A comprehensive guide to mortgage in Poland.

For all who consider buying a property in Poland via a mortgage, we prepared a comprehensive guide about the subject. We hope it will help you understand the process and decide whether or not you wish to join more than 2 million households owning property in Poland via a mortgage.

Price of the mortgage in Poland.

Before even thinking about getting the mortgage, you must calculate its cost. Our articles about the price of the mortgage in Poland and early repayment should help you with this part:

How much does the mortgage in Poland cost? The price breakdown.

Early repayment of the mortgage in Poland - is it possible?

Creditability.

After you made the comparison between the mortgage price and the current/predicted cost of renting from someone or the expected return from an investment you are planning, and it still makes sense to take it, you should start to think about your creditability. To check how much banks would be willing to offer in your case, you can make multiple direct queries, or use the free service of the mortgage broker, who has access to all the banks at once. Due to the law regulations regarding the mortgage market in Poland - whether a customer in a specific situation query a given bank directly or via the broker, the presented offer will be the same.

A good broker would analyze your situation thoroughly and not only provide you with quotes from different banks but also advise on what should be done to raise your creditability to the desired levels. 

Many factors would affect your creditability, and the main two are your residency status and your income. The residency status is not an issue for EU nationals, but for those who are coming to Poland from outside of the EU, banks require a valid residency card.

As for the income, the bank would focus on the following points:

• amount - the bank has to know how much you earn regularly. And then assess it too - each type of income is calculated differently and various bonuses/penalties apply due to this (for example, the monthly salary from an indefinite contract would mean more than the same salary from any other type of employment)
• source - the most desired customer for the bank is an employee with an indefinite 'umowa o pracę' - any other type of contract or income coming from a business activity means more risk for the bank and a harsher approach when calculating creditability. Recently, we are also experiencing 'the COVID factor' and a tighter approach to the customers working in an area directly affected by its aftermath
• period of continuity - not only how much and based on what, but also since when matters to the bank. The entry point of income acceptance is much earlier for an indefinite working contract (even three months only) than other types of contract or business activity (6 or 12 months at a minimum)

Besides the income, when calculating your creditability, the bank will assess your living costs, which are affected by how many kids you have, your housing situation, etc. 

At last, all of the bank's calculations will be 'authenticated' by checking your credit score. To know more about this part, please check our dedicated article:

Credit score in Poland - how to build it?

Let's say your creditability stands at 1 million. Does it mean you can now proceed to search the market for a property worth this much? Not necessarily - the other factor you need to take into account is the upfront, which we already analyzed before:

How much of mortgage down-payment should I pay in Poland?

The property.

Creditability - check. Upfront - check. You have your budget calculated, and now you are ready to hunt for the property of your dreams. The process of purchasing an apartment is the same for a Pole as for a foreigner living in Poland. Check it out here:

A short guide to buying an apartment in Poland via mortgage

It becomes more complicated when the purchase would include ownership of the land, as those who are coming from outside of the countries participating in the European Economic Area will need to obtain a permit from the Ministry of Internal Affairs. Besides EEA citizens, exempted from permit requirement are foreign nationals who:

• live in Poland based on permanent residency or long-term EU residency for at least 5 years
• are married to a Polish citizen and live in Poland based on permanent residency or long-term EU residency for at least 2 years, and the property in question will be co-owned by the spouse
• are buying a property with land that will serve as a garage

The process of obtaining the permit is lengthy and includes substantial paperwork, can take a couple of months, and requires synchronization with the bank/broker, as the Ministry would ask for the bank's decision regarding the mortgage before issuing the permit. 

For more information about the other requirements and more useful tips, please check an article by our partner, Krakspire, specializing in migration issues:

How to: A Foreigners’ Guide to Buying a Property in Poland

Polish mortgage application process.

The hunt is over - you found the apartment or the house, the one and only, and you are ready to take the next step, which is asking the bank to agree to finance your choice.

At first, you need to gather all of the documents required by the bank you apply at, and due to the specific situation of yours. There is no one fixed list of documents needed for the mortgage application, as each bank has different rules, and also each income situation or property type might require something else. Please see the list of what might be needed.

Personal documentation:

• passport
• residency card
• PESEL certificate, in case there is no PESEL written on residency card
• certificate of registration of stay of EU citizen
• certificate of address registration
• prenup agreement, in applicable cases

Income-related documentation:

• certificate of employment filled by the employer on a special bank form
• bank statement confirming salary transfers
• ZUS certificate confirming base salary
• RMUA form, if the salary is in cash
• PIT-37
• certificate of employment or working agreement from the previous job, in case a continuity of work will be required by the bank
• statement by the employer that they are willing to continue employment in case the current agreement is for a fixed term
• annex confirming recent salary raise
• documents confirming the amount of pension
• company's registry documents (CEiDG, KRS, REGON), financial sheets for full-year backward and current one up to date (KPiR, PIT, RZiS)

Property-related documentation:

