Loan Brokers

Summary of changes to BIK credit score reporting in Poland (July 2026)

Sun, 09 Aug 2026 11:13:07 +0000

There were few important changes to how the credit scoring in Poland works, please check our summary of key changes below.

1. Credit inquiries no longer reduce the BIK score:

Submitting loan applications to multiple banks to compare offers no longer negatively impacts a customer's BIK score.
The change eliminates the previous practice where multiple inquiries could lower creditworthiness.

2. Unsuccessful credit inquiries are automatically deleted after 14 days:

If a credit inquiry does not result in a loan agreement, it is automatically removed from BIK after 14 days.
Previously, such inquiries could remain visible for up to 12 months.

3. New BIK scoring model introduced:

Banks now receive credit scores calculated using a new algorithm designed to better reflect a customer's actual repayment risk.
The updated model places less emphasis on application behavior and more emphasis on real financial obligations.
Very likely your score is now different than until June 2026.

4. Greater focus on current financial behavior:

The new score gives more weight to:
- timely repayment history,
- current indebtedness,
- utilization of revolving credit limits,
- stability and length of credit history.

5. Non-bank financing is now included in scoring:

The scoring model now considers repayment behavior for:
- BNPL (Buy Now, Pay Later) products,
- selected non-bank loans,
- other alternative financing products where data is reported to BIK.
Proper repayment of these obligations can positively influence the BIK score.

6. Improved ability to compare credit offers:

Consumers can safely request offers from several banks without worrying that multiple inquiries alone will reduce their chances of obtaining financing.
The intention is to encourage informed comparison shopping while maintaining prudent credit assessment.

7. Banks receive a more predictive assessment of borrower risk:

The revised scoring model is intended to improve the predictive power of BIK scores by emphasizing actual repayment behavior rather than the number of credit inquiries.
Banks were required to adapt their internal credit decision engines to accommodate the new scoring methodology.

Buying a New-Build Apartment in Poland in 2026: A Complete Step-by-Step Guide for Foreign Buyers

Mon, 08 Jun 2026 19:27:28 +0000

Buying a new-build apartment from a developer in Poland has become one of the safest ways to purchase residential property. Thanks to the current Developer Act, buyers benefit from strong legal protection and strict safeguards for funds paid during construction.

However, legal protection alone is not enough. For foreigners living and working in Poland, understanding the entire purchase and mortgage process is essential. From selecting a property and securing financing to signing notarial deeds and taking ownership, every stage involves important financial and legal decisions.

This guide explains how to buy a developer property in Poland in 2026, highlights the mortgage financing process, and shows how an independent mortgage broker such as Loan-brokers.pl can help you secure the best mortgage solution available.

Step 1: Define Your Budget and Obtain Mortgage Pre-Approval

Before visiting a developer's sales office, it is highly recommended to understand your borrowing capacity.

Many buyers fall in love with a property only to discover later that it exceeds their mortgage eligibility. This is particularly important for foreign nationals, whose income structure, residency status, or employment contracts may be assessed differently by Polish banks.

Working with an independent mortgage broker such as Loan-brokers.pl allows you to:

Assess your mortgage affordability before making any commitments.
Compare eligibility requirements across multiple banks.
Understand how your nationality, residence permit, or employment status affects financing options.
Receive guidance in English throughout the process.
Avoid unnecessary credit applications that could negatively impact your profile.
Having your mortgage capacity verified before negotiations gives you confidence and strengthens your position when discussing purchase terms with a developer.

Step 2: Visit the Developer's Sales Office

Most buyers arrive already familiar with the project through online research, floor plans, and virtual presentations.

The sales meeting is your opportunity to obtain information that may not be available online.

Important questions include:

What is included in the finishing standard?
What are the expected completion and handover dates?
What are the costs of parking spaces and storage units?
Are there any additional fees?
What payment schedule applies during construction?

For mortgage buyers, it is also important to discuss whether the developer has experience working with international clients and whether the project meets bank financing requirements. However, this part can also be covered by your broker while they contact the developer to cover the mortgage-related issues.

Step 3: Review the Information Prospectus

Before signing any agreement, the developer must provide an Information Prospectus.

This document contains critical information about both the project and the developer.

Pay particular attention to:

3.1. Legal Status of the Land

Verify:

Ownership rights to the land.
Land and Mortgage Register details.
Existing encumbrances or restrictions.

3.2. Building Permit

Confirm that:

The permit is valid and final.
The permit covers the specific building where your apartment is located.

3.3. Construction Timeline

Review:

Planned completion date.
Apartment handover date.
Ownership transfer date.

3.4. Future Development in the Area

The prospectus should disclose planned infrastructure and development projects within a defined radius of the investment.

Step 4: Reserve Your Apartment

In Poland, apartment reservations typically follow one of three models.

4.1. Informal Reservation

The unit is temporarily removed from sale, usually for a few days.

4.2. Reservation Agreement

A written agreement is signed, and a reservation fee is paid.

Under current regulations, the reservation fee cannot exceed 1% of the apartment price.

Before signing, ensure that the agreement clearly specifies the conditions under which the fee will be refunded, especially if a bank declines your mortgage application.

4.3. Direct Developer Agreement

Some buyers skip the reservation stage entirely and proceed directly to signing the developer agreement before a notary.

This option is generally suitable for buyers with confirmed financing and a clear purchasing decision.

Step 5: Sign the Developer Agreement

The developer agreement is the most important legal stage of the transaction.

The agreement must be signed before a Polish notary and establishes the obligations of both parties.

The document specifies:

Apartment size and location.
Technical specifications.
Construction schedule.
Payment schedule.
Handover procedures.
Conditions for ownership transfer.

The law also provides buyers with specific rights to withdraw from the agreement if significant discrepancies or legal issues arise.

Step 6: Mortgage Financing Process – How It Works

Once the developer agreement (or a reservation) is signed, the mortgage process enters its most important phase.

This is where an independent mortgage broker can make a significant difference.

Unlike bank-employed advisors who represent only one institution, Loan-brokers.pl works independently and compares mortgage offers from multiple banks to find the most suitable solution for your circumstances.

Mortgage Financing Stages

Stage 1: Financial Assessment

Your broker reviews:

Employment contracts.
Income documentation.
Residence status.
Existing liabilities.
Available down payment.

Stage 2: Mortgage Strategy

Not every bank accepts every type of foreign income.

Loan-brokers.pl identifies banks most likely to approve your application before submission.

Stage 3: Document Collection

Your broker helps prepare:

Identity documents.
Residence permits (if required).
Employment documentation.
Tax records.
Developer documents.
Developer agreement.

Stage 4: Mortgage Applications

Applications are submitted to selected banks simultaneously.

This increases your chances of receiving competitive offers and reduces delays.

Stage 5: Credit Decisions

Banks review your application and issue:

Initial decisions.
Conditional approvals.
Final mortgage offers.

Your broker compares the offers and explains:

Interest rates.
Monthly payments.
Fixed-rate versus variable-rate options.
Additional banking products and fees.

Stage 6: Mortgage Agreement

After selecting the most suitable offer, you sign the mortgage agreement with the chosen bank.

Stage 7: Loan Disbursement

The bank transfers funds directly to the developer's protected escrow account according to the construction schedule.

During construction, most borrowers pay interest only on funds already released.

Stage 8: Registration of the Mortgage

Until the mortgage is officially registered in the Land and Mortgage Register, the bank usually applies temporary bridge insurance.

Once registration is completed, standard mortgage repayments begin.

Why Foreign Buyers Should Use an Independent Mortgage Broker

For expatriates and international professionals living in Poland, navigating the mortgage market independently can be challenging.

Banks often have different requirements regarding:

Nationality.
Residence permits.
Type of employment contract.
Foreign income.
Self-employment income.

Loan-brokers.pl provides:

Access to multiple lenders through a single advisor.
English-language support.
Expertise in mortgages for foreigners in Poland.
Assistance with documentation.
Faster application processing.
Professional negotiation and offer comparison.
Support from the reservation through the final loan disbursement.

Most importantly, you receive unbiased advice because the broker's role is to help you find the most suitable financing solution rather than promote a single bank's products.

It is important to note that in Poland, around 70% of all mortgages, including those taken by the Poles, are obtained with a broker’s help.

Step 7: Protection of Your Funds – Escrow Accounts and the Developer Guarantee Fund

Polish law protects buyers through two important mechanisms.

7.1. Housing Escrow Account

Your payments are not transferred directly to the developer.

Instead, funds are deposited into a protected escrow account supervised by a bank.

The developer receives funds only after verified completion of construction milestones.

7.2. Developer Guarantee Fund

The Developer Guarantee Fund provides additional protection.

It may reimburse buyers if:

The developer becomes insolvent.
The escrow bank becomes insolvent.
The buyer legally withdraws from the agreement, and funds are not returned.

These protections make buying an off-plan apartment in Poland significantly safer than in many other countries.

Step 8: Technical Inspection and Key Handover

After construction is completed and the occupancy permit is obtained, the developer schedules a technical inspection.

This is your opportunity to verify:

Apartment size and layout.
Walls, floors, windows, and doors.
Electrical installations.
Plumbing connections.
Heating and ventilation systems.

Any defects should be recorded in the inspection report.

The developer generally has:

14 days to respond.
30 days to rectify acknowledged defects.

After the handover, you receive the keys and can begin arranging the interior.

Step 9: Interior Finishing

Most developer apartments in Poland are delivered in a developer standard, requiring additional finishing work.

Many buyers arrange contractors several months in advance to avoid delays and rising labour costs.

Step 10: Transfer of Ownership

The final step is signing the ownership transfer deed before a notary.

At this stage:

The purchase price has been fully paid.
Construction has been legally completed.
Ownership is transferred to the buyer.

The notary submits applications to:

Following registration, you become the official owner of the property. Congratulations!

Best regards,

Loan-brokers.pl Team

"Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that the law and its application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk."

WIBOR Rate in Poland, and why do you need to understand it before taking a mortgage

Sat, 16 May 2026 16:00:30 +0000

The WIBOR rate (Warsaw Interbank Offered Rate) is key in Polish banking. It affects what people and businesses pay on loans and earn on savings. Knowing about WIBOR and how to handle its changes is vital for anyone considering a loan.

1. What Is WIBOR?

WIBOR means Warsaw Interbank Offered Rate. It is the average rate at which banks in Poland lend to one another for periods ranging from 1 day to 1 year.

The rate is expressed in several variants depending on the lending term:

WIBOR 1M – one-month interbank lending rate
WIBOR 3M – three-month rate (most common for mortgages)
WIBOR 6M – six-month rate

GPW Benchmark S.A., part of the Warsaw Stock Exchange Group, calculates and disseminates WIBOR. The Financial Supervision Authority (KNF) checks the process. The rate changes each day based on bids from major Polish banks in the market where banks lend to one another.

This benchmark is used for mortgages, business loans, leases, and government bonds. It serves as the foundation of the Polish financial system.

2. How Is WIBOR Shaped and Who Decides Its Level?

No single bank sets WIBOR. Each workday at 11 a.m., major Polish banks set their internal lending rates. The highest and lowest rates are excluded. The average of the rest becomes the official WIBOR for the day.

WIBOR is mainly affected by the base rate set by the Monetary Policy Council (RPP):

When NBP raises interest rates to fight inflation, WIBOR rises.
When NBP cuts rates to stimulate growth, WIBOR decreases.

WIBOR not only reacts to RPP’s decisions. It also changes in response to banks’ expectations for future policy or market conditions.

P.S. Feel welcome to follow our Facebook profile, where we often share news on inflation, future rates, and what is happening on the market.

