Applying for Home Financing in Poland
Kasha, Monday, 11 November 2013
This article is part of a series of 6 articles about buying property in Poland. The other articles in the series cover the following topics:
The majority of banks will allow foreigners to borrow money for purchasing a home although it is important to realize that each bank will have different requirements for the loan application as well as different terms for the loan itself. The terms and the procedures will often depend on whether the foreigner is a Polish resident (i.e. living and working in Poland) or not. Although most Polish banks would only give home loans to foreigners who are Polish residents, there are some banks, which waive this condition.
Most banks will require the prospective debtor to provide a host of documents proving their financial situation and creditworthiness. If the prospective debtor is a non-resident, they will need to supply a proof of income (typically a statement from their current employer detailing their income over the past year), a copy of their work contract, a copy of their tax returns/statement, credit score from the local credit scoring agency, and 3-6 months worth of bank account statements. These documents will need to be presented in originals and as sworn translations. Some banks with foreign capital will accept documents in English or German.
Some banks may require the prospective debtor to have existing sources of income in Poland or to provide collateral. Banks are also likely to require a Polish residence address or alternatively notarial appointment of a representative who has a Polish residence address. These procedures may be somewhat simplified for the EU and EFTA country citizens.
If the prospective debtor is a Polish resident, he or she will be in the best position to obtain a loan on terms close to those offered to Polish citizens. The documents they will need to supply to the bank will include the proof of income issued by their employer and their temporary or permanent residence card (unless the prospective debtor is an EU/EFTA citizen or applies for the loan with their Polish partner).
Both the residents and non-residents will need to supply a preliminary sale agreement when applying for a home loan. Additionally, all debtors are required to provide a proof of life insurance equivalent to the financed amount. If no such insurance is had, the loaning bank will have one on offer.
The terms offered to foreign debtors will typically be worse than those offered to Polish citizens. This is because banks consider foreign-born debtors as higher risk debtors than their Polish clients. Among other terms, the loan to value ratio (LTV) for foreigners may range from 50-90%, meaning that the prospective foreign debtors would need to down pay between 10-50% of the property value depending on the bank policy. They may also be offered a higher interest rate, a higher loan commission (up to 2%) and a shorter repayment term, typically 15-20 years as compared to 30-40 years offered to the Polish citizens. Foreign debtors may also be required to buy additional insurance.
Despite all the mentioned requirements, it is generally a good time to take out home loans in Poland, since the interest rates (composed of the 3M/6M WIBOR – Warsaw Interbank Offered Rate - and the bank’s own margin) is currently very low. At present, the banks’ margins average out at 1.58pp and 3M/6M WIBOR is at 2.66/2.7, which is the lowest in a long time.
Although some banks may provide the application documentation in English, the process of applying for a home loan from a Polish bank may be quite difficult for a foreigner, especially one who does not speak Polish. It may, therefore, be a good idea to hire an experienced financial specialist to conduct the application process. They would be the best equipped to know how long the procedure will take, which banks offer home loans for foreigners and which banks provide the most attractive terms.
This article is part of a series of 6 articles about buying property in Poland. The other articles in the series cover the following topics:
The majority of banks will allow foreigners to borrow money for purchasing a home although it is important to realize that each bank will have different requirements for the loan application as well as different terms for the loan itself. The terms and the procedures will often depend on whether the foreigner is a Polish resident (i.e. living and working in Poland) or not. Although most Polish banks would only give home loans to foreigners who are Polish residents, there are some banks, which waive this condition.
Most banks will require the prospective debtor to provide a host of documents proving their financial situation and creditworthiness. If the prospective debtor is a non-resident, they will need to supply a proof of income (typically a statement from their current employer detailing their income over the past year), a copy of their work contract, a copy of their tax returns/statement, credit score from the local credit scoring agency, and 3-6 months worth of bank account statements. These documents will need to be presented in originals and as sworn translations. Some banks with foreign capital will accept documents in English or German.
Some banks may require the prospective debtor to have existing sources of income in Poland or to provide collateral. Banks are also likely to require a Polish residence address or alternatively notarial appointment of a representative who has a Polish residence address. These procedures may be somewhat simplified for the EU and EFTA country citizens.
If the prospective debtor is a Polish resident, he or she will be in the best position to obtain a loan on terms close to those offered to Polish citizens. The documents they will need to supply to the bank will include the proof of income issued by their employer and their temporary or permanent residence card (unless the prospective debtor is an EU/EFTA citizen or applies for the loan with their Polish partner).
Both the residents and non-residents will need to supply a preliminary sale agreement when applying for a home loan. Additionally, all debtors are required to provide a proof of life insurance equivalent to the financed amount. If no such insurance is had, the loaning bank will have one on offer.
The terms offered to foreign debtors will typically be worse than those offered to Polish citizens. This is because banks consider foreign-born debtors as higher risk debtors than their Polish clients. Among other terms, the loan to value ratio (LTV) for foreigners may range from 50-90%, meaning that the prospective foreign debtors would need to down pay between 10-50% of the property value depending on the bank policy. They may also be offered a higher interest rate, a higher loan commission (up to 2%) and a shorter repayment term, typically 15-20 years as compared to 30-40 years offered to the Polish citizens. Foreign debtors may also be required to buy additional insurance.
Despite all the mentioned requirements, it is generally a good time to take out home loans in Poland, since the interest rates (composed of the 3M/6M WIBOR – Warsaw Interbank Offered Rate - and the bank’s own margin) is currently very low. At present, the banks’ margins average out at 1.58pp and 3M/6M WIBOR is at 2.66/2.7, which is the lowest in a long time.
Although some banks may provide the application documentation in English, the process of applying for a home loan from a Polish bank may be quite difficult for a foreigner, especially one who does not speak Polish. It may, therefore, be a good idea to hire an experienced financial specialist to conduct the application process. They would be the best equipped to know how long the procedure will take, which banks offer home loans for foreigners and which banks provide the most attractive terms.
All types of property for sale in Poland by private sellers and estate agents. Find your villa, farmhouse or apartment in the Mazowieckie, Malopolskie, Pomorskie or Dolnoslaskie region.
While contracting a real estate agent to assist with buying or selling property in Poland is not necessary, it may be the preferable solution for
foreigners as well as all those who are not knowledgeable about the local market, who want to save time and those who want to have additional insurance
against dishonest sellers.