• reservation or pre-agreement with the developer or the seller in case of second-hand property
• KRS, CEiDG, and the NIP number of the developer
• construction permit or certificate of completion of construction from the developer
• excerpt from the land registry describing the state of the property
• maps locating the property in the local development plan
• confirmation of the road access, in case of the house
• property plans confirming the size
• estimate and list of renovation work needed
• certificate of the ownership from the seller
• certificate from building association proving lack of liabilities on the property
• certificate from building cooperative stating that the apartment can have a separate registry, in case it does not yet

Extras in case you build a house:

• ownership act of the plot
• excerpt from the land registry regarding the plot
• building project
• construction log
• agreements with the contractors
• building permit

Besides the documents above, there is one more property-related, required in each case, as well as quite crucial, which is why we will explain it more. This document is the property appraisal, issued only by one of the certified experts. It will determine the market value of the property you are buying, hence also affect many aspects of the mortgage itself. In case the value in the appraisal will not match the asking price from the seller, the difference between the mortgage value and property value will be paid by you (on top of the required upfront).

Some of the banks are ordering the appraisal themselves, others give the customer an option to order it themselves. In some banks getting the valuation independently affects the time bank needs to issue a mortgage decision, for example, up to 20 days with the appraisal attached to the application and 40 without it. Also, in case you plan to apply in more than one bank, it is better to get your appraisal independently, as you can use it many times while paying for it only once. The cost of it is more or less fixed and stands at around 400 złoty for an apartment, while for a house the quote is more individual, but should not exceed 800.

Another document we would like to talk about a bit more is the reservation/pre-agreement. There is one aspect to it we would like to describe to you - upfront, which most of the sellers or developers require. The amount of it differs and is subject to negotiation. It also will be included in the total upfront within the mortgage. We recommend having the upfront returnable in case of rejection from the bank, as there is always, even if slightest, chance it will happen.

After you gathered all the documents needed in your case, you should submit them and start the mortgage application. Now the bank analyst will proceed with first checking the documentation from a procedural point of view, sometimes ask for additional documents or explanations, and then continue with risk assessment, both regarding the property and you as a borrower.

Do not worry too much - if you prepared your case as per all requirements, the chance of rejection is substantially low. Receiving the decision from the bank should not take longer than the above mentioned 20-40 days, counted from the day you applied.

The start of the mortgage.

Let's assume the bank's decision is positive, so what will happen now? There is no one standard path, as each bank might have its own rules. The process differs also depending on the type of property you are purchasing. We will present you with 2 model scenarios.

The first one is a second-hand apartment with an assumption that the applicant does not request additional funds for renovation. After a decision, you should sign the mortgage agreement. That is a crucial point, as this agreement would bind you for many years to come. The bank will first send you a draft, via email, so make sure you analyze it thoroughly. In case you do not speak Polish, it would be in your best interest to do it with a Polish speaker you trust, it does not have to be a sworn translator, but rather someone with at least basic banking knowledge or financial understanding. Then you can visit the bank for the signature meeting with the same person assisting. Please do not hesitate to ask questions from the bank's employee whenever you do not understand any part clearly and make sure the version you are signing matches the draft you received earlier.

The next step after that would be signing the final sales agreement, in front of the notary, and with the presence of a sworn translator (in case you do not speak Polish or you do, but you still want a translator). We also recommend hiring a lawyer to analyze the document and be present at the signature meeting too. The sales agreement should contain confirmation of upfront paid to the seller. The notary should also confirm he is submitting to the court a request for putting the bank's name into the land and mortgage register. With these documents, plus a confirmation of the property insurance (only if you did not take the one offered by the bank), you should proceed to the bank, which would activate the mortgage by sending a transfer to the seller. 

Please note that banks add extra interest rate to your mortgage cost until they receive a confirmation that the court has updated the land and mortgage register, which can take 3-6 months in most cases. Each bank has a different level of penalty - some add 0,8%, some 1,5. Depending on the mortgage amount, this might mean a few hundred zlotys extra to the monthly payment.

Now the new apartment scenario, with an assumption that the building is still in construction and the applicant requests additional funds for renovation. After the decision from the bank and before signing the mortgage application, you should sign a developer's agreement, the same way it was with the sales agreement in the previous scenario. The difference here is a payment schedule, which is a specification of when and in what percentage should the bank be sending transfers to the developer, alongside construction progress. The bank needs to first agree to that schedule, before asking you to sign the mortgage agreement. 

Once all transfers have been sent, and the developer finished your flat, you should visit it to check the quality and sign an acceptance report. With this report and final notarial deed of ownership transfer, you can proceed to the bank, which would send you the transfer of money requested for renovation and fully activate the mortgage. Later you will need to prove to the bank that you renovated the flat as was agreed (there is a cost sheet you need to fill in when requesting these funds), for example by sending pictures.

Please note that before the last transfer is sent, you would be paying to the bank only the interest cost of the capital it already transferred to the developer. That means the mortgage can start fully even after two years since you signed the agreement with the bank, depending on the construction stage of the building your apartment is in.

Summary.

The above text is a comprehensive explanation of how mortgage in Poland works. Please remember that there are many scenarios in between what we described and each deserves its specific analysis. Feel welcome to consult your case with us. We would be happy to answer your questions.

Best regards,
Loan-brokers.pl Team

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