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In this article we will explain to you how the process of getting the mortgage in Poland looks like step by step and what can you expect from it. We hope it will help you have a better outlook on this important life decision you are planning to make.
The process of getting a mortgage in Poland might be complicated even for Polish citizens, that is why it is recommended to use the service of a mortgage broker. Hence finding the best broker should be your first step before proceeding with the mortgage application. It is recommended especially since this kind of brokerage should not cost you anything extra. Polish law is regulating the mortgage market in the way that the bank cannot present you any alternated offer, whether you go to the bank alone, or you are applying via broker, which means using the broker gives you an advantage, as you are not tied to one bank, but you have an access to the whole market and you are receiving a professional assistance throughout entire process of getting the mortgage, while all of this is free of charge.
The next step should be finding the property you wish to buy. Obviously, it is a very important part of the mortgage application, especially when it comes to foreigners, as the type of property you choose will determine what documents you should provide and the requirements you will have to meet. There are different documents needed whether you will buy a flat from a developer or you will buy it second-hand, also different documents and possible permits will be needed when you decide to buy a detached house or land on which you plan to build a house. The easiest from this point of view would be second-hand flat, as basically only thing bank needs is the number of the given property in the national registry of properties, with that number all the information bank needs regarding the mortgage is available. It becomes a little bit more complicated when you are buying a new flat directly from the developer, as there are additional documents needed. When using a broker, it should not be a problem for you, as the broker can be in direct contact with the developer without the need of engaging you in the process of collecting needed documents. For sure the most complicated type of property would be a house, especially when you plan to build it, then documents from the local land registries, as well as plans and permits, would probably make this the longest and most challenging part of the entire mortgage process.
Let’s say you already chose the property you want to buy and now you wish to check if the bank will be interested in financing it for you. Please keep in mind that you can check your creditability even before you find the actual flat or house you wish to buy. The first requirements we should look at are the procedural ones even before the bank will look at your actual financial situation. Firstly, in case you are coming to Poland from outside of the EU, the main requirement is having a residency card, if you are from the EU, the only thing you need for the start is the registration of stay in Poland. Having PESEL number confirmation and address registration documents is also advised, as some banks will require it, some not. Only then the bank can proceed with analyzing your financial situation regarding getting the mortgage.
Your financial situation will be analyzed by the bank individually. There are different rules and document requirements in different banks, depending on the type of income you have. For example, when you are being employed, most of the banks will require an indefinite contract, but at the same time some will agree to you working at your current job for 3 months, but some will require at least 6 months. Some banks will ask you for the work certificate filled by your company’s HR department, some will only need your bank account history from the last 12 months, supported by the PIT tax declaration. There are even more differences when you get the income by running your own company, depending on the type of company and the given bank requirements, you might be asked for accounting books 2 years backward, PIT declarations or even invoices from your business partners, and many, many more. Again, having a broker would be a great help to you regarding this part of the application.
The golden rule of the banks in Poland is that your monthly payments for all loans cannot exceed 60% of your net monthly income, hence for example, while simplifying greatly, when you earn 10 thousand zlotys net, the bank will not allow you to have your mortgage monthly payments together with other loan liabilities greater than 6 thousand per month. So, you could say your maximum creditability would be 6 thousand multiplied by 360 months (30 years, which is the maximum mortgage period at the moment). But it’s not that easy, for example, the bank also considers your life costs, which are different in each bank and are changing depending on the number of people living in your household, it also calculates you credit card limits into a monthly burden, etc. Also, each bank has another golden rule regarding DTI (debt-to-income) ratio, so it is not necessarily 60%. That is why to really calculate your creditability it is best to query a bank or broker directly, as by answering few questions you will get an exact number you can aim for a given bank or a number of banks your broker works with.
After the property is chosen, as well as the offer from one of the banks and collecting all the documents needed by this given bank procedure, you can proceed to the next step, which is an actual mortgage application. This takes one meeting at the bank, when you are filling and signing application forms and providing all the documents required, it can be done by yourself or with the assistance of your broker/translator. Then the bank process will start. At first bank’s analyst will give an opinion about your financial situation and give a recommendation, whether he sees giving you mortgage safe for the bank or not. It is important to note, that even though you presented all the required information and documents when you were applying, the analyst can ask for additional documents or explanations regarding the documents you already presented. This is another argument for using a broker, as the broker knows bank procedure and can help you prepare the application in the way which eliminates extra documents or explanation requests from the analyst, which are postponing the closing of a mortgage application.
Then the bank will check the property against the value offered to you by the seller. Please keep in mind the cost of this valuation will be on you, and recently starts from around 400 zlotys. Bank can agree to the price you and the seller finally negotiated, but it can also say the property is overpriced. While such valuation being an additional cost for you, it also gives you safety, as bank experts know the market and will advise the actual value of the property, which means you will not overpay for the property you chose.
The last step, after bank giving a positive decision on your creditability and property value, is to sign an actual mortgage agreement with the bank. Signing this agreement happens at the same time you will transfer the upfront to the seller of the property, of course, preceded by the agreement you sign with the seller in front of the notary. The upfront minimum value differs on the market, some banks require 20%, but some agree to 10% – please note this affects the overall cost of the mortgage, to get the cheapest offer you need to have 20% of property value prepared, having only 10% will make your mortgage cost slightly higher while simplifying again we could say it would be around 1% per year more.
This is how, in great shortcut, the mortgage process in Poland looks like. The truth is that each customer’s situation is different, hence to really advise about the case, it must be looked at individually. To query about your case, you can head directly to the bank or use a service of a mortgage broker, who would be happy to answer your questions. Feel welcome to ask us directly for advice.