Disrupting the German mortgage market

Dutch entrepreneur Nick Mulder launched his online mortgage broker business by first focussing on the expat market.

Nick Mulder, founder of Hypofriend
Nick Mulder, founder of HypofriendPhoto: Henryk Wexel

Berlin- It's a classic way to start a business: solve a problem you yourself have experienced. A few years ago Nick Mulder, the Dutch founder of online mortgage broker Hypofriend, wanted to buy a flat in the city and found the whole process pretty grueling. In particular, applying for a home loan was confusing and intransparent, Mulder says, speaking in a conference room in Hypofriend's swanky Altbau building in Mitte. Today, he runs a profitable business with revenues in the single-digit millions, that helps people like him navigate the process of finding and financing flats in Berlin and across Germany. 

Mulder, a 30 year-old who dresses in a hoodie and white sneakers, grew up in the Netherlands and the US, where his father worked at the World Bank. At 15, he decided he wanted to become a professional cyclist and began racing around Europe but, pushed by his parents, ended up studying finance. When he didn't make it to the Tour du France, Mulder directed his attention to creating his first venture: a workout app called Fitto. The app didn't really take off, so eight years ago he moved to Berlin to work as a product manager at Zalando. He later switched to health app Ada.

A few years into his Berlin life, he began looking for a flat to buy. He cycled from tower crane to tower crane and ended up closing on a unit in a new project. "That went pretty smoothly until I had to get a mortgage. It was a new build, so it was delayed. I was caught paying my rent and a mortgage for two years. I'd had no advice on the mortgage."

"I was reflecting on this whole experience. Why is this so complex, so intransparent, and ultimately, why is it so expensive?" Mulder realised his mortgage broker had earned a high commission although he'd explained very little about the process. He began to think about getting into the business himself: "How could we streamline the process? How can we give fair, objective advice? That's how the company started."

With two friends, Mulder founded Hypofriend in a one-room office. "We started with the expat market. I could empathise with their problems. Many of them are engineers and are looking for ways to get information on their own, like a self-checkout experience. People would rather investigate online before they trust a service."

Hypofriend helps customers with three main decisions, explains Mulder: how long to fix the interest rate, how quickly to repay the mortgage, and how much equity to bring in.

"Traditionally, in Germany debt is seen as very bad. When the cost of borrowing is one per cent, why would you spend all your money repaying this one per cent when you could put all this money into something else that gets five? It's this irrational feeling that I want to have my house paid off."

All the advice takes place online - which allowed Hypofriend to flourish in the pandemic. Business doubled in 2020. In video calls bilingual advisors use online graphic tools to illustrate mortgage scenarios. 

"We want to be a friend to a person buying a home. Trust and objectivity are very important."

But Hypofriend earns commissions from banks on mortgage deals. So, how can it remain objective? Mulder is open about this "conflict of interest."

"We try to charge as little commission as we can, about one per cent of the loan sum."

Mulder wants to go beyond the traditional role of mortgage brokers. Hypofriend is working on a "post-mortgage flow" which gives buyers real-time insights in their debt and equity. They're also planning to offer property listings.

The firm has helped 1,000 first-time buyers finance a flat in Berlin. At first, 100 per cent were foreigners. Germans were more sceptical of an online service, says Mulder, but now they comprise 50 per cent of clients.

In 2021, the property sector seems stuck in the past. With large amounts of money at stake and a reputation that leaves much to be desired, the business seems ripe for disruption by the likes of Mulder, who claims to be the buyer's advocate every step of the way. "We tell them when they're getting screwed."

Only 17 per cent of Berliners own their own home. But with 30,000 of them registered with Hypofriend, Mulder's got plenty to smile about.

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