Mortgage loan in Poland on your own, how to get a mortgage with low-interest rates
A mortgage loan in Poland is a loan agreement concluded between the bank and the borrower for the long term. As a rule, a loan for the purchase of housing, land, and another real estate, both in Ukraine and in Poland, is issued for 10, 20, and even 30 years. Despite the attractiveness of the terms of repayment of the loan obligation, like any other type of loan, mortgage lending has a lot of nuances and aspects that you need to pay attention to before signing the contract.
Down payment, creditworthiness or what you need to get a mortgage loan in Poland
Not everyone knows that getting a loan for an apartment in Poland is quite realistic. However, before choosing one of the many offers of banking institutions, each potential borrower needs to resolve several issues:
- availability of a minimum amount for the first installment on a loan;
- the creditworthiness of the borrower.
Since over the past few years, the Polish economy has changed somewhat and the conditions for issuing loans and borrowings have been revised, it will not work to take out a loan for real estate in Poland at the full 100% cost of housing or land. As a rule, in order to obtain a positive result of a loan, it is necessary to deposit at least 20-25% of the total value of the property. This condition is provided for by the current legislation of Poland and entered into force in 2017.
At the same time, it is possible to reduce your own initial payment if you take out additional insurance. If there is insurance, the amount of the initial mandatory payment will be no more than 10% of the market value of the property. It is important to remember that when considering an application for mortgage lending in Poland, the bank can independently regulate the amount of the down payment. This is due to the fact that not every bank resorts to additional insurance, they may require up to 20% of the down payment from the borrower.
However, not everything is so bad. When applying for a mortgage loan for housing in Poland with higher interest on the down payment, the main body of the real estate loan will require lower costs to the final payment.
When applying for a loan for a house, apartment or land plot in Poland, each banking institution individually assesses the borrower’s creditworthiness, based on the results of which a decision is made to issue the maximum possible amount and the term of the loan. When assessing the creditworthiness of foreigners, including Ukrainians, Polish banks take into account:
- income level;
- source of income;
- age of the potential borrower;
- number of family members, including those who are not working;
- availability of valid loan agreements;
- credit history.
This is a standard list of conditions under which all banks of the Republic of Poland make a decision to grant a loan. Therefore, before you buy an apartment in Poland on credit, we recommend that you familiarize yourself with the proposals for mortgage lending in different banks and eliminate the shortcomings in order to meet all the requirements of the bank.
How much do you need to earn to get a mortgage loan in Poland
After numerous analyzes, checks, and studies, it was established how much a potential borrower should receive in order to receive loans in Poland for housing and what conditions will be offered to a bank client. All studies and surveys were carried out in average families with 3 people. For the calculation, loans were taken for housing for up to 30 years.
In the course of the study, it turned out that in order to obtain a housing loan in the amount of 410,000 zlotys, the total earnings of all family members must be at least 8,000 zlotys, dirty income. It follows from this that in an average family of three, where only two are able to work, the income of one person should be 4000 PLN of dirty income, and, accordingly, 2800 PLN of net income on hand.
When applying for such a loan amount, banks may require a first down payment of 10-20% of the appraised value of the property. As a result, at this level of income, Polish banks can offer different interest rates and loan amounts for a period of 30 years:
- Pekao – PLN 433,800 (at 5.13% per annum);
- ING – PLN 432,600 (at 4.32%);
- Credit Agricole – PLN 431,500 (4.36%);
- BNP Paribas – PLN 429,400 (under 3.37%);
- Santander – PLN 411,700 (at 4.28% per annum);
- Citi Handlowy – PLN 408,000 (at 3.67% per annum);
- PKO Bank Hipoteczny – PLN 403,100 (4.18%);
- PKO Bank Polski – PLN 403,100 (at 4.20%);
- Alior – PLN 338,300 (5.16%);
- Bank Ochrony Środowiska – PLN 336,000 (at 3.95%).
Mortgage loans and interest rates
The mortgage interest in Poland directly affects the amount of the obligatory monthly payment, based on which the bank wants to receive benefits for the money or the bank’s resources. As a rule, the bulk of housing loans in Poland are issued exclusively in the national currency (zloty) and may contain a variable loan rate, which may include several components:
- WIBOR – the rate that makes it possible to carry out on-lending between banks in the domestic interbank market. A dedicated Monetary Policy Council regularly changes interest rates, as a result of which the rate on an existing mortgage can change every 3 months. However, some banks deviate from the rules a little and recalculate the lending rate and the loan body every 6, 12 months.
- Margin is a fixed rate that, after the approval and signing of the loan agreement, cannot be changed either up or down. The size of the margin rate is influenced only by the amount of your own down payment and the amount of the loan. From this, a simple calculation is made: the more funds are deposited when applying for a loan, the lower the percentage will be set on the loan. In addition, the lending period directly affects the size of the margin, that is, the less the bank participates in investing in the purchase of the real estate, the less interest the bank will require for its services.