Poland is now aiming to reform WIBOR, replacing it with a new benchmark called POLSTR - a risk-free overnight rate based on real interbank deposit transactions. The official roadmap aims for a gradual introduction by 2027, with GPW Benchmark as administrator. Delays or discontinuation, as with WIRON, remain possible.

3. How Does WIBOR Affect Mortgages and Other Types of Financing?

For most Polish borrowers, WIBOR directly affects the interest on variable-rate loans. Yearly interest is calculated as:

Loan interest = WIBOR + Bank margin

If the bank’s margin is 2% and WIBOR 3M is 5%, your total loan interest is 7%. If WIBOR rises to 6%, interest climbs to 8%. Your monthly payments increase.

WIBOR affects:

Home loans are most affected; payments change according to agreed intervals with the bank.
Cash and car loans can use changing WIBOR or fixed rates.
Company and investment loans also follow WIBOR. Companies borrowing in PLN pay interest linked to WIBOR. This affects business choices and profits.
Savings on banks' deposits.

Changes in WIBOR affect both family and business budgets and the whole economy.

4. How to Minimize the WIBOR Risk When Taking a Loan

Borrowers can limit their exposure to WIBOR fluctuations through several practical strategies:

Choose a Fixed or Semi-Fixed Interest Period - Many banks offer fixed-rate loans for 5 or 10 years. When this period ends, the bank reviews the interest. This shields you from sudden WIBOR jumps, especially in uncertain times. Even when you already have an ongoing variable-rate mortgage, you can switch to a fixed rate if you expect market conditions to worsen. We explain refinancing in more detail here.

Compare WIBOR 3M vs. 6M or 12M - WIBOR 6M or 12M gives steady payments for a while, but delays lower payments when rates drop. WIBOR 3M or 1M reacts faster to RPP decisions.

Maintain a Financial Cushion - Keep a savings buffer equal to 12 or more monthly loan payments. This will protect you if rates rise and lower the risk of default.

Make steady overpayments - Pay more than your required installment. This lowers your remaining loan balance and the impact of future WIBOR rises. Most Polish banks let you overpay with little or no fees. We explain overpayments in more detail here.

Summary

WIBOR shapes loan costs in Poland. Borrowers have little influence but can limit risk by choosing fixed-rate loans, saving, and managing loans well. Knowing how WIBOR works helps people make better financial decisions.

Best regards,

Loan-brokers.pl Team

2025 Poland Mortgage Market Report: Volumes, Interest Rate, and Creditworthiness

Tue, 24 Feb 2026 16:15:32 +0000

Last year was an eventful one for the mortgage market in Poland. Below is a comprehensive summary of the key trends.

Value of Mortgages Granted in 2025: Breaking Records, or not Really?

BIK (Credit Information Bureau)—the institution housing loan data from all banks and financial firms in Poland—reports that mortgages granted in 2025 totaled 105.9 billion PLN. This suggests that the market has broken the previous record of 88.6 billion PLN set in 2021.

In our opinion, there is a major issue with this data and the way BIK gathers it from banks. Under the current mechanism, all mortgages granted—whether original mortgages for property purchases or refinanced mortgages—are bundled together. This leads to significant double-counting.

Based on our internal data, many customers refinanced their mortgages last year. Some transferred the same mortgage twice to maximize savings as rates shifted. In the BIK reports, all these events add to the total value of mortgages sold. Until the institution differentiates between loan types, the data will not provide a clear picture of the market.

At the same time, the average mortgage amount grew from 425,000 to 460,000 PLN. This is confirmed by our observations: mortgages exceeding 1 million PLN, which are typically associated with properties in the 2-3 million PLN range, are being purchased more frequently, thereby increasing the average credit amount.

Interest Rates in Poland: The Shift to 4%

Last year brought positive news for mortgage holders, as the NBP reference rate dropped 7 times, falling from 5.75% at the start of 2025 to 4.00% by the end.

While the reference rate dropped, WIBOR 3M fell even further - from 5.85% to 3.85%. Conversely, 5-year fixed rates remained less affected, starting at 6.6% and ending at 5.5%. This suggests banks have inflated margins on fixed-rate deals, balancing the reference rate drop.

2026 Forecast: The downtrend is likely to continue, though at a slower pace. The Monetary Policy Council (RPP) suggests 3.5% as the “equilibrium” rate for 2026, and depending on inflation, we think the actual rate might fall even lower. It remains unclear if more aggressive price competition between banks will emerge this year, but whatever happens, our customers will be the first to know.

Creditworthiness in 2026: Comparison Data

How do lower rates affect your maximum creditworthiness? We updated our 2025 report calculations to show the differences.

Our Assumptions:

Age: 30 years old | Liability: No current credit debt.
Contract: Unlimited work contract (umowa o pracę na czas nieokreślony).
Benefits: 800+ included for families with children.
LTV: 20% own contribution (80% Loan-to-Value).
Term: 360 months | Installments: Even (raty równe).

Maximum Loan Amounts 2025 vs. 2026:

Single (4k PLN net): 263,000 PLN (was 245,000).
Single (6.5k PLN net): 531,000 PLN (was 465,000).
Single + 1 Child (6.5k PLN net): 490,000 PLN (was 449,000).
Couple (8k PLN net): 591,000 PLN (was 549,000).
Couple + 1 Child (8k PLN net): 476,000 PLN (was 460,000).
Couple (12k PLN net): 981,000 PLN (was 859,000).
Couple + 1 Child (12k PLN net): 950,000 PLN (was 901,000).
Couple + 2 Children (12k PLN net): 906,000 PLN (was 860,000).

Property Prices in 2025: A Limited, but Historical Drop

According to Pekao Bank and the National Bank of Poland (NBP), 2025 saw the first price dip since 2016. Nominal prices fell 0.8% on the primary market and 0.4% on the secondary market. When adjusted for inflation, this was a 3-3.5% real-term drop. Analysts expect a rebound later this year with a projected 5% growth. Whether they got it right, time will tell.

Best regards,

Loan-brokers.pl Team

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

Wed, 29 Oct 2025 19:01:06 +0000

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.

Best regards,

Loan-brokers.pl Team

How to minimize the Polish mortgage cost?

Mon, 30 Jun 2025 10:17:18 +0000

When signing the mortgage agreement with a Polish bank, you agree on multiple conditions, including the estimated total cost of the mortgage. Does it mean that you are obligated to repay the specified amount to the bank? No, it doesn't, and we will show you multiple methods of cutting the mortgage cost available in Poland.

Method 1 - regular overpayments mixed with lowering mortgage installment

Generally, when making any overpayment of the mortgage in Poland, you have a choice of how this overpayment will affect the shape of your mortgage in the future. You can decide to either lower the monthly installment while keeping the original mortgage period or cut the mortgage tenure while paying the same installment as before. For the first method, we will discuss the former option.

The model we assume for all calculations in this article is as follows:

Starting yearly interest rate - 6%
Starting mortgage amount – 500 thousand PLN
Original mortgage period – 360 months
Original monthly installment – 2997,75 PLN
Original cost of interest (assuming the customer is not making any overpayments over 30 year period, and also interest rate does not change over this period) - 579190,95 PLN

Now, if we establish you would be making an extra payment on top of the standard installment, it would bring you savings as per below:

500 PLN every month - the total interest cost would become 482372,22 PLN, meaning saving 96818,73 PLN, monthly installment would be lower by 3 PLN after each extra payment, and the total mortgage period would get shorter by 3 months (as you paid up the principal faster than signed in the agreement)
1000 PLN every month - the total interest cost would become 388249,03 PLN, meaning saving 190941,92 PLN, monthly installment would be lower by 6 PLN after each extra payment, and the mortgage period would get shorter by 45 months
1500 PLN every month - the total interest cost would become 310664,59 PLN, meaning saving 268526,36 PLN, monthly installment would be lower by 9 PLN after each extra payment, and the total mortgage period would get shorter by 104 months

Method 2 - regular overpayments mixed with cutting the mortgage period

The model remains the same as in Method 1; however, in this scenario, you keep the monthly installment as it was and instead ask the bank to shorten the mortgage tenure each time you make an overpayment.

Important to note! Some banks charge customers for annex anytime a customer makes an overpayment and asks to shorten a mortgage period rather than have the installment lowered. As of today, these banks are:

BNP – 200 PLN
PKO BP – 0,5% from principal left (min. 300 PLN)
Velo – 200 PLN

Now, let's calculate your savings using the numbers we used in method 1:

500 PLN every month - the total interest cost would become 379689,68 PLN, meaning saving 199501,27 PLN, and the total mortgage period would get shorter by 108 months
1000 PLN every month - the total interest cost would become 286934,13 PLN, meaning saving 292256,82 PLN, and the total mortgage period would get shorter by 163 months
1500 PLN every month - the total interest cost would become 231860,57 PLN, meaning saving 347330,38 PLN, and the total mortgage period would get shorter by 197 months

As you can see, this method of regular overpayments gives a better outcome than the first one.

Method 3 - one-time overpayment

Not everyone has the means for regular overpayments or is charged for annex by their bank, and they might prefer to overpay less regularly whenever possible. It is also an option, and we will now analyze a few scenarios around it.

Scenario 3.1 - 50000 PLN overpayment after 1 year of mortgage running

Let's break down the results of such overpayment between the two methods presented above (meaning you either choose to lower the monthly installment as a result of the overpayment or to cut the mortgage period):

Method 1 - the total interest cost would become 523572,14 PLN, meaning saving 55618,81 PLN, the monthly installment would fall to 2697,98 PLN (from the original 2997,75 PLN), and the total mortgage period would remain intact
Method 2 - the total interest cost would become 396373,73 PLN, meaning saving 182817,22 PLN, installment would remain the same, and the total mortgage period would get shorter by 77 months

Scenario 3.2 - 10000 PLN overpayment every year for 10 years straight

Method 1 - the total interest cost would become 487891,07 PLN, meaning saving 91299,88 PLN, the monthly installment would fall by around 30 PLN with each 10k repayment, and the total mortgage period would remain intact
Method 2 - the total interest cost would become 348533,80 PLN, meaning saving 230657,15 PLN, installment would remain the same, and the total mortgage period would get shorter by 110 months

Method 4 – interest rate management

You should now understand the mechanisms behind overpaying the mortgage. However, there is more you can do to minimize the cost of your liability – for example, choosing the correct interest rate type.

Generally, in Poland, you have a choice between two types of mortgage interest rates: variable and adjustable.

The variable rate consists of WIBOR (1M, 3M, 6M, or 12M – depending on the bank and your agreement) and a fixed bank margin. Due to its structure, this rate is subject to continuous fluctuations (which you can see on WIBOR's historical charts).
The adjustable rate, on the other hand, is fixed for 5 years (or 10 in one bank), meaning that regardless of what happens to WIBOR – your rate remains the same. Subsequently, once five years have passed, the bank will offer a new rate for the next 5-year period (assuming your overall mortgage period exceeds this timeframe). If you do not agree to the offered rate, your mortgage will automatically convert to a variable rate available at that time.

Now, let's talk numbers. At the moment of writing this article, the variable rate starts at around 7% and the adjustable rate – at around 6%. However, before the COVID crisis, when WIBOR in Poland remained below 2% for almost five years straight, the situation was different – variable rates were around 1% lower than the adjustable ones offered by banks.

Important to note! In Poland, banks must follow a regulation set by the Financial Supervision Authority (KNF): a customer with a mortgage based on an adjustable rate can switch the mortgage only to another adjustable rate, while a variable rate can be amended at any moment to either a variable or adjustable one. This rule will become a crucial factor in the following chapter of this article – refinancing.

