if only you spend enough time you will succeed. If you have any questions or problems along the way you can always email me at email@example.com – I’ll be happy to help. And keep checking this blog, I’ll post more articles that you may find useful.
You may also interest: What documents you need as an EU citizen to apply for a mortgage in Poland?