Banking advice on mortgage lending often flawed

What good will real estate loans benefit future homeowners when they pay too much for their loan through false advice? This question must be asked in light of the results of the current test by Stiftung Warentest. The consumer organization has examined how well banks advise on real estate financing. They encountered light and shadow.

“Capital mistakes”, “numerous mistakes”, “scant information”: The latest mortgage lending test 2017 Stiftung Warentest on the quality of banking advice is sobering for many financial institutions (loan 03/2017). At 21 banks, the testers were asked several times to finance real estate, only five of them can give Stiftung Warentest the quality rating “good” . Nine times, the consumer organization awarded a satisfactory rating, four times a “sufficient”. Two banks even fail with “poor”. For consumers who are looking for suitable mortgage lending, this means one thing above all: they should prepare and follow up on discussions with the advisors.

Tip: Do not just rely on a single offer, but request from various agencies offers for mortgage lending. This is the only way to find cheap real estate financing.

Frankfurter Volksbank test winner at Stiftung Warentest

For the investigation, the testers visited six to seven branches of a financial institution and inquired about the best real estate financing for their planned condominium. The quality of the financing concept was 75 percent of the overall rating. For example, it is important here whether the proposed loan fits the financial situation of the customer and the purchase of the condominium is sufficiently financed. The cost of the loan was also crucial to this criterion.

With 20 percent Stiftung Warentest evaluated the customer information . This includes, for example, whether advisers have received a full repayment plan. Five percent accounted for the accompanying circumstances.

Bank consulting for construction financing in the test: Expensive error for customers

Overall, good advice in the investigation remains an exception. The mistakes made by bankers can be expensive for customers. For example, some loans were higher than they had to be, as the equity was under-capitalized. This not only leads to a higher loan amount, but also to more interest. As with the construction financing test 2017 of the consumer organization, these show big differences. The savings for a 276,000-euro loan with a term of 15 years add up to up to 30,000 euros if future homeowners compare different offers.

Stiftung Warentest also criticizes gaps in the financing plan, lack of information on the amount of the remaining debt, inappropriate credit sums and excessive loan rates , which customers can not afford.

Good pre-and after-consultation can pay off with mortgage lending

According to Stiftung Warentest, building owners and homebuyers can not be compensated for possible weaknesses so that they do not fall victim to bad bank advice. Important for this is a good preparation and follow-up. For example, in order to find the optimal mortgage lending, it is advisable to obtain in advance information about the interest rate level , to set the time frame for the repayment and to set the lending rate that borrowers can afford on a monthly basis.

During the conversation, it is advisable, for example, to specifically ask for funding opportunities . Potential borrowers should also keep track of how much more equity they would receive a lower interest rate. After the conversation, it’s important to check the facts . “The cheapest offer is of no use if it does not suit the situation,” says loan.