Method 5 – refinancing

In many cases, transferring the mortgage from one bank to another is an efficient strategy to minimize costs, especially during periods when interest rates are gradually decreasing (which is hopefully the current period). The reason for this is that when the Monetary Policy Council lowers the interest rate, banks follow up by trimming their offers on adjustable-rate mortgages. However, ongoing mortgages keep the same adjustable rate they were signed with, and banks are usually not willing to negotiate the originally agreed rate. Does it mean you are tied to paying for your mortgage more than you could? No, you can cut the cost by moving to another bank.

Before we provide you with promising calculations, let's discuss a few rules important for refinancing:

You cannot refinance a mortgage while the property is still in construction, meaning that in case you buy from the developer, you are tied with the taken mortgage until they finish construction and release the property to you.
It is not possible to refinance within the same bank, each time you refinance it will mean changing the bank of your mortgage.
Some banks charge a fee for early repayment of the mortgage, so it is crucial to check your mortgage agreement before refinancing to avoid unpleasant surprises.

Additionally, refinancing comes with several one-time costs, which differ depending on a bank and your specific case, however, every time you plan to refinance you need to understand which costs will apply to you, and take them into account when calculating your savings coming from the refinancing. The costs may be:

Property appraisal - around 500 PLN (however, if you paid for the independent appraisal when taking the mortgage, and then refinance again within a year, in many banks you can use the same report, avoiding this cost).
Court fees - 450 PLN, paid each time you change banks, so the court updates the property register with the name of the new bank.
Certificate of the mortgage from a current bank - 50 PLN (this document is required by the bank you transfer your mortgage to, however, only a few banks charge customers for it).
Sworn translation - around 200 per hour (some banks require the presence of a sworn translator when you sign the mortgage agreement with them).

Now let's calculate potential savings based on the same model we used for all previous calculations, so 500 thousand PLN taken for 30 years:

The customer switches from 8% in the current bank to 6% in the new bank - this way they cut the original interest cost of 820775,2 PLN by 241,584,25 PLN, leaving them with an interest cost of 579190,95 PLN. At the same time, their monthly installment falls from 3668,82 to 2997,75 PLN.
The customer switches from 7% in the current bank to 6% in the new bank - this way they cut the original interest cost of 697543,6 PLN by 118352,65 PLN, leaving them with an interest cost of 579190,95 PLN. At the same time, their monthly installment falls from 3326,51 to 2997,75 PLN.
The customer switches from 6,5% in the current bank to 6% in the new bank - this way they cut the original interest cost of 637722,4 PLN by 58531,45 PLN, leaving them with an interest cost of 579190,95 PLN. At the same time, their monthly installment falls from 3160,34 to 2997,75 PLN.

As you probably noticed by looking at the above numbers, whether the refinancing makes sense in your case requires a detailed calculation covering all the one-time costs, and the potential savings. Please remember that we can help you both with calculating all of the above and also fully manage the transfer of your mortgage.

We hope the article will help you manage the cost of your mortgage more efficiently. Should you have any further questions - do not hesitate to email us at office@loan-brokers.pl

Best regards,

Loan-brokers.pl Team

Mortgage market report - 2024

Tue, 25 Mar 2025 12:26:12 +0000

Please accept our apologies. We've been busy recently, so the summary of the Polish mortgage market from last year is coming a bit later than usual. Let us then get on with it.

1. VALUE OF MORTGAGE GRANTED IN 2024.

According to data from BIK (Credit Information Bureau, gathering information about loans from all banks and financial firms in Poland), the total value of the mortgage granted in 2024 closed at 87,1 billion PLN, which means the market finished around 1,5 billion short of breaking the record of 2021.

13,6 billion of the above total were mortgages granted via the "Safe Mortgage 2%" program, so the house loans taken at market rates were worth "only" 73,5 billion PLN. At the same time, BIK predicts the number will rise to 88,2 billion this year. And if we look at incoming numbers, they might be correct.

In January 2025, 28,31 thousand households applied for mortgages, with 441,46 thousand PLN being the average amount asked from banks. These numbers are respectively 25,5 and 3,4% higher than January the year before. Then, in February 2025, 33,11 thousand households submitted a house loan application for an average amount of 449,1 thousand PLN, with both numbers being 24,3 and 1,7% higher than the same month of last year. To sum up - households in Poland have applied for a total of 27,39 billion PLN worth of house loans in 2 months of 2025.

2. THE INTEREST RATE IN POLAND.

Sixteen months passed since the Monetary Policy Council decided to lower the interest rate. As of 25th March 2025, the base rate stands at 5,75%, and WIBOR3M at 5,85%. What does it mean for mortgage cost? As banks add their margin to the WIBOR rate, the variable rate mortgage starts from around 7,7%, while the 5-year fixed rate - circa 6,8% (banks' offers change weekly).

Based on the current macroeconomic situation, both within Poland and abroad, inflation predictions, analysis of historical cycles of interest rates, as well as political aspects, including comments from members of the Monetary Policy Council, below we will present you different scenarios that we can predict for the current year.

Scenario 1. The interest rate in Poland is falling this year at least 0,25% - highly likely (90% probability). The most likely variant of this scenario is that the interest rate will fall a total of 0,5%-0,75%, with the first drop to happen anytime between Q3 and Q4. There is only a small chance that the rates will fall even more in 2025, and/or the first drop will happen sooner than Q3.

Scenario 2. The interest rate in Poland is to remain at the current level until the end of the year - unlikely (9% probability). For this scenario to materialize, inflation has to remain at levels from the beginning of the year, with no signs of dropping in the future. However, we've already seen both PPI inflation and salary growth below market expectations, which will soon affect the CPI inflation (main point of reference) and put more pressure on the MPC to lower the rates.

Scenario 3. The interest rate is surging this year - highly unlikely (1% probability). Only an unexpected, critical global event could result in the inflation rate growing fast and potentially push the MPC to raise the rates. But, as we all experienced such events in our lifetimes, we could not ignore the existence of this scenario, regardless of how unlikely it might be.

3. CREDITABILITY IN 2025.

As we know, higher interest rates negatively affect the maximum amounts banks can lend to potential borrowers. As the rates remained flat for the whole of 2024, the creditability calculations also did not move much (besides raising periodically when promotional offers appear in banks). We will present it to you based on a few examples.

We assumed that the mortgage applicant/applicants are 30 years old, with no current credit liabilities, employed based on an unlimited work contract ("umowa o pracę na czas nieokreślony"), and (for scenarios with children) they receive 800+ benefits. Also, the applicant/applicants offer 20% of their own contribution (so LTV is at least 80%), the loan period is 360 months, and customers choose an even installment option. Salaries taken into account below are presented in net per month.

With the above assumptions, a single person with no children, earning 4 thousand PLN net monthly, could borrow a maximum of 245 thousand PLN. A single person with no children and a salary of 6,5 thousand PLN - 465 thousand PLN. And a single person with one child who also earns 6,5 thousand PLN - 449 thousand PLN.

A couple with one child, earning together 8 thousand PLN could borrow up to 460 thousand PLN. If the same couple would earn 12 thousand PLN - the amount would grow to 901 thousand PLN. And a couple earning 12 thousand PLN as well, but with two children - 860 thousand PLN.

A couple without kids earning 8 thousand PLN would be able to borrow up to 549 thousand PLN, while earning 12 thousand PLN would allow them to ask banks for a maximum of 859 thousand PLN.

Feel welcome to follow our page for more information about the Polish mortgage market (and more)!

Best regards,

Loan-brokers.pl Team

Polish Mortgage in 10 Steps

Sat, 19 Oct 2024 17:31:00 +0000

Do you plan to take a mortgage in Poland? Our guide should help you to understand what steps await you in the process. To make your life easier, we recommend taking all these steps with us, via a free mortgage brokerage service.

Step 1 - Assess Your Budget

At first, you need to determine what is the maximum property price you could aim for.

There are numerous rules to creditability in Poland, and each bank looks at it their way, hence the differences can go to even hundreds of thousands of PLN.

You can either check at each bank the maximum mortgage amount they can offer in your specific situation or use a broker with access to all banks.

Step 2 - Check Banks’ Offers

Once you determined how much of the mortgage you will need to take, it is time to check which offers from banks suits you the best.

Most importantly you need to check the price, not only the interest rate, but also any additional costs, to have a full picture of differences between banks.

On top of that, you should consider all the rules connected to each bank, to not be surprised with anything once your mortgage is running, like having penalties for lack of transfer to account, etc.

Step 3 - Find a Property

You know your future mortgage cost - now is the time to find your perfect property.

Start by determining your main criteria, like property size, number of rooms, do you want it from the developer or second-hand, and then target your research accordingly. A golden rule: the more research - the better.

While searching for the property, you will find many differences between Poland and your country, which can influence your original goals.

Step 4 - Sign Pre-Agreement

Once you found the property, and negotiated its final price - the next step is to sign a preliminary purchase agreement.

The pre-agreement is an important document - it is required to proceed with the mortgage application and the property appraisal.

It also determines the rules between you and the seller, how much of the deposit you need to pay, and how much will be returnable if the deal does not go through - make sure to make it as favorable as possible for yourself.

Step 5 - Gather Documents

Pre-agreement is signed, and time to gather the rest of the documentation required for the mortgage application.

Even though the documentation needed is mostly the same across banks, there are some differences, like some banks asking for monthly bank statements, some only salary receipts, some for address registration, and some not.

The financial documentation will also differ depending on your income, you will need to either provide a form filled and signed by your employer, or accounting documents of your company, and so on.

Step 6 - Order Property Appraisal

The property appraisal is another crucial step - it will determine the market value of the purchased property.

The appraiser might set a price below, under, or the same as the sale price. The number they provide will have a significant effect on your mortgage application, as sometimes it might require more upfront to reach the LTV (loan-to-value) level the bank requires.

Due to that, we recommend ordering the appraisal before submitting the mortgage application - to avoid any surprises later in the process.

Step 7 - Apply for the Mortgage

You gathered all the documentation about yourself and the property, so now you are ready to submit the mortgage application.

The process differs between the banks: some banks prefer to do everything remotely, but some require you to sign paper documentation. Some banks will ask you to pre-apply, and then once they pre-accept you - apply again.

As with all other steps, it would be helpful to use a broker to manage this part of the process for you.

Step 8 - Track the Bank’s decision

As with previous steps, this one will also vary between banks. Generally, if you managed to submit a complete application following all specific bank requirements, the bank analyst should have all they need to provide mortgage decisions.

However, the bank might ask questions about your documents, or request more.

This part of the process can take 2-8 weeks, depending on various factors.

Step 9 - Finalize the Purchase

The bank’s decision is positive - congratulations! Now, the bank will send you the mortgage agreement to check if all is correct - please go through it in detail. After that, the bank will schedule a meeting to sign it.

In most cases, if you do not speak Polish - banks will require a sworn translator to be present at the signature meeting.

Subsequently, at the notary, you will need to sign the final sales agreement and provide it to the bank for mortgage to be released.

Step 10 - Update the Property Register

The last step is updating the property register with your and the bank’s name. Usually, the notary submits a request to the local court as part of their service, but in some cases, it needs to be done by you.

It takes one visit to the local court (assuming you gathered the correct documentation) and costs 200 PLN.

Once the property register is updated, which can take a few months, you need to bring confirmation to the bank, and you can consider the mortgage process finalized.

Thank you!

We hope this short process description will help you to have a better understanding of the Polish mortgage process.

Please note that none of the steps we explained have to be taken by you without any assistance. In Poland, it is common to use the service of a mortgage broker, who can manage the whole process for you.

The broker’s service is free of charge, as was settled by the legal regulations - parliament established brokers to represent customers’ interests in front of the banks.

Best regards,

Loan-brokers.pl Team

How to make an early repayment of the mortgage in Poland?

Wed, 02 Oct 2024 14:19:39 +0000

Most of our customers ask us at different stages of the mortgage process about what the early repayments of the loan look like in Poland. Hence, we decided to break it down with proper analysis.

