If you will be using a mortgage to buy your Polish property, you should decide very early on where that mortgage will be coming from. The reason for this is that Polish mortgages can take a little longer than expected to be approved – and if your funds are not available on the date stated in your contract, you stand to lose your deposit and your new home.
For UK buyers who will continue to live and work in the UK once they have bought their Polish home, using a UK mortgage is probably the best option.
There are several reasons for this, mainly:
- Flexibility – you will have a wider choice of mortgage products and may also have the choice of remortgaging your existing home and buying your Polish property for cash.
- Exchange rate protection – at present Poland is still using the Zloty, and payments on a Polish mortgage would vary unpredictably with exchange rate fluctuations.
As a rule of thumb, it is often easiest to have your mortgage in the same currency as your income, but everyone’s circumstances are unique.
If you aren’t sure how to decide, it may be a good idea to sit down with a mortgage broker specialising in overseas mortgages. They will be able to explain your options to you and confirm how much you will be able to borrow.
Getting A Mortgage In Poland
Getting a mortgage in Poland is not especially difficult, but it can sometimes be a slower process than expected – it’s important to start your mortgage application as early as possible to ensure that you don’t delay the completion of your purchase.
The choice of mortgages available in Poland is much more limited than in the UK and non-residents tend to get slightly poorer terms and conditions than residents due to the higher risk they present – put simply, you are more likely to default on a loan in another country than you are in your own country.
A Polish mortgage lender will typically offer:
- 60% – 80% of the value of the property
- Arrangement fee of 0.5% – 3%
- Full repayment mortgage
- Monthly payments no greater than around 35% of net income
- Mortgage term of 20-30 years
- Variable Rate
Interest-only mortgages are not available in Poland – the only exception to this is for mortgages secured on new builds. While the property is being built, the lender will charge interest only.
If You’re Employed
If you’re employed and seeking a Polish mortgage, you will need to provide proof of income and outgoings and proof of your employment status – for example:
- A reference from your employer stating your position and salary
- Last 3 months’ payslips
- Last 3 months’ bank statements
If You’re Self-Employed
Non-status (self-certified) mortgages are not available in Poland, so if you are self-employed and seeking a Polish mortgage you will need to be able to verify your businesses financial status:
- Last 2 years’ audited accounts
- Last 2 years’ tax returns
- Last 3 months’ business and personal bank statements
You may also need a letter from your accountant providing information about your personal drawings from the business.
While rental of your property may be possible, potential rental income will not be included in mortgage calculations by Polish banks. This means you need to be able to afford the property without the rental income.