Mortgage broker or direct to the bank in Czechia: how the choice works

There are two ways to a Czech mortgage. You can walk into a bank, or you can sit down with a broker who works with many banks. Brokers advertise their service as free, and for the borrower it often is. A free service paid by someone else is not wrong, but it deserves a question: paid by whom, and for steering you where?

This article describes how both routes work, how intermediaries are paid and regulated, and what to ask. It names no brokers and recommends none.

Going direct

Applying directly means choosing a bank and dealing with its adviser. The advantage is simplicity. You have one point of contact, one set of documents and no one else in the chain. If you already bank with the lender, it can see your account history, which may help, and may offer better terms to existing clients.

The disadvantage is that you see one bank's view. Each Czech lender sets its own credit policy, and the same file can be accepted by one and queried by another, a point we make in what banks ask foreign borrowers. To compare banks directly you must apply to several, repeat the paperwork and keep track of the offers and their expiry dates yourself.

Going through a broker

A broker (in the Czech market, an intermediary of consumer credit) collects your details, tests them against several lenders and presents the options. A good broker knows which bank accepts which type of income and residence status, which can spare a self-employed or foreign applicant some refusals. They also handle forms, chase the bank and may coordinate the valuation and the cadastre steps.

The limits are as clear. A broker works with a panel of lenders, not all of them, and some banks are available only direct. If a broker is paid more by one lender than another, the incentive to recommend the first exists even when the advice is honest. You can reduce the effect by asking.

How intermediaries are paid

Most commonly the lender pays the broker a commission when the loan is drawn. The amount is set between the bank and the intermediary and is generally not shown to you. Some intermediaries also charge the borrower a fee, for instance for a complex case. Intermediaries must disclose their remuneration, so ask for it in writing (Act 257/2016 Sb.; check the ČNB).

The questions to ask are short. Which banks are on your panel? Are there lenders you cannot place with? Do you receive different commission from different banks? Will I pay you anything? What happens to the fee if the loan is refused or I withdraw?

What the regulation says

Credit intermediaries are licensed and supervised by the ČNB under the Consumer Credit Act (zákon č. 257/2016 Sb.). The act distinguishes between types of intermediary, and the type matters, because a tied agent offers one lender's products and is not comparing the market, whatever the business card suggests. The ČNB publishes a register of authorised intermediaries (check the ČNB site for the current register), so you can look up the firm before sharing documents.

Lenders must give you a standard information sheet and state the annual percentage rate of charge (RPSN), whichever route you take, so you can compare offers on the same footing. The Financial Arbitrator, an out-of-court body, handles disputes about consumer credit; check on its site whether your case falls within its remit. The ČOI deals with some other consumer complaints.

Who benefits most from a broker

A broker's value rises with the complexity of the file. Employees with a clean record and a standard flat in a big city have an easy case, and a direct application to two or three banks may be enough. The self-employed, applicants with foreign income, those with several loans, and buyers of unusual property such as a cooperative flat or a building with a defect may need to know which lender will take the case. For them the knowledge of the panel is the product.

A foreign applicant should be wary of the opposite mistake: assuming that a broker can find a bank for anyone. Some profiles are hard to place anywhere, and an honest broker says so early. Our piece on whether a non-resident can get a Czech mortgage shows where the limits lie. The Hypoteky.com guide to mortgages for foreigners gives another view of what lenders ask.

Using both

Nothing stops you from combining the routes. Start with a broker for the comparison, then ask your own bank to match or beat the best offer, or the other way round. One caution: formal applications are recorded by the lenders, and several in a short time can raise questions. Plan the comparison so that formal applications are few.

Before you meet anyone, work out your range. The borrowing estimator on Hypoteky.com shows what a bank may lend on a given income and costs, and it is useful for asking sharper questions, though only the bank's assessment counts. The article on how much you can borrow explains the limits in more depth.

After the loan is signed

A broker's role usually ends at drawdown, and for the fixation period you deal with the bank. When the fixation ends, you can renegotiate, refinance or repay, as covered in our guides to fixation periods and refinancing. Ask whether the broker will remind you before the date and whether they charge for helping again. The step-by-step view of the process is in the application guide.

Frequently asked questions

Do I pay a mortgage broker in Czechia?

In most cases the lender pays the commission. Some intermediaries also charge the borrower a fee, so ask in writing.

Is a broker regulated?

Credit intermediaries are regulated under the Consumer Credit Act and supervised by the ČNB. Check the register for the firm.

Can a broker get me a better rate than my own bank?

Sometimes, because they compare several lenders. Your own bank may also match an offer. Compare the offers on the same terms.

What is a tied agent?

An intermediary who sells for one lender. They do not compare the market.

Where do I complain?

Start with the firm. The Financial Arbitrator handles out-of-court disputes about consumer credit; check its site whether your case qualifies.

A practical next step

Write five questions on a card (panel, commission, fees, conflicts, what happens if the loan is refused) and ask them of one broker and of your own bank. How each answers will tell you what you need to know about the service you are about to pay for, directly or not.

This is a general explainer, not legal, tax or mortgage advice.