Let's start from the beginning. As per Polish law, specifically the bill from 23rd March 2017 regulating the mortgage, customer has the right to repay their loan in full or partially at any point of the agreement. In other words, banks cannot deny you the possibility of repaying the loan early.

However, even though banks will not block you from the early repayment, some try to secure their interest by including the early repayment fee in the mortgage agreement you sign. You need to understand these fees before applying at a given bank. The law regulates the mechanism of the early repayment fee to some extent - banks cannot charge the customer more than 3% calculated from the capital repaid earlier than as per the repayment schedule, and they cannot do it for longer than the first three years of the mortgage running.

Repaying the mortgage fully is straightforward - it closes the mortgage agreement and cancels any interest or additional fees you were supposed to pay in the future. On top of that, in some cases, the bank will need to proportionally return some fees charged upfront, like commissions, etc.

The partial repayment requires a more detailed analysis. Essentially, whenever you make a repayment exceeding the monthly installment agreed with the bank, it results in new calculations of the principal-to-interest and subsequently requires you to choose between 2 options:

To keep the original mortgage period and lower the monthly installment amount.
To cut the mortgage period and keep the original monthly installment amount.

We will now check based on potential scenarios to understand which option brings more savings.

SCENARIO 1

Ricardo has a mortgage with a remaining principal of 500 thousand PLN, 300 months of the mortgage period left, and a current 7% interest rate. He decides to overpay the mortgage with 10 thousand PLN. As mentioned, there are two options to choose from, and the results of each would be as follows:

The mortgage period remains the same, and the monthly installment goes down from 3533,90 PLN to 3463,13 PLN - the total cost of interest changes from 560168,80 PLN to 549009,98 PLN, meaning that the move gave 11158,82 PLN of savings.
The mortgage period gets shorter by 15 months, and the monthly installment remains the same - the total interest cost changes from 560168,80 PLN to 515608,34 PLN, meaning total savings of 44560,45 PLN.

SCENARIO 2

Maria just took a mortgage of 600 thousand PLN for 25 years, at a 6,5% rate. She decided each month to overpay 500 PLN on top of the payment required by the bank. She will also get two options to choose from, with the following results:

The mortgage period remains the same, and the monthly installment goes with around 7 PLN with each PLN repayment (starting amount - 3792,11 PLN) - the total cost of interest changes from 765266,93 PLN to 659062,34 PLN, meaning that the strategy gave 106204,59 PLN of savings.
Maria decided to shorten the mortgage period each time she overpays 1000 PLN and to keep the original installment amount - it got shortened by 98 months overall - the total interest cost changed from 765266,93 PLN to 524593,06 PLN, meaning total savings of 240673,87 PLN.

As we can see above, it always makes sense to make early repayments, even small ones, as the savings on the total mortgage cost can mount to significant numbers. Also, in any scenario, it turns out that it is more beneficial to shorten the mortgage period than to lower monthly installments.

Hopefully, the above analysis helped you understand how mortgage early repayments work in Poland. In case you took or are looking to take the mortgage, we hope the content of this article will become handy as many times as possible.

Best regards,

Loan-brokers.pl Team

Mortgage market report - 2023

Sun, 04 Feb 2024 15:48:54 +0000

As every year, the time has come to summarize the situation in the mortgage market in the previous year and to outline the developments that will be affecting the current year. 2023 was a year of rebound in the mortgage market, partially stimulated by governmental programs. Let's break it down into pieces.

1. VALUE OF MORTGAGE GRANTED IN 2023.

As per data from BIK (the Credit Information Bureau), the total value of the mortgage granted in 2023 is 63,9 billion PLN, in comparison to 45,4 billion a year before. At the same time, BIK predicts the total value in 2024 to grow to 72 billion PLN.

From the total value of the granted portfolio, 27,2 billion PLN went via the "Safe Mortgage 2%" program, and 36,7 billion PLN via standard mortgage.

January 2024 seems to confirm the rebound on the mortgage market, as even though "Safe Mortgage 2%" does not exist anymore (the program ran between July and December 2023), 22,58 thousand households have applied for a mortgage this month - 92% higher than January 2022 (13,25 thousand).

2. THE INTEREST RATE IN POLAND.

The governmental program was to some extent an answer to high interest rates blocking many first-time buyers from being able to take a mortgage.

For most of the past year, the interest rate in Poland stood at 6,75% - a level unseen since the early 2000's. Those who follow our page should know the reasons and the journey it took to reach this level.

However, inflation has been falling steadily throughout the year, from 18,4% in January to 6,2% in December, which allowed the Monetary Policy Council to lower the rate in September and again in October, altogether to 5,75%.

The market expects the rate to continue falling this year, first cut again in March. We cannot predict how fast and often the rate will go down, however, if we look at history, every time Poland got hit by inflation and the rate went up as a result, once the inflation plateaued and the interest rate started falling, the trend was irreversible.

We will keep informing you via our Facebook profile about the market expectations, trends, and so on, like in July when we signaled the September's cut.

3. "SAFE MORTGAGE 2%" AND WHAT'S NEXT?

"Safe Mortgage 2%" was one of the hottest topics in the public domain. The program attracted above 100 thousand households who decided to buy their first property using it.

We have explained this topic in detail here - as well as multiple posts providing our customer with updates, including the one about the program coming to an end against the initial plans behind it. Feel welcome to refer to these resources.

Even though the SM2% ended, the new government has announced it is starting to work on the new program, with the working name of "The First Apartment", and as the name suggests - also directed to first-time buyers only.

However, at this point, we cannot be sure about the program's launch - the soonest date provided by the Minister in charge of implementing it is July 2024. At the same time, some fractions of the current government, which is less uniform than the previous one, oppose the program. We should wait for more concrete information, and the actual law to be passed in the parliament.

Feel welcome to follow our page for more information about the Polish mortgage market (and more)!

Best regards,

Loan-brokers.pl Team

"Safe Mortgage 2%" - brief analysis.

Mon, 07 Aug 2023 17:06:26 +0000

As we are already a month into the governmental program addressed to first-time property buyers, we gathered enough data to analyze it further.

The program is enjoying a lot of attention - only in July, around 20 thousand customers, including ours, applied for it. To give you perspective - in the previous year, banks granted 126 thousand mortgages. As the demand for standard mortgages is growing alongside - a total of 43,47 thousand households applied for mortgages in July, making it the highest monthly number ever, or since 2008 when BIK (Credit Information Bureau) started collecting such data.

At the same time, the program stands high on the political agenda, which automatically means a lot of misinformation flying around. In the following article, we would like to address some of the points of confusion.

What is the program?

Let's start from the beginning. Please see our post from the 21st of April, explaining the "Safe Mortgage 2%" - you will know the rules, eligibility, etc. Also, while reading you will see that many program-related risks we were pointing at back then finally did not materialize.

You can find the previous post under this link.

What is the actual price of this mortgage? 2 or 5%?

Customers who want to use the program should apply for at least 181 months of the mortgage period, but some decide for longer, for example, 30 years. Those customers receive an informational offer from the bank, on which they can see RRSO, meaning real yearly interest rate, at 4,8%, or another percent much different from the 2% promised via the program. Why?

The reason for that is quite straightforward - in Poland, banks have to show customers the cost of credit for the whole original mortgage period while assuming today's interest rates. So, even though the interest rate of the mortgage via the program is fixed at around 2% for the first ten years, including all costs (or 5+5 years, as the rate will be recalculated after five years for another five years, but still should be around 2% as per regulations), the bank assumes that after ten years customer will be charged today's interest rate with WIBOR close to 7%, making the averaged yearly interest rate closer to 5%.

Such a scenario is unlikely due to two main reasons. First, statistics show that an original mortgage period in Poland is 26 years on average, but the liability gets fully repaid on average within only 13 years. The potential of early repayment is even higher with the "Safe Mortgage 2%". For 500 thousand PLN taken for 30 years, the monthly payment would start at around 2200 PLN and then gradually drop to almost 1900 PLN in the 120th month. So if you would only double your monthly payment each month, you would be left with below a hundred thousand PLN of principal once the ~2% rate ten-year period has ended.

Second of all, even if the customer would not make any extra payments towards the principal in the ten years, there is no basis for the assumption that the interest rate would be at current levels for the whole 20 years coming after the mentioned period, and that would be a condition necessary for the averaged yearly cost of such mortgage to become 4,8%. Of course, as with any financial decision, anyone interested in the program should assess their risk, and determine their ability for early repayment, which makes it even more crucial to be aware of the mechanisms behind the numbers.

To summarize, the price of "Safe Mortgage 2%" is indeed around 2% for the first ten years - the price after depends on how you manage your liability, and the situation on the market.

How easy is it to lose the subsidy?

Yes, you can lose the right to governmental subsidies, but it is not hard to avoid for those who understand the program's rules.

Let's first clarify - even when you stop meeting the criteria to participate in the program, you will not be giving back what the government already paid towards your mortgage, but lose the right for these subsidies forward. The only scenario when someone would have to give back the funds is if they lied about owning the property and joined the program based on false statements - as it is a criminal offense such a person would also risk jail time.

For the rest of the program participants, the situations when they cannot use the funding anymore are when they:

- did not start living in the property bought via "Safe Mortgage 2%" within 24 months after signing the final notarial agreement
- started using the property for commercial purposes
- rented the property out
- sold the property bought via "Safe Mortgage 2%" (when you sell property with a mortgage on it, part of the sales price automatically goes to the bank to cover the mortgage, hence it closes fully)
- bought another property
- allowed a partner, who owns a property, and with whom they were running a household for at least 12 months before using the program, to live in the property bought via "Safe Mortgage 2%"
- overpaid the mortgage with the amount higher than 200 thousand PLN within the first three years (200 thousand is calculated together with the upfront of the mortgage, those who provided 200 thousand PLN upfront, cannot repay the mortgage at all in the first three years)

As per above, while offering significant financial incentives, the program is not for everyone. However, please note that you can refinance "Safe Mortgage 2%" the same as any other mortgage, so if you expect not to meet the criteria at some point, you can preemptively move the mortgage to another bank. Especially given the current interest rate developments, we can expect that within a year or two, the market will offer rates much closer to the program, unlike today, expanding the participants' options.

If the above did not answer your questions about the program, feel welcome to email us at: office@loan-brokers.pl, or join one of our Q&A sessions, which we plan to do after we process the first group of customers who were already waiting for the program (follow our FB page to be notified).

Best regards,

Loan-brokers.pl Team

"Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is published, and website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from the use of the page. Any reliance upon any information shall be at your sole risk."

PPK - what it is, and why you should have participated.

Sun, 14 May 2023 12:23:27 +0000

PPK ('Pracownicze Plany Kapitałowe') is a retirement saving program enforced by the government three years ago. In our opinion, among many missed programs our current government has established, the PPK makes the most sense. Read more to find out why.

Each company with more than 20 employees was obliged to join and enroll them into PPK (those with fewer employees could have a vote from them deciding whether to join or not). A company could choose from multiple investment firms to tie its PPK with. Each employee of the companies that joined PPK had been automatically enrolled in the scheme but could and still can resign at any time.

Why was it enforced? Well, based on current calculations, persons going to retire in 2050, will receive 29,5% of the average salary as their pension, in 2070 - 23,5%. When we put it together with the fact that in 2021 only 1/4 of Poles have been saving for retirement - a big crisis might be looming. Hence the PPK.

The mechanism of PPK is as follows. Each month 2% is taken from the gross amount of the employee's gross salary and invested in PPK (lowers the net remuneration). On top of that employer is adding 1,5% of mentioned salary, which also goes to PPK (this does not affect the paycheck). Moreover, the government adds a welcome bonus of 250 PLN and a yearly one of 240.

