If you plan to buy a property in Poland via a mortgage, below you can find a comprehensive guide about the subject. We hope it will help you understand the process and decide about your next steps.
Price of the mortgage in Poland.
The price is a crucial aspect to take into account before any purchase. It would be wise to have it calculated before going forward with the mortgage too. The best approach is to gather the mortgage offers from the market to see what you are dealing with. You can query each bank separately or use a mortgage broker to get you a comparison of all the banks at once. Due to the law regulations regarding the mortgage market in Poland – the offers you get via a broker will be the same a customer in your specific situation would receive the same day.
The current nominal interest rate of the mortgages in Poland starts from below 2%. The actual yearly cost starts from above 2%, which is calculated by adding all of the price factors, like insurance, etc., and presenting it as a percent. When comparing bank offers, we recommend looking at the actual cost, or even better at a total cost of the mortgage in PLN, as banks are obliged to present it, and it is more transparent – allowing you to compare actual prices on the offers.
For a more detailed breakdown of the price of the mortgage in Poland, feel welcome to check the below article:
If you are satisfied with what banks have to offer, you should check if they will be interested in lending to you at all, and how much they would be willing to lend. It is better to do so before submitting the mortgage application, to maximize your chance of success. To check your creditability, you can again query financial institutions separately, or use the free service of the mortgage broker, with access to all the banks in Poland.
Many factors would affect your creditability, and the main two are your residency status and your income. If you are coming to Poland from outside of the EU, banks require a valid residency card. If you are coming from an EU country, you will only need to be registered here.
As for the income, the bank would focus on the following points:
- amount – the bank needs to know how much you earn on average. Each type of income is counted differently and various bonuses/penalties apply due to this (for example, the monthly salary from an indefinite contract would mean more than the same amount from any other type of employment)
- source – the ‘perfect’ customer for the bank is an employee with the indefinite working agreement – any other type of contract or income coming from a business activity means more risk for the bank and a harsher approach to the customer’s creditability. Recently, we are also experiencing ‘the COVID factor’ and a tighter approach to the customers working in areas directly affected by the pandemic
- period of continuity – not only how much and based on what, but also since when matters to the bank. The minimum required is much earlier for an indefinite working contract (even three months only) than other types of contract or business activity (6 or 12 months, or longer)
The income is not the only factor – the bank will assess your living costs too, which are affected by how many kids you have, your housing situation, etc.
At last, the previous calculations will be ‘validated’ by checking your credit score. To know more about this part, please check our dedicated article:
Let’s assume your final 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 analyzed here:
Creditability – check. Upfront – check. You have your budget calculated, and now you are ready to start the hunt for the property of your dreams. The process of purchasing an apartment can be complicated, but it is the same for a Pole as for a foreigner living in Poland. Check it in detail here:
The situation changes if you are coming from outside of the countries participating in the European Economic Area, and the property you plan to buy comes with ownership of a land plot – you 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 five years
- are married to a Polish citizen and live in Poland based on permanent residency or long-term EU residency for at least two 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 six months or more, and requires synchronization with the bank/broker, as the Ministry would ask for the mortgage decision before issuing the permit.
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 in your specific case by the given bank – each has different rules, and also each income situation or property type might require something else to be provided. Please see the list of what generally might be needed.
- residency card
- PESEL certificate
- certificate of registration of stay of EU citizen
- certificate of address registration
- prenup agreement
- certificate of employment
- bank statement confirming salary transfers
- ZUS certificate confirming base salary
- RMUA form
- certificate of employment or working agreement from the previous job
- 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)
- company’s financial sheets for full-year backward and current one up to date (KPiR, PIT, RZiS)
- reservation or pre-agreement with the developer or the second-hand seller
- KRS, CEiDG, and the NIP number of the developer
- construction permit
- certificate of completion of construction
- 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
- property plans confirming the size
- estimate and list of renovation work needed
- certificate of 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
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, and quite crucial, hence we will explain it more detailed way. This document is the property appraisal, issued 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, like the required upfront, etc.
Some of the banks in Poland get the appraisal internally, others give the customer an option to order it independently. In some cases getting the valuation this way 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 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, especially the deposit you will most probably need to pay to the seller. The amount of it differs and is subject to negotiation. It also will be included in the total upfront of the mortgage. We recommend having the upfront returnable in case of rejection from the bank, as there is always, even if the slightest, chance that it might happen.
After all the documents are gathered, you should submit them together with the mortgage application. The bank analyst will first check the documentation from a procedural point of view. Sometimes you can be asked for additional documents or provide explanations. Then the bank’s risk assessment will continue, both regarding the property and you as a borrower.
Receiving the decision from the bank should not take longer than 20-40 days, counted from the day you applied – if you applied without any error it might take less, or even longer if the application has errors.
The start of the mortgage.
Let’s assume the bank’s decision is positive – what will happen now? There is no standard path, as each bank might have its own rules. The process also depends on the type of property you are purchasing. We will explain two model scenarios.
The first one is a second-hand apartment for which the applicant did 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. If 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 will visit the bank for the signature meeting. Do not hesitate to ask questions from the bank’s employees – there should be no one point in the agreement you are not sure about.
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 for you. The sales agreement should contain confirmation of the upfront paid to the seller. The notary should also confirm he is submitting to the court a request to put 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 back to the bank, which would send a transfer to the seller.
Please note that banks in Poland add an 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 usually. 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.
The next scenario is a new apartment, in a building still in construction, and the applicant requests additional funds for renovation. After the decision from the bank and before signing the mortgage agreement, 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 specifies when and in what percentage the bank will be sending the developer’s money, as the construction progresses.
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 the final notarial deed, you can proceed to the bank, which would send you the remaining transfer of money requested for renovation. Later you will need to prove to the bank that you renovated the flat as was agreed, 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.
The above text is our detailed explanation of how mortgage in Poland works. Please remember that there are many scenarios other than the ones we described and each needs an individual analysis. Feel welcome to consult your case with us. We would be happy to answer your questions.