Have you found the apartment of your dreams? Are you looking for a mortgage to finance the property in question? Wondering how long it will take to get a home loan and how to go about it? Be sure to read today’s article.
Housing loan the only way out for millions of Poles
A housing loan, commonly known as a mortgage, is often the only way to fulfill not even dreams anymore, but basic housing needs. Thanks to bank financing of the purchase of an apartment or a house, we are able to become owners of real estate in a relatively short period of time and do not need to “spend” hundreds of thousands of zlotys at a time for this purpose.
Before granting a mortgage, that is, a home loan secured by a mortgage on the financed property, banks will carefully check the creditworthiness of the person / persons interested in financing. This consists of both income and living expenses, as well as credit history and BIK score. Based on these, most banks are able to decide whether to grant or deny a mortgage, even at the stage of searching for an apartment or house.
Read also: What is a reverse mortgage? What are the benefits and drawbacks of it?
If we have managed to find our dream property and know that we meet the banks’ conditions, we can start looking for suitable financing.
IMPORTANT: In the current state of the law, when applying for a home loan, the borrower must have a minimum of 20 percent of own contribution. If we are interested in buying an apartment worth half a million zlotys, our savings for this purpose should amount to a minimum of 100 thousand zlotys. It is possible to take advantage of a lower, 10 percent own contribution, but it is necessary to purchase additional insurance.
If we do not have savings for the required own contribution, it is also possible to take advantage of surety guarantees provided by Bank Gospodarstwa Krajowego under the Polish Order, but not everyone interested will qualify.
Mortgage loan step by step
When we have managed to meet the credit conditions required by the banks and have determined the amount of the own contribution and what it will realistically be, we can move on to the actual application for a home loan. It should be noted at this point that this process is quite complex, but with proper preparation, it will not pose any problem for most people.
The mortgage application itself basically takes place in three stages. These include finding the purpose of the loan (an apartment, a house, a plot of land for the construction of a house), analyzing creditworthiness and applying for a cash loan (or vice versa, but this can be done in two ways, as we will discuss in a moment), and after receiving a credit decision, proceeding to the third stage.
The snag is that the first two steps are still relatively easy, because they depend solely on us, it is the third, that is, the one that follows a positive credit decision, that is quite complex. First, because the very submission of the application (step two) is usually associated with the need to submit to the bank the appropriate documentation