All these funds are invested as per the strategy of the investment firm that the company chose to have PPK at. Generally, the investment strategy depends on the participant's age funds are divided between the stock market and obligations/bonds, and the ratio between them goes up proportionally to age (meaning the younger the participant - the more aggressive strategy). As the participant gets older, a safer approach is applied to protect gathered funds. The ratio goes from a maximum of 60-80% of shares at the start to not more than 15% before the participant reaches 60 y/o and is entitled to disbursement of funds.

The PPK program has met a lot of controversy since its start, mainly connected to a lack of trust in the government, mixed with what happened with OFE (even though it's a different story, different factors). However, the numbers don't lie, and after three years we can say that joining (or just staying in) PPK was an excellent financial decision. Of course, it does not automatically mean it will continue to be so in the future. As always, let's calculate it based on a real-life scenario.

An employee earns 10 thousand PLN gross, and after joining the PPK - 200 PLN is taken from it monthly, topped with an extra 150 from the employer, so 350 total. To this government added 250 PLN at the start, and 240 yearly. Altogether, in 36 months it gave a sum of 13,570 PLN (before capital gain).

Within three years all 163 PPK strategies earned 26% on average - none lost - out of which most were added in the past 12 months due to a bull run on the markets (14% on average, and 160 strategies over 10%). All results are available publicly, e.g. here: https://www.analizy.pl/fundusze-ppk/notowania.

Let's assume the participant was neither lucky to have their funds invested in one of 13 strategies that grew over 40% in 3 years nor unlucky to be with those ten that grew below 10%, and got the average return.

Using a simple compound interest calculator, the 13,570 PLN of the invested sum became 15100 after three years of participation in PPK. However, the participant invested only 7200 PLN of their money (200 monthly), which means 109% of the return.

Even if the participant now decides to resign from PPK (so as per rules they would get 100% of their funds, 70% of the funds added by the employer, all the capital gain minus 19% tax, while losing all governmental add-ons), they would have 12220 PLN out of 7200 PLN invested over three years, giving a return of 70%.

It looks even better given all this happened with the COVID-19 crisis, the Ukraine war, the energy crisis, the inflation crisis, and the year-long bear market in the background.

Finally, PPK is flexible in the way that you can go out, and go back in at any time, so in case of limited trust in the program, cashing out gathered funds after x time and coming back in to start the cycle again seems a plausible option. If so, we highly recommend keeping the cashed-out funds invested in any way for your retirement.

That is why you should have participated (and probably should still be participating).

Best regards,
Loan-brokers.pl Team

"Any content provided on this page is to be considered informational only. It is not legal or investment advice or a replacement for such advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is published, and website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from using the page. Any reliance upon any information shall be at your sole risk."

Mortgage market report - 2022

Mon, 06 Mar 2023 13:19:32 +0000

The time has come to summarize the situation in the mortgage market in the previous year, and to outline the developments that will be affecting the current year.

2022 was yet another challenging period, however, looking at the challenges people in other countries had and still have to face, we appreciate the obstacles we are dealing with and wish for peace and safety to all.

THE INTEREST RATE IN POLAND.

After starting the rate-hike cycle in October 2021, the National Monetary Policy Council has been raising the rate for most of last year, reacting to dynamically growing inflation. Starting at 2,75% in February, the reference rate rose to 6,75% by September, taking WIBOR3M to 7,61%.

Since then, due to increasing signals of the inflation trend reversing, the MPC has been deciding to keep the rate at the same level. Currently, the market predicts that the interest rate should start going down at the end of this year, or the beginning of the next one. Such prediction would also align with statements from the MPC members throughout the year.

2022 brought another development to the interest rate subject. The parliament has passed a bill changing the credit rate indicator from WIBOR to WIRON. WIRON is based on the rate of previous daily transactions between the banks, while WIBOR is looking forward. Due to that, WIRON is currently circa 1% lower than WIBOR, but it will decrease slower than WIBOR once the reference rate starts going down.
However, a crucial part of the bill passed is the schedule for implementing the changes. Officially, the WIBOR will not be published anymore at the beginning of 2025, so until then banks can use it for ongoing mortgages unless they are ready to use WIRON earlier. For now, we can see preparations at banks have already started, but we cannot provide binding dates. As usual, we will keep our customers updated.

CREDITABILITY IN 2022 AND 2023.

The interest rate growth had a decisive effect on the creditability of mortgage applicants. Let's look at it based on a model customer, a married couple with one child, earning together 10 thousand PLN net per month with unlimited working contracts, not having any credit liabilities, and planning to take a mortgage for 25 years. At the beginning of the year when the mortgage interest rate was at around 4%, such a couple could apply for up to 800 thousand PLN of credit, while now they could apply for up to 500 thousand PLN.

Creditability went down not only due to raising interest rates but also due to stricter policies imposed on banks by the Financial Supervision Committee (KNF). Last year KNF decided to tighten the rules behind calculating creditworthiness by lowering the maximum DTI ratio (debt-to-income) to 50%, raising the potential WIBOR level banks must take into account when looking at customers' income, as well as obliging banks to calculate creditability for 25 years period, even if customer applies for 30 years mortgage. These moves, as per KNF statements, were to ensure the stability of the sector.

However, noticing that the mortgage market remains healthy and the risks are fading away, this month KNF announced that banks can use lower future WIBOR for the creditworthiness calculations, which resulted in around a 25% growth of maximum creditability, and can be considered as a first signal of the situation going back to normal.

NEW TREND ON THE MARKET - REFINANCING OF THE MORTGAGE.

The high interest rates have resulted in a new trend expanding on the market. In the past, when the WIBOR was more or less steadily going down, the banks' margin grew or was kept flat. In the new situation of the growing WIBOR, the banks have started to lower their margin. As a result, an opportunity to lock a lower margin for the whole loan period had shown for mortgage owners, and many took it. As WIBOR peaked, and with most probability will start going down soon, we believe this window of opportunity might be closing.

Moreover, several mortgage owners have decided to lock the interest rate on their credit for five years, often by switching banks to another offering a better fixed rate. As this trend was almost nonexistent until now, the market did not develop tools yet to track the number of refinancing deals. However, when it comes to our customer base - around 50-60% decided to switch banks for savings or safety, and many new customers came to us with their already-owned mortgages to get assistance with the transfer. However, not all have been accepted to switch due to the lower creditability issue explained above.

Now, as interest was locked on many mortgages, once the interest rate will start to go down, we expect another wave of mortgage refinancing, this time from fixed to a possibly cheaper variable.

VALUE OF MORTGAGE GRANTED IN 2022.

After the record-breaking 2021, 2022 brought a significant correction in the mortgage market. The uncertainty, high interest rates, and low creditability resulted in a drop of 49,1% when it comes to the value of mortgages granted in 2022 compared to the previous year, translating to 45,4 billion PLN as the total value for 2022.

At the same time, as per the Credit Information Bureau (BIK) - "Contrary to fears from the beginning of 2022, there was no significant deterioration in the quality of the loan portfolio".

GOVERNMENT'S ACTIVITY ON THE MORTGAGE MARKET.

2022 has been a year of higher governmental activity in the mortgage market. Several programs have been started or announced - let's analyze them one by one.

PAYMENT HOLIDAYS. Due to raising the interest rate, directly affecting mortgage owners, the government announced the possibility for anyone with a mortgage to halt their payments, for four months in 2022 (2 months per quarter starting in August), and four months in 2023 (1 month per quarter). At the same time, banks could not count interest rates for the period of the holiday, making the program beneficial enough to be requested on above 1 million active mortgage agreements (around 50% of the total portfolio). There are plans to prolong the program in 2024, but this time with more restrictions regarding availability.

MORTGAGE WITHOUT UPFRONT. Another program announced last year made it possible to take a mortgage without offering any upfront to the bank - instead governmental bank was offering a guarantee. However, due to multiple mistakes in the program's structure, it was used in only 296 mortgages in the whole year (out of the total of 125 thousand granted in 2022). For example, the maximum price per square meter of the mortgaged property was unrealistically low - in Kraków a price limit for the newly built apartment was 9 thousand per m2, making only 2% of the properties on the market eligible for the program.

MORTGAGE WITH GUARANTEED INTEREST RATE. This year government is planning another program, possibly to start in July. It is directed only to those who are buying their first property. Based on the announcements, the government will guarantee a mortgage interest rate of 2%. However, the 2% seems to apply only to the interest rate the bank charges on top of the bank's margin, and it is not clear yet what margin banks will apply to these supported mortgages. As we do not know the exact shape of the scheme, nor can we be sure if it starts at all, you will need to keep an eye on our page for further information.

Best regards,
Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is published, and website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from the use of the page. Any reliance upon any information shall be at your sole risk.

How to save thousands of PLN on your mortgage with one simple adjustment?

Sun, 20 Nov 2022 12:24:42 +0000

In Poland, one of the main price-shaping factors in the mortgage is the amount of upfront the customer can pay in advance.

The minimum is 10% (even though the government has passed a bill this year allowing taking the mortgage without the upfront, but due to being underdeveloped, the scheme remains inactive). To get the cheapest mortgage possible, banks require 20%, and adding another 10% can also make a difference in a few.

The difference in margin between the 10% and 20% upfront mortgage can be even 1% or more per year. A difference of 1% per year for a mortgage worth 500 thousand PLN, and taken for 30 years, means 239,9 PLN per month, or 86364 PLN in the total interest cost. Besides charging a higher margin, with the 10% upfront, banks often require additional insurance, or other additional fees, making the difference even bigger.

Does it mean that once you took a mortgage with 10% upfront you have no choice other than being charged more than others for 30 years? Fortunately no.

For the past years, property prices in Poland are growing steadily and rapidly, which allows many customers to lower their mortgage costs. Let's work as usual based on the example.

We have a person that took two years ago a mortgage for an apartment worth 500 thousand PLN. Upfront was 10% or 50 thousand PLN, so 450 was financed by the bank. Since the mortgage started, the property value grew by 15% - to 575 thousand PLN. Subsequently, the space between the mortgage amount (let's say it is 440 now after two years of repayments), and the property value grew too, and is now 135 thousand PLN, so above 20% of the property value. The customer will now have access to a cheaper mortgage.

Recently, we have gone through a similar process with multiple customers. In case you would like to check your eligibility and enjoy savings in your household budget, please do not hesitate to contact us via office@loan-brokers.pl - even if this particular example does not match your case, there is almost always a way to save some money by making amendments to the mortgage.

Best regards,

Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

Transfer of the mortgage to a cheaper bank - how does it work in Poland?

Mon, 11 Apr 2022 08:37:58 +0000

Recently, many mortgage owners could've been offered a change from variable to a 5-year fixed rate. While it was and still is an option to consider, there is also an alternative way to address the current situation in the market, with potentially more tangible and long-term savings in mortgage cost.

Since 2012, which was the peak of the previous rate-hike cycle, the base rate in Poland was continuously going down, and when the base rate is going down, the WIBOR (Warsaw Interbank Offering Rate) follows. As WIBOR is, next to the bank's margin, a factor shaping the bank's profit from the capital lent via a mortgage, when it was going down, banks were gradually raising their margins to keep desired profitability.

The situation changed in October, as due to the inflation crisis, the Monetary Policy Council started a rate-hike cycle once again. With the base rate growing (and WIBOR with it), the maximum creditability of the customers went down significantly. The reason is that the higher the yearly interest rate, the higher the monthly payment for the same original amount of the mortgage, which leaves less disposable income (as per the banking rules in Poland, the debt-to-income ratio cannot exceed 65%). The situation got even worse on the 1st of April, as the Polish Financial Supervision Authority (KNF) has obliged the banks to use an even harsher approach toward mortgage applicants - for example, the DTI ratio is now 50%. That leaves the banks with a smaller pool of potential new customers.

