Mortgage for Renovation in Poland — How to Finance the Purchase and Renovation of a Property with One Loan

A mortgage for renovation in Poland (also called a purchase + renovation mortgage) is an increasingly popular solution offered by Polish banks. It allows you to finance both the purchase of a property and the renovation or finishing works with just one home loan.

Instead of taking out two separate loans, you receive a single mortgage secured by the same property. The bank divides it into two parts: funds for the purchase and funds for renovation or finishing.

This type of home renovation mortgage in Poland is ideal for buyers who want to purchase an older flat or house and immediately begin modernizing it, or for those buying a new apartment that still needs interior finishing. Banks in Poland treat the entire project as one investment, assuming that after renovation the property’s market value will increase, which improves their loan security.

What Can a Renovation Loan in Poland Be Used For?

Funds from a home improvement loan in Poland or a mortgage with a renovation component can only be used for purposes permanently related to the property and which clearly improve its standard and value.

Polish banks typically allow financing for:

• replacement of electrical and plumbing installations
• installation of new windows and doors
• laying tiles, floors, and ceramics
• painting, plastering, and wall finishing
• installing heating and sanitary systems
• built-in furniture, such as kitchen units or wardrobes

However, no bank in Poland will allow you to use these funds to purchase movable items — such as sofas, washing machines, televisions, or freestanding wardrobes.

In limited cases, Polish mortgage lenders may allow financing for built-in appliances, but only if they are permanently attached and considered part of the property.

How Does a Mortgage with Renovation Work in Poland?

Applying for a mortgage with renovation in Poland is very similar to obtaining a standard mortgage, but the process requires additional documents.

Besides the typical income proof and property details, Polish banks will ask for a detailed renovation cost estimate — a list of planned works, materials, and expected expenses. This is usually prepared by the borrower or by a licensed appraiser.

Using this cost estimate, the bank commissions a property valuation (operat szacunkowy) that determines: the current market value of the property, and the estimated value after renovation.

This assessment determines the maximum mortgage amount.

In most cases, banks in Poland can finance up to 80% of the property’s post-renovation value (the LTV — loan-to-value ratio).

Example: If your flat is expected to be worth PLN 600,000 after renovation, the Polish bank may grant you a loan of up to PLN 480,000, while the remaining PLN 120,000 must come from your own funds.

How Do Polish Banks Calculate Property Value for a Renovation Loan?

In Poland, the property serves as the main collateral for the mortgage, so its value is crucial for the bank. As mentioned, an appraiser determines two figures: the current property value, and the projected value after renovation.

If your renovation plan clearly increases the property’s standard and comfort, Polish banks will use the higher, post-renovation valuation to determine how much they can lend.

This system benefits borrowers, since the bank considers not just the property’s current worth, but also its future value after improvements — helping you secure a larger home renovation mortgage if the project adds measurable value.

Own Contribution for a Renovation Mortgage in Poland.

Just like with a standard mortgage in Poland, a home improvement mortgage requires an own contribution — part of the investment financed from your own savings.

Most Polish banks require an own contribution of at least 20% of the total investment value, which includes both the purchase price and renovation costs.

Example: If a property costs PLN 450,000 and the renovation adds PLN 50,000, the total investment value is PLN 500,000. You’ll need to contribute at least PLN 100,000 of your own funds.

Some banks in Poland may accept a 10% down payment, provided additional safeguards are in place, such as low down payment insurance.

Your contribution can come from savings, gifts, the sale of another property, or documented renovation works already completed before applying for the loan.

How Are Mortgage Funds Disbursed by Polish Banks?

When you take a mortgage for renovation in Poland, the bank disburses the funds in stages, according to the progress of your renovation project.

The purchase portion is usually transferred directly to the property seller after the notarial deed is signed.

The renovation portion is released in tranches (installments) as the renovation progresses.

To receive each new tranche, the borrower must provide documentation confirming the completion of the previous stage — such as invoices, photos, or a follow-up inspection by a bank appraiser.

This system ensures that: the bank in Poland can verify the funds are used appropriately, and the borrower receives financing in sync with the project’s progress.

Common Mistakes When Applying for a Renovation Mortgage in Poland.

A frequent mistake among borrowers is underestimating renovation costs. In the Polish mortgage system, it’s best to prepare a cost estimate with a 10–15% safety buffer, since actual construction costs tend to rise over time.

Another common issue is incomplete documentation. Polish banks will not release the next tranche of the renovation loan unless the previous stage is properly verified. Keep invoices, receipts, and progress photos well-organized to avoid payment delays and work interruptions.

Before signing the loan agreement, make sure to review:

• the interest rate period (especially for promotional offers)
• the early repayment conditions
• any additional insurance requirements imposed by the bank

Summary — Why Choose a Mortgage for Renovation from a Polish Bank?

A mortgage for renovation in Poland is one of the most effective ways to finance both the purchase and the modernization of a property with a single home loan.

It’s particularly attractive for people who want to: buy a lower-priced property and renovate it, or finish a developer-standard flat into a move-in-ready home.

Banks in Poland finance only the elements permanently attached to the property, not loose furnishings or decorations. They typically require an own contribution of 20%, and renovation funds are released in stages as progress is confirmed.

When well planned, a home improvement mortgage in Poland allows you to purchase and transform your property efficiently — turning an outdated flat or unfinished shell into a modern, comfortable home that meets your vision and lifestyle.