Often, banking institutions that issue loans for apartments, houses, or land plots reduce their interest rates when conducting various promotions or when signing additional agreements for the use of the payment, credit, or deposit cards by the borrower.
Today the WIBOR indicator is the lowest in the last 5-6 years – less than 2%. At the same time, the size of the margin of most banks varies between 1.5-1.7% per annum. As a result, the interest rate on a loan in Poland for the purchase of housing and other real estate is 3.5-4% per year.
Despite the attractiveness of the offer, it is important to remember that mortgages are taken not for one year, but for tens of years, and with a significant overestimation of one’s own strengths and insufficient income, a loan can become an unbearable burden.
Opening a bank account and receiving a payment card in Poland for foreigners
Many believe that a foreigner cannot apply for a payment card in Warsaw or must go through multiple bureaucratic processes in order to receive a credit or payment card. However, this is not at all the case. To obtain a payment card in Poland, it is enough to provide a passport with a visa, a temporary or permanent permit to stay in the country (a household card, EU resident card, permanent residence, residence permit, etc.).
Issuance of payment cards in Poland is somewhat different from a similar procedure in Ukraine. The fact is that in Poland, even for foreigners, all cards are issued with personalized ones, so it will not be possible to fill out an application and receive a card in your hands in 10-15 minutes. After filling out the questionnaire, the bank will prepare a client’s payment card within 7-10 days and send it to the previously specified address. After that, the client needs to activate the card over the phone or via the Internet.
What you get in return for the bank’s low mortgage margin
Despite the fact that the bank cannot influence the change in the WIBOR percentage, the institution can regulate the bank’s margin, which is fixed when the agreement is signed. It is not uncommon for banks to attract customers by lowering the margin interest. At the same time, in order to obtain more favorable conditions, the client may be offered to use other bank products or transfer existing accounts from other banks in exchange for a decrease in the interest rate. Also, the bank will offer to use additional insurance, which in itself is mandatory when signing a mortgage agreement. Therefore, before signing long-term agreements, we recommend that you familiarize yourself in detail with all the nuances and aspects of a loan or investment program.
Interest is not all you have to pay
Despite the fact that the interest on the body of the loan forms the total amount before payment, the loan agreement provides for several more expensive items that form the bank’s total profit. When drawing up a loan agreement, pay attention to some points that must be prescribed by the bank and should not be veiled:
- the commission charged by a banking institution for issuing credit funds. As a rule, this article provides for a one-time payment by the borrower of his own funds, which at times can reach up to 5% of the loan amount. In this case, the bank can prescribe this amount for the entire term of the mortgage loan. To exempt from this item of expenses, the bank may offer the client to use other conditions and products of the bank.
- Conclusion of documentary insurance. It is not uncommon for a banking institution to require that the institution be indicated in the land register until the debt on the body of the loan is repaid. As a result, the bank may charge additional fees for risk insurance or increase the margin.
- Payment for property valuation. Since the housing being purchased acts as a guarantor and will be used as collateral required for registration of a mortgage agreement, the bank may require an additional property valuation, which will help establish the real market value of the property, which at times may be much lower than the price of an apartment or house declared by the seller. < / li>
- Life insurance of the borrower.
- Additional commissions and fees (SMS-informing, sending by e-mail, etc.).
How to get a loan in Poland for a foreigner
In addition to the fact that a foreigner, like a citizen of Poland, must have a stable and legal income, in order to obtain a mortgage for the purchase of housing in a bank, you will need to provide the following documents:
- permitting documents to stay in the country;
- Polish registration;
- PESEL number that confirms the identity of a person;
- international passport;
- a valid account and a bank card in any bank of the Republic of Poland.
To obtain a mortgage for the purchase of housing more quickly, it is recommended to have an active account, credit or payment card exactly in the institution where you plan to receive a loan.
Mortgage for foreigners with a residence card
There is an opinion that Polish banks do not issue loans to people with a residence card (residence permit). This is partly true. However, only those foreigners who have a residence permit issued for a period of no more than 12 months are denied a mortgage. If you have a residence permit for a period of a year or more, you can safely go to the bank for a mortgage. At the same time, one must be prepared for the fact that loans for housing for foreigners are available only with a work visa. Additionally, the bank may request from the official place of employment a certificate of income for both the last 3 months and the last calendar year, depending on the employment contract.
Mortgages in Poland 2020 – the impact of the crisis
The decline in housing costs will continue until the unemployment rate and the economic situation in the country return to normal. However, this is not the biggest problem. The fact is that today there are only 4 banking institutions that issue mortgages at 10% of the initial own contribution:
- Alior Bank;
In addition, institutions have imposed restrictions on obtaining loans for foreigners and citizens of the country who work in certain industries. As a rule, this condition is relevant for those who have the main source of income – mind about zelo, business, mind-bane. If these conditions and restrictions remain unchanged, the market value of housing will continue to decline, and most consumers may be left without credit financing.