On top of that, with growing WIBOR, banks' profitability accelerated, which gave space to cut their margin. Last year, before the rates started to go up, the lowest margin we could negotiate for the customer was around 1,7%, while the whole market average margin stood at circa 2,5%. Now, the banks offer 1,7% (or lower) even before the negotiation. Because of that, it became potentially profitable to move the mortgage to another bank offering a lower margin - the process called refinancing. As usual, let's see it based on an example.

We have customers who took a mortgage five years ago with a 2,5% margin. The current capital to be repaid stands at 500 thousand PLN with 25 years of repaying left. The customer decided to move their mortgage to another bank that offered 1,7% of the margin. With the WIBOR3M currently at 4,92%, customers' monthly payments due to this change went down from 4002.58 to 3770.08 PLN, and the total remaining cost of their mortgage from 1,200,774 to 1,131,024 PLN, summing up to 69,750 PLN of savings.

While the base rate (and WIBOR) will go down again, as many times in the past (please see our latest article), the lower margin and savings customer got with the mortgage transfer will stay. Future lower rates will also mean higher margins, so the current situation, even though challenging, might prove as a window of opportunity to cut the cost of the mortgage for its whole length, or at least neutralize the currently higher expenses.

Feel welcome to query us about your existing mortgage and explore potential savings in your specific case.

Best regards,
Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

Fixed rate vs variable rate - market update.

Fri, 07 Jan 2022 11:24:14 +0000

It's been only four months since we have analyzed the differences between the fixed and variable rate mortgage. Nevertheless, the situation on the market changed so rapidly that we have decided to look at the subject once more.

In August 2021, as we mentioned in our previous article, the market was shocked by the monthly inflation rate of 5,4%. Ever since, inflation grew to 8,6% in December, a level last seen 20 years ago. Important to mention, no analyst back in August predicted that this, or anything close to this, might happen.

There are multiple sources of inflation we experience now. Besides the enormous pandemic stimulus or energy market prices soaring - the more fundamental reason lies in the economic doctrine of the ruling party, which we can recap by the growth of social transfers and taxation. Social transfers mean more freshly printed money on the market, mainly used for consumption, which pushes prices to grow. The growth in taxation burden leads to businesses raising their prices to save their profit. The growing prices inspire employees to demand pay-raise, which leads to even more money for consumption available on the market - it's called an inflation-wage spiral.

As it is unlikely that the government would significantly cut the welfare programs or the taxes, the only effective tool left to tackle current inflation remains in hands of the Monetary Policy Council. Raising the base reference rate, as that is the tool meant here, elevates the WIBOR rate proportionally. Higher WIBOR leads to higher lending interest rates, which results in fewer persons/institutions interested in borrowing money from the banks. Also, banks become more strict towards those still interested in borrowing - in short, the credit action goes down, hence less capital comes into the market, and less capital means lower inflation. For those who already have a mortgage or a business loan, as WIBOR shapes their interest rates, the monthly burden goes up, so less money in their budget is left to go to the market - again, less money means lower inflation.

Due to the above, the Monetary Policy Council has started raising the base rate since October and has repeated doing so each month until now, which led to growth from 0,1% to 2,25%. These moves made WIBOR3M grow to 2,62% today (banks apply it differently and with delays, so there will be discrepancies between official WIBOR and banks' internal). The market analysts predict that the rate-hike cycle will end at around 4%, which would suggest we could experience WIBOR3M above 4%. However, the chairman of the National Bank of Poland, and member of the Monetary Policy Council, Mr. Adam Glapinski, stated at a conference on Wednesday, that the rate can grow up to 3% without a negative impact on the economy, and he will recommend one more hike of 0,5%. He also deemed the current inflation rate "transitional".

All of this made the scenario that was unlikely back in August the reality - those who took a mortgage with a fixed rate when its interest was starting at 3%, while flexible back then was starting at 2%, can start counting their savings. Their interest rate will remain 3%, while for a person who took a mortgage while WIBOR3M was at around 0,2%, and with a bank's margin of 1,7% (that was the lowest we could negotiate with the banks back then), the current WIBOR makes the total interest rate of their mortgage at above 4%, and with potential to grow.

Given the above changes on the market, mortgages with fixed-rate are more popular than before. Currently, the market offers the following rates:

for a fixed-rate mortgage with 10% upfront starting at ~5,7%
for a variable rate mortgage with 10% upfront starting at ~5%
for a fixed-rate mortgage with 20% upfront starting at ~5%
for a variable rate mortgage with 20% upfront starting at ~4,3%

While looking at the predictions of reference rate reaching 4%, and the relative safety that comes with a fixed rate, more and more customers decide to go with this option instead of variable. But only in the future, we will be able to see who made the right decision. The same way we experience an inflation shock today, as the economy is highly volatile since the start of COVID-19, we might experience deflation shock too, and see reference rate going down - no analyst can predict that with certainty.

We hope this explanation gives you a better understanding of how a fixed-rate mortgage in Poland works. For more do not hesitate to ask us: office@loan-brokers.pl.

Best regards,

Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

Mortgage in Poland - fixed rate vs variable rate.

Tue, 31 Aug 2021 11:04:36 +0000

Until recently not all banks in Poland were offering a mortgage with a fixed rate - this changed due to a recommendation issued by the Polish Financial Supervision Authority, and now each big bank in Poland does offer this type of mortgage. Let's analyze what the market offers.

A fixed-rate mortgage in Poland differs from what you could experience in your own country. Such a mortgage has a fixed rate for 5-7 years only, and if the overall period is above it, after 5-7 years bank will offer you a new fixed rate for the next 5-7 years - in case you will not agree with it, your interest will change to a flexible rate as per the bank's current offer.

Each bank offers a different fixed rate. Currently (August 2021), the market offers a range of 3,84-5,45% for the mortgages with 10% of the upfront and 3,04-5,25% for 20% ones. This means that when compared to current flexible rate mortgages, for a fixed rate to be profitable, the WIBOR 3M, shaped by reference rate decided by the Monetary Policy Council of Poland would need to reach 1,05% in the lowest fixed-rate scenario (3,04%). However, if the reference rate would reach mentioned 1,05% after a year since the mortgage started and then stay 1,05% for the rest of the five years, this would mean that the customer would be better off with choosing the flexible rate in the first place.

Hence, while simplifying, for the fixed-rate mortgage taken today to be profitable, the WIBOR3M rate would need to reach at least 1,5% within two years. It is possible, however, given how reluctant to raise the reference rate from the current 0,1% level the Monetary Policy Council is, even while the inflation is reaching a level of 5% - most analysts would say that it's unlikely to happen. Due to that, fixed-rate mortgages are only a fraction of the mortgage market at the moment.

While not necessarily profitable, a fixed-rate mortgage does give a customer a certain level of safety, as they can rest assured that their monthly payment won't change during the fixed period. Let's calculate it based on an example.

A customer is taking a mortgage for an apartment worth 750 thousand while offering 20% of the upfront, so the mortgage amount is 600 thousand, and the repayment period is 30 years. The fixed rate offered by the bank is 3,04%, while their current flexible offer is 2,2%. In the first scenario, the monthly payment for the first five years would be 2543 PLN, while the flexible would be 2278, and stay the same until a change in reference rate would happen. As mentioned before, for the 2278 PLN to become 2543, a reference rate would have to reach 1,05%.

While writing this article, we have received an update from the market. The CPI inflation rate for August 2021 jumped to 5,4% - well above expectations. Due to that, some analysts expect that the Monetary Policy Council might react and start raising reference rates already this November. Such predictions will potentially influence the banks to lift their offered fixed rate, especially the ones with the lowest rate at the moment.

We hope this explanation gives you a better understanding of how a fixed-rate mortgage in Poland works. For more do not hesitate to ask us: office@loan-brokers.pl.

Best regards,
Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

Poland's mortgage market summary.

Tue, 02 Mar 2021 18:57:58 +0000

The year 2020 is over, and even though its outcome will most probably affect the market for longer, let's summarize what we already know.

1. Amount of credit granted in 2020.

As per data from the Credit Information Bureau (BIK), after the freeze due to lockdown, the market rebounded during the rest of the year, and the total value of mortgages granted was only 2,9% less than in record-breaking 2019. At the same time, BIK predicts the value to grow, in comparison to 2020, 13,9% this year, which would mean around 72 billion PLN of mortgage granted, another all-time high. The contraction in 2020 was stronger when it comes to cash loans (-30%) and leasing (-10,1%).

At the same time, the quality of the portfolio of existing mortgages improved last year. The percentage of mortgages unpaid for longer than 90 days, went down by 0,29%, reaching 0,5% of the total portfolio.

2. Banks loosen their policies.

As the economic impact of COVID-19 was less harsh than expected, banks adjusted to it and started to liberalize their policies gradually to accommodate high demand. The required upfront went down through the market, for example, ING went back from 30% to 20%, Pekao S.A. from 15% to 10%. Also, new promotional offers start to show up on the market and it seems like we are heading closer to pre-lockdown reality.

However, banks still take the COVID-19 economical impact into account and remain strict towards customers who work in sectors directly affected by the lockdown. On top of that, obtaining a loan became generally harder for business owners than it was before.

3. The interest rate in Poland.

The reference interest rate remains 0,1% after a sudden cut-down by the Monetary Policy Council between March and May 2020. At the moment the market consensus expects the rate to remain untouched until the end of 2022. However, the President of the National Bank of Poland, Adam Głapiński, in an interview last December, announced the rate might be lowered even more and below zero if needed, but the experts consider this unlikely.

The current level of the interest rate is useful for the MPC and NBP for many reasons, however, given the Polish inflation is currently highest in European Union, should it go out of control, the rate might be raised faster than predicted. Please keep it in mind when planning on the mortgage, as it is based on a 15-30 years perspective and the reference interest rate shapes the amount of your monthly payment.

4. Property prices.

In July 2020, most of the market analysts were predicting prices to fall. However, the mix of a low interest rate and high inflation resulted in a mass closure of the bank deposits (53 billion PLN from March until August 2020), of which a significant amount went to the property market, which together with a stable amount of mortgages granted defied earlier predictions.

Based on Eurostat data for Q3 of 2020, the price per square meter went 7,9% higher when compared to Q4 of 2019, or +10,6% for second-hand properties, and +4,2% for newly built ones. At the same time, Eurostat calculated that since 2015, prices grew a total of 37% (+47% for second-hand and +25% for newly built), which still is less than other countries in the region, like the Czech Republic (+55%) or Hungary (+80%).

The newest data we have is from the National Bank of Poland, regarding the Q4 of 2020 and the second-hand market. NBP analyzed 7 biggest property markets in Poland and based on their research the transactional prices in comparison to Q4 of 2019 grew: 6,1% in Gdańsk, 7,1% in Gdynia, 9,5% in Kraków, 13,4% in Łódź, 2,2% in Poznań, 2,7% in Warsaw, and 9% in Wrocław. Moreover, the NBP report suggests that the difference between the offering price and the transactional price is growing, especially in Warsaw (respectively on average: 11893 PLN per m2 offering and 10072 transactional) and Kraków (9820 and 8118). Please keep that in mind when negotiating with the seller.

Best regards,

Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

Zaliczka or zadatek, and why you should know the difference.

Tue, 09 Feb 2021 09:26:40 +0000

The upfront payment is one of the most crucial aspects of the deal when buying a property in Poland, or elsewhere. On the Polish market, there are two types of upfront - zaliczka or zadatek. They differ significantly, and you must be aware of those differences to avoid any unpleasant surprises.

