What documents govern the mortgage offer?
The ability of banks to offer mortgages is primarily regulated by the Law of March 23, 2017. On mortgage credit and supervision of mortgage brokers and agents. The provisions apply to all loans taken since the announcement.
Another document is Recommendation S on good practices in the management of mortgage-backed credit exposures issued by the Financial Supervision Commission.
Do you need to use additional banking services?
Very often before taking out a mortgage, it turns out that the bank requires the customer to use additional services. On whether you take out a credit card or open a new bank account, for example, the banker makes the granting of credit contingent. Is it necessary to use such services?
Two options are spelled out in the Credit Act:
- combined sales – the mortgage is available as a stand-alone product or together with others (it may have a different price depending on whether you select additional services – it happens that when you choose a stand-alone loan, the bank’s margin is higher),
- Bundling – the mortgage is only available together with another service, not as a SINGLE product (this way is prohibited by law with one exception – when the additional product is a free bank account for servicing the loan).
Most often it pays to take additional services – the bank calculates the offer in such a way as to encourage the use of as many products as possible. However, it is never mandatory!
Will you know all the costs of a mortgage?
Yes! The aforementioned Mortgage Loan Act makes it mandatory to inform about all loan costs (including margin, commission, interest, insurance). Everything is presented on the Information Form (a model of which can be found in the Law).
At each bank you will receive such a form both for a stand-alone loan and for a loan with additional services. This makes it easier for you to compare the available options and their costs, and then choose the most favorable solution.
Is it worth paying off the loan early? Additional charges
The method of calculating fees for overpayment of credit is also specified in the Mortgage Loan Law:
- Variable interest rate – max. 3% on the amount repaid, only up to 36 months from the signing of the contract,
- Fixed interest rate – in accordance with the contract.
If you want to overpay your loan – look for a bank that does not charge for this.
Does the broker have to be paid a commission?
The credit intermediary service is free for you – the intermediary is paid by the bank. However, the intermediary has an insight into all the possibilities that are available at the moment. So it presents you with not just one offer, but several dozen, which makes it much easier to choose. The offer at the broker is identical to the one at the bank!
Is it worth switching from variable to fixed interest rates?
The issues of fixed and variable interest rates are described in the aforementioned Recommendation S.
Fixed or temporary interest rates must be on offer from each bank (the obligation is 5 years, sometimes there are also offers for 7 and 10 years). After this time, you can change the interest rate to variable (written in the contract) or sign an addendum for the next period with a temporary fixed interest rate, under the terms of the year.
Currently in Poland, most people have variable interest rates – which depend primarily on interest rates.
You can change the variable interest rate to a temporary fixed rate free of charge by signing an addendum to the contract (for 5, 7 or 10 years – depending on the offer). Before that time, it is impossible to switch back to variable interest rates for free (and often not at all). So remember to think carefully about this decision, taking into account the coming years.
What are the costs associated with buying property on credit?
Buying a property on credit involves specific costs. What do you need to prepare for and how can you reduce your expenses?
- Own contribution 10-20% – if you have only 10% collected, it is worth looking for a bank that will not increase the margin because of this (without the so-called low contribution insurance).
- The appraisal report – you can choose an appraiser from the bank or look for your own.
- Margin for the bank – one of the components of each installment.
- Loan origination fee – you can look for a bank that does not charge a commission. Sometimes the lack of commission depends, for example, on the selection of an additional product.
- Property insurance – check whether it is more profitable to buy a policy from the bank or an outside company.
- Mortgage origination tax.
- Bridging insurance – an increased margin until the bank is listed in the mortgage book.
In addition to the costs associated with the mortgage, the purchase of real estate also involves other expenses. What are they?
- Notarial deed – there are set maximum rates, but the notary may take less.
- Court fees related to the land registry.
- Tax of 2% on the price of the property (when buying from the secondary market).
- Real estate agency fee (if you use such services).
How to reduce the cost of a mortgage when you are already paying installments?
If you already have a mortgage, you may want to think about refinancing. What is it? This is the transfer of one’s credit to another bank.
Banks usually structure their offerings this way: the higher the interest rates, the lower the margin. So it’s worth considering whether it’s better to move the loan to a bank that currently charges a lower margin. Before you decide to take that step:
- Carefully review the Information Form,
- recalculate such fees as a change in the land register or an appraisal report.
What else is worth knowing? The new bank recalculates creditworthiness and takes into account the regularity of repayment of the previous loan.
Government support for borrowers
Are you having trouble paying your installments? It may be helpful to Law of October 9, 2015. On supporting borrowers who have taken out a home loan and are in financial difficulty.
Government support for borrowers includes interest-free and repayable:
- Surcharges (maximum PLN 2,000 for 36 months),
- A loan to cover the amount left over after the sale of the property (maximum 72 thousand zlotys).
When do you have to repay? After 2 years in 144 installments (if you pay off 100 installments on time, the rest will be forgiven).
Who can benefit? The law lists specific conditions. In short: you must be unemployed, or your loan installment must be more than 50% of your household income, or your income must be within a certain amount. You also can’t own another property.
How can you benefit? All you have to do is apply to the bank where you have credit.
Currently, changes to the program are being prepared – support is to be even more accessible.
How to reduce the cost of a mortgage? Key principles
- Use a credit intermediary, which is free – it will be easier to compare available offers and choose the most favorable one.
- Carefully inquire about the discount you will receive when you choose additional services – see what pays off.
- Look for a bank that doesn’t charge fees for overpayment of a loan – especially if you want to pay it off faster.
- Recalculate your choice of interest rate method carefully – take into account not only the current situation, but also the forecasts for the next few years.
- Find out whether such services as an appraisal or property insurance are better chosen from a bank or an outside company.
- If you already have a loan – consider moving it to another bank with a lower margin.
Want to learn more about the mortgage and its costs? Watch the webinar “Mortgage credit – how can you reduce its cost? Find out what you can do to lower your installment!” Conducted by Katarzyna Stypinska – an expert in the field of the Ministry of Agriculture and Rural Development. mortgages.
You can see the webinar on YouTube:
You can see the webinar on YouTube
The material was created in cooperation with Ms. Katarzyna Stypinska – business trainer, coach with 16 years of experience. She has been involved in the financial industry for 12 years. He specializes in financial products, particularly mortgages. She is a graduate of the Poznań School of Banking and the Leon Koźmiński Academy in Warsaw.
Also read:
