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

If you are planning to get a mortgage in Poland, sooner or later you will hear about "wkład własny" or "wpłata własna". How does it work?

It is very important to know about this before starting the mortgage procedure. Below we explain it point by point, based on the most common questions asked from our customers.

1. What is "wkład własny" and where does it come from?

"Wkład własny" literally means "own contribution" and in other words, it is a required down-payment or upfront that customer is obliged to provide from their own money before getting a mortgage in the bank. The reason it became an obligation was "Recommendation S" issued for banks in Poland after the global financial crisis by the Financial Supervision Authority (KNF), which is a supervisory body ruling over the Polish financial sector with the main objective of keeping it stable.

2. How much of "wkład własny" is required?

In most of the banks, the amount of it is 20% as recommended by FSA, but there are banks, who are willing to go as low as 10%. Most of them are covering this higher risk by offering you a higher interest rate or by adding additions to the mortgage cost, for example, extra provision or special insurances. In general mortgages with 10% of upfront tend to be more expensive than the ones with 20%.

3. Can "wkład własny" be provided in anything else than cash?

In the case of buying a flat, the only way to provide "wkład własny" is in cash. The situation is slightly different when you plan to build a house, as in case you already own the land you want to build your house on, its value will be considered as "wkład własny".

4. When do I have to bring the actual cash to the bank?

In most cases, the upfront is being paid to the seller of the property when signing the sale agreement, in front of the notary public. Then after you provide this agreement - signed by both parties and stamped by a notary public, alongside with confirmation of bank transfer from you to the seller - your "wkład własny" is considered as paid and the bank activates the mortgage.

5. What if I pay upfront to the seller, but the bank will deny giving me the mortgage?

Many sellers require the upfront be paid already at the moment of signing the sale pre-agreement, which is required to start the mortgage procedure, which means it is paid before you are 100% sure you will get a mortgage. There are a couple of ways to avoid the risk of losing this money. The first is to convince the seller to not take any upfront at the moment of signing the pre-agreement, but only when the actual agreement will be signed, which is when you are already sure about getting the mortgage. In case the seller won't agree to this, the usual procedure is to incorporate a paragraph into an agreement, stating that in case of not be able to receive a mortgage in a given number of banks (we recommend putting 2), the seller will give the upfront back to the buyer.

We hope you will find the above information helpful. Feel welcome to let us know, if anything needs clarification or if anything should be added.

Best regards,
Loan-brokers.pl Team

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