Let's start with zadatek. It is a specific form of the upfront, regulated by the Civil Code (art. 394). In case the transaction is not finalized due to a fault from one of the sides, the side at fault has to pay, the buyer loses the amount of zadatek paid, the seller should pay double that amount.

Using zadatek gives both sides more security regarding the transaction. The buyer is more sure that the seller won't sell the property to another party, and the seller that the buyer won't suddenly resign from the deal. However, it might be problematic for those who plan to buy the property via a mortgage, as in case banks would refuse it, the seller might want to keep the upfront. Hence, when applying for a mortgage and paying the upfront as zadatek you should clearly state that mortgage refusal would mean its returnable. Unfortunately, not all sellers would agree to that.

Zaliczka on the other hand is more flexible. Whenever the transaction is canceled, the seller should give it back to the buyer, regardless of the reason, unless there was some specific agreement stating otherwise. Zaliczka gives more flexibility than zadatek, but it also less security. Not only the buyer can cancel the deal, but also the seller can choose to sell to someone else without notice. When applying for a mortgage, this might pose a risk of losing time and money - let's say, you paid for the property appraisal required to proceed with the application, but the seller found a cash buyer or someone willing to pay more and cancels the transaction with yourself.

Given that, some sellers and buyers prefer to mix zadatek and zaliczka. For example, making 5 thousand as zadatek, just to make both parties more tied to the deal, and the rest of the upfront as zaliczka. The options are virtually limitless, and as in any transaction, are a subject of negotiation between both sides.

Please remember you can always consult those issues with us as a part of our mortgage assistance in Poland.

Best regards,
Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

A comprehensive guide to mortgage in Poland.

Sun, 15 Nov 2020 15:36:49 +0000

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

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

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

Tue, 29 Sep 2020 09:52:09 +0000

Understanding the actual cost of the mortgage might be challenging as there are many factors to it. Let’s analyze them for you one by one.

1. Interest rate.

In Poland interest rate for all types of loans consists of 2 factors. First is the bank's margin, the second is WIBOR - Warsaw Inter-Bank Offer Rate. WIBOR is the rate that banks use when they are lending money to each other. It is important to note that while the bank profit rate is fixed for the whole period of your mortgage, it is not the same with WIBOR as it is changing and with it, your yearly interest rate will change too. There is an option to take a mortgage with a fully fixed rate, but at the moment it is possible for a maximum of the first five years of your mortgage.

Currently, the bank's margin starts from around 2%. At the same time, WIBOR6M stands at 0,26%. So the interest rates start from above 2% and this is the biggest part of the mortgage cost.

2. Commission.

Some of the banks add another cost to your mortgage - initial commission. Usually, it is around 1% and you do not have to put this money on the table - the bank is adding it to the overall amount of your mortgage and incorporating it into your monthly payments.

Please note that this kind of commission does not relate to the initial down-payment we have discussed in our previous post.

3. Insurances.

Currently, most of the banks add multiple insurances to their offers. We can divide them into two types: property insurance and personal insurance. Property insurance is obligatory as long as your mortgage is active. You can get your insurance directly from a bank as part of your mortgage deal, or you can get it from the market. If you get it from the market, it has to meet all the criteria required by the bank and then every year you have to provide an insurance confirmation (polisa ubezpieczeniowa) to the bank. The cost of property insurance varies and depends on the value of the property you are buying.

Most of the banks are also offering personal insurance as part of your deal. Some of them are obligatory, some optional. In most cases taking insurance affects other costs of the mortgage positively. There are different types of insurances in this area: some cover your life, some cover your health, but in general, they aim to repay your mortgage in an unexpected situation. Personal insurance cost and rules are different in every bank, as well as ways to pay for it: some are within your monthly payment, some you need to cover separately.

4. Other fees.

Besides the costs presented above, there are plenty of side fees you should be prepared for when taking the mortgage:

Property evaluation fee - this is payment for the property you are buying to be evaluated by an expert. It costs above 400 PLN at the moment and is paid separately before the mortgage starts.
Official fees - those are costs for official paperwork of the courts as amending the property registry with mortgage information, etc. and it is around 200 PLN.
Notary public fee - the sale agreement has to be signed in front of the notary public, which means this will also be a separate cost paid before the mortgage starts. Prices vary on the market from city to city.
PCC tax - if you buy property second-hand, in most cases you will have to pay this tax, which is 2% of property value.
Other banking costs - most of the banks require you to open other products alongside the mortgage, like a personal account or credit card, and you should treat them as part of the mortgage cost as well. Prices vary too.

5. Summary.

As you can see, mortgage in Poland is a very complex product, with many factors shaping the price. To compare offers you are getting you should take them all into account. It is complicated even for Polish citizens, so obviously as a foreigner you could use some help, which we offer without any additional cost for you.

When you use our service, offer-wise banks have to treat you the same as any other customer, meaning they cannot give you an offer any worse than to the rest of the customers. After giving you the mortgage they have to share part of their profit with our company.

To summarize, with us you can get offers from different banks, with all of those factors above counted and explained, and then you can choose the best one for yourself.

Feel welcome to inquire.

Best regards,
Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

Buying a car in Poland, should I go with loan, leasing or rental?

Tue, 22 Sep 2020 08:43:39 +0000

Here is a brief comparison of the popular ways to finance the purchase of a car in Poland.

In 2019(Q1-Q3), registered car dealers in Poland sold 410,8k new vehicles, most of them got purchased via leasing, not with cash (data by Polish Automotive Industry Association). The ratio is more balanced when it comes to second-hand cars, but still, a significant amount of cash deals are financed via bank loan anyway. It's confirmation of the long-term trend on the market as more and more customers decide to use outside financing rather than their savings for the car purchase. One of the reasons for that is that the market offers plenty of options and most of the customers can find a solution that matches their needs.

To help you find the one for yourself we decided to create a comparison of the three most popular options at the moment - cash loan, operational leasing, and long-term rental. The main differences occur in the application process, ownership status, taxation, the structure of the cost, as well as the maximum age of the car and product length, hence we will focus on these issues.

Application process.

The cash loan is obtained directly at the bank and is subject to standard bank procedures. When applying for it you apply only for the given amount of money without connection to the purpose you will use it for. Given that, the bank analyzes only your financial situation and decides if they can offer the amount you request, hence you will need to provide financial documents, whether salary confirmation or your company's accounting documents.

This process might be simplified when it comes to leasing or rental. In most cases, when you buy/rent a car the leasing/rental company will not ask for financial documents, but rather check the credit-score databases like BIK, BIG InfoMonitor, or KRD, and other of that sort. When you buy a second-hand car or new car with a value over 150k zlotys, the process similar to a cash loan might appear, as owning such vehicles poses more risk for the leasing company. The decision on what applying path to follow is always up to the analyst assigned to the case.

Ownership status.

When buying a car using a cash loan, you become the sole owner of the vehicle, as the bank only gives you money and does not ask for what you need it. This means you can manage the car freely and without any restrictions that occur in leasing or rental.

The leasing company remains the owner of the car until the debt is repaid fully. Due to that, you cannot manage the car the same way you can with a cash loan, you need to service or insure it as per the leasing company criteria, you cannot make any permanent changes to it without permission or take it abroad without first informing the leasing company and getting the document confirming owner agrees for that. Also, the users of the car must be acknowledged and agreed upon by the leasing company. The same applies to rental, however, issues like service and insurance can be part of the deal as the responsibility of the rental company. Lastly, when the renting period is over, you do not become the owner of the car unless it was agreed otherwise beforehand.

Taxation.

Please keep in mind that subject as delicate and complicated as taxation is best to discuss in detail with your accountant. Nevertheless, we are happy to explain the general rules connected to the products we analyze here.

With a cash loan, becoming the sole owner of the car matters also when it comes to taxation, as the car you buy this way can be registered as your company's possession and be giving you a tax premium due to depreciation. It does not apply to the operational leasing or rental. On the other hand, you can include only the interest part of the loan's monthly installment in your company's sheets as the cost.

In leasing or rental, the whole monthly payment can be considered a cost of your company, but different rules apply here depending on if you are a VAT taxpayer or if you use the vehicle for business purposes only. Moreover, in 2019 the government has set up a rule, that leasing or rental costs for a car with a value exceeding 150k zlotys (or 225k for an electric car), cannot be fully included in your company's financial sheet. Also, the initial upfront for the leasing or rental can be considered the business cost, which gives opportunities for tax optimization. As advised previously, we believe these issues should be discussed and thoroughly analyzed with your accountant.

The structure of the cost.

Cash loan pays up only for the cost of the vehicle purchase, the insurance, service, and all the other expenses related to owning a car have to be covered separately. Of course, you can apply for a loan higher than the cost of the vehicle itself, as mentioned previously the bank is not interested in the allocation of the money it lends you this way and will lend as much as your creditworthiness allows. However, please keep in mind that the interest rate for the cash loan nowadays starts from 7% per year. On the other hand, with a cash loan, you can buy a car without VAT, which is not the case with operational leasing or rental. There is another type of leasing, kind of hybrid, called financial leasing, used by company owners buying a second-hand car from a private seller without VAT, but as it is not one the most popular products, we do not analyze it here, feel welcome to query us directly for details of it.

When buying a car with leasing, also insurance, service, and other costs of maintenance are covered by the customer, unless negotiated otherwise. What is different from the cash loan is that the leasing company will provide you with strict requirements about OC/AC, service, etc. Another cost that does not occur with the loan is the upfront, which you have to pay in most of the cases, and usually, it starts from 5-10%. On the other side, leasing also offers the option of a higher last installment, it can be agreed at even 35% of the car value, which is used to lower the monthly burden throughout the leasing period. Lastly, the interest rate is lower than the loan, it can be even around 1% per year depending on the case.

The structure of the cost seems least complicated with the rental, as in most cases you can have it all included in the monthly payment, insurance, service, even tires with storing them for you. On top of that, you might pay an extra fee, if you will exceed the yearly km limit determined in the agreement. Rental also might mean upfront - the more upfront you pay the lower the monthly payment would be. As you are not buying the car, but renting it, it is not possible to assess the yearly cost of the capital, you are paying just for using the car or for the value it is losing while you are using it, not for obtaining it. However, looking at the market, the 36-month deals for the smallest cars like Fiat500 without upfront and insurance included start from around 600 zlotys net per month, while in the same scenario for Mercedes E-class you should be prepared for circa 2300 net monthly.

Maximum age of the car/product length.

The cash loan has no limitations when it comes to the car age, for the reasons we explained in the previous sections. As for the maximum length of the loan itself, currently, banks offer up to 10 years (12 in specific cases).

The construction of the leasing is different. The main rule is that the age of the car and period of the leasing cannot exceed 8, 10, or 12 years when combined (depending on the leasing company regulations). In some cases, like a specialistic or historical car, it can be altered. This rule applies to second-hand vehicles. The leasing for a new one in most cases cannot be longer than seven years. Overall, leasing is often individually negotiated due to customer needs and also based on the customer's situation.

The long-term rental is made specifically for new cars, but still few companies offer second-hand options. The period of the rental goes up to 5 years.

We hope you find this article helpful. Feel welcome to query us for more details.

Best regards,
Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

A short guide to buying an apartment in Poland via mortgage

Thu, 20 Aug 2020 14:22:10 +0000

Buying an apartment in Poland does not have to be complicated if you are well prepared for the task.

It becomes a bit easier when the purchase is through the mortgage and you are using a mortgage broker as besides the assistance throughout the banking process - they also should have enough experience to deal with issues related to the property itself.

The process of the purchase differs depending on the source of the flat you are buying, as it is not the same when you buy it from the developer and when you buy it second-hand. Let's start with the developer scenario.

Finding a property from the developer can be done independently by checking the websites of the developers existent in your city or websites gathering information about the investments going on in the city, for example, investmap.pl, or with help of a real estate agent. You can also sign for the developers' newsletters, as often they use this channel to inform customers about new investments or discounts. It is wise to research the developer who is building the investment you are interested in, through online forums, etc. - to see what to expect later. Buying a flat from the developer via a mortgage gives you a kind of safety from this point of view as well, as the bank checks not only you and the flat itself but also the developer's reputation.

After you already found the investment and particular flat that suits your needs, you need to contact/meet the developer to reserve it. At this point, the developer should also provide you with the Information Prospectus, in which they need to inform you about their company registry data and their experience (investments they already finished or are building). It should also include a description of the investment of your interest, the legal status of the land, the plans considering the plots surrounding it, etc. Besides that, Prospectus should contain a draft of the sales agreement and the rules around it, like the payments' schedule. It is recommended to consult this document with your mortgage broker or another specialist to make sure its content is meeting the standards of the market and will not jeopardize your mortgage application.

After you checked the Information Prospectus and everything is ok, the next step will be signing the reservation agreement or pre-agreement regarding the purchase of the flat of your choice. Again, before signing this document you should consult it with your broker, as it will determine many aspects directly affecting your mortgage application. For example, it will specify when the developer requires the transfer of the first payment, so your broker must check if the demanded deadline is realistic. Or it will explain the legal status of the garage and whether it can be accepted by the bank to be a part of your mortgage or you need to buy it separately.

Please keep in mind that you can simply provide your trusted broker or lawyer with the developer's contact details, and all of the issues explained above, as well as other not mentioned that might occur, would be sorted without consuming your valuable time.

After signing the reservation or pre-agreement and providing all the remaining documentation required by the bank, we can start the application process. We will explain the mortgage process itself in a separate article, in the meantime feel welcome to query us directly for assistance.

In shortcut, the bank will not only analyze your financial situation but also evaluate the property you are buying, as well as make sure you are buying it from a trustworthy developer. If everything is fine, the price is accepted and the bank issues a positive decision regarding your mortgage, the last step is to sign the final sales agreement between you and the developer. Subsequently, the bank will start transferring tranches as per the payments' schedule and due to the progress of the building. With the last tranche, you should also receive the keys to the flat, and depending on the deal with the developer, start living in it or renovating it.

When getting the keys from the developer, we also recommend using a service of one of the companies performing a property check-up, as they could find issues not necessarily visible with the naked eye, which the developer would need to fix for you. After you sign the acceptance report and you find some issues in the flat later, getting the developer to fix it might be challenging.

Here are some of the companies that provide such service:

The whole process will look different when it comes to the purchase of the second-hand flat.

The most popular way of finding such property is via sales websites. Most of the offers you will find would come from real estate agencies, but it is still possible to find some flats directly from the owner. In case you choose the property offered by the agency, please keep in mind there will be some commission to pay. Another cost that does not occur when you are buying the flat from the developer, while it does in most cases when you are buying second-hand is PCC tax. Its amount is fixed - 2% of the property value and, as the real estate commission, it has to be covered from your funds, not via a mortgage.

The most popular websites to find a second-hand apartment are:

otodom.pl
olx.pl
morizon.pl
domiporta.pl
Facebook Marketplace

Let's say you found the flat you want to buy. You went to see it, negotiated the price to the final amount, and are ready to proceed with the mortgage. The first step you should make is checking the property's status in the land and mortgage registers. Each property in Poland has its registry number and after obtaining it you will be able to see the data about ownership, non-standard situations, and the mortgage status of the property. The registers will tell you if the flat is "clean" and if the bank will accept its status.

Another document advised to ask for is the one confirming there is no-one registered at this address (Zaświadczenie o stanie zameldowania w lokalu) - you can also get this document yourself at the dedicated department of the City Hall. Also, it is wise to check if there are any unpaid liabilities towards the Housing Association of the building the flat is in. Besides that, you can check the local development plans, in big cities available online, to see what might be built around the building in the future.

Besides formal check-up, we recommend using one of those technical check-up companies we listed above. It might save you trouble in the future.

After you checked everything and you did not find any red flags, you can proceed with signing a pre-agreement with the seller. Again, it is better to consult this document with your broker or another specialist before signing it, for the same reasons as in the developer scenario. After signing the pre-agreement and collecting the rest of the documentation needed, the mortgage application can start. In the same way, as with the flat from a developer, the bank will proceed with property valuation, based on which final mortgage amount will be accepted or trimmed. In case the bank does not agree with the price tag seller has put on the property and lowers its value, given you still want to proceed with the purchase, the difference must be covered from your funds.

At last, after the mortgage process is done, you can sign the final sales agreement, then the bank will transfer the money to the seller, the deal will be closed and you will be able to move in into your new flat - or start the renovation.

That is how, in a nutshell, the process of buying an apartment with a mortgage looks like in Poland. To consult your specific case and get all the answers you are looking for - feel welcome to contact us directly.

Best regards,
Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

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

Sun, 26 Jul 2020 17:38:56 +0000

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

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

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

Sun, 26 Jul 2020 17:37:59 +0000

As many of our customers plan to repay their mortgage sooner than the original period in the mortgage agreement with the bank, we decided to explain to you how it works.

Polish banking law states that each bank must allow customers to repay the mortgage earlier than signed in the agreement, virtually anytime the customer wishes to do so. Moreover, banks can charge for early repayment only within the first 3 years after the mortgage started and the maximum fee within this period is 3%. Currently, many banks do not charge early repayment fees even from the first day of the mortgage.

Repaying the mortgage early obviously gives you savings in nominal terms, as you will avoid paying the interest for the amount you are adding up because it fully covers the value of the property itself. On top of that, due to the European Union directive, after your repayments will lead to closing the mortgage sooner than was agreed originally, the bank should return all additional fees connected directly with your mortgage, as provision or insurance, in a proportional manner. However, please note that you need to apply for such a refund, as the bank is not obligated to return the mentioned costs without your request.

Enough theory. Let’s calculate it based on an example. Customer buys a flat worth 600 thousand zlotys and 450 thousand of it is provided by the bank, the mortgage is for 30 years, the interest rate (bank margin + WIBOR rate) is 4% per year and bank charges provision of 2%. Originally the full cost of the mortgage is 782 412 PLN, of which 323 412 is the cost of interest and 9 thousand as a provision. The customer decides to repay the mortgage in 10 years, which gives the savings of 153 287 PLN in interest and 2/3 of the provision, as 20 years of original 30 got cut off, altogether 159 287 zlotys saved. For sure you noticed that 153 287 is rather a half than 2/3 of the original interest cost. It is because with each monthly payment you are repaying a bit of the loan capital, so interest cost in nominal terms goes lower throughout the mortgage.

It is possible to make additional payments for the mortgage anytime and with any sum. The bank is obligated to inform you about any additional costs of such action. Also, each time you make an additional payment, you have to make a disposition to the bank, whether with the repayment you would like your monthly payment to be lowered or the mortgage period be shortened.

We hope you find this information helpful.

Best regards,

Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

Credit score in Poland - how to build it?

Sun, 26 Jul 2020 17:37:05 +0000

Let’s talk about the credit score in Poland.

A credit score is quite important when it comes to taking the mortgage or any other type of loan, as each bank is profiling applicants mainly through their credit score and divides them into different risk groups. Depending on which group you are assigned to bank decides how much it is willing to loan to you and sometimes also for what price it wants to offer you the loan.

When it comes to banks, a credit score in Poland is being tracked by the Credit Reference Office (Biuro Informacji Kredytowej – BIK). This institution tracks all your bank liabilities: cash loans, credit cards, limits in accounts, mortgages, etc. The main rule is simple – each time you pay a monthly payment on time your score gets higher and each time you miss the deadline it gets lower.

VERY IMPORTANT! Whenever you check your credit score at the bank it takes a couple of points from your overall score. It is important to remember, as some customers tend to check the offer at many banks by giving consent to check their credit score – this leads to a significant drop in credit score and affects later your application. Also, when you check your credit score in 2-3 different banks throughout one month, you are putting a kind of red flag on yourself, which might lead to an automatic negative decision on your loan application. To avoid such a situation, it is best to check the bank offers without giving consent to have your credit score checked and then apply at the one with the best offer – the easiest way to do it is by using a broker that can get you offers without the need of you visiting the banks.

To have the offers as accurate as possible, best is to download your credit score independently, one-time report costs 39 złoty and it can be done here: https://www.bik.pl/. A report downloaded this way does not affect your score negatively.

Overall, each person in Poland has some credit score, even if you never used a bank’s products your score is ‘no-score’. Each bank is building its credit policies based on the credit scores of customers, for example, some might be not interested in giving loans to people with ‘no-score’, others might be willing to give a maximum of 10 thousand to such person, while another 50 thousand. At the same time, some banks might be willing to offer a loan of above 500 thousand only to customers with a credit score of 600 and above, other to customers with a score higher than 500, etc. Banks have strict policies regarding it and sometimes a couple of points in your credit score might have a great influence on your loan application overall.

Building your credit score should be the first step when you are planning to take any kind of loan, mortgage included. The most efficient ways to build the score are:

getting a credit card and using 10% of its limit on a regular monthly basis, and also repaying the debt month by month, in case you might forget, you should be able to apply automatic repayment from your personal account
buying any kind of appliance or other items via popular 'raty 0%', this would not cost you anything, while regular monthly payments for such purchase would quickly build up your credit score

For more feel welcome to contact us directly.

Best regards,

Loan-brokers.pl Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.

Creditability in Poland - how do the banks calculate it?

Sun, 26 Jul 2020 17:36:27 +0000

One of the most important aspects of getting the mortgage, or any other loan, is your creditability. What is it and how do the banks calculate it?

Creditability is simply a number - it's a number that the bank believes you can repay without the risk of default. Many factors decide about your creditability, not only your income but also your work or business situation and even your private life.

The first and most important factor of creditability is the customer's income. In the post about the initial payment, we mentioned KNF - Financial Supervision Authority. So the same FSA decided that the maximum DTI (debt-to-income), which is how much of your net income can be allocated to cover your bank obligations, cannot surpass 65%. Hence, while simplifying greatly, you can say that 65% of your monthly income, minus any bank obligations you already have and multiplied by 360 months is the maximum you can get from the bank for your mortgage.

But, at the end of the day bank's analyst takes many more factors into account when calculating your creditability.

Your work situation is of great importance here. Banks will ask how long you are working for your employer and on the position you have, a type of your agreement, and even the size and reputation of the company you work for. And much, much more than that, especially when you earn abroad.

It gets even more complicated when the source of your income is your own business. Bank analyzes your financial documents in detail, you might be asked for invoices, contracts, explanations. While employees tend to be categorized by the banks, the business customer is always treated individually.

Given your income situation is shaped by many factors, there are also many ways to improve it. For your application to be successful, this should be done before you apply.

Lastly, the bank looks at your life situation. Even your marital status makes a difference. Especially important here is the number of people in your household, in other words, how many people are dependant on your income, so your kids and partner, in case they don't have their income. Bank will take this into account when calculating your creditability as well.

As you can see, it is not easy to determine your creditability and even less easy to know what to do to increase it without professional help. If you already decided you want to buy property in Poland and wish to use the mortgage as a way of financing this purchase, feel free to query us to calculate your creditability. Then later, after you already found the flat or house of your dreams, we will be happy to guide you through the whole bank procedure.

Best regards,
Loan-brokers Team

Any content provided on this page is to be considered information only. It is not legal advice or a replacement for legal advice. The information posted here by the Loan-brokers.pl team is accurate and current to the best of our knowledge as of the date it is posted, but website users should be aware that laws and their application change frequently, sometimes without notice. You shall be fully responsible for any consequences resulting from your use of the page. Any reliance upon any information shall be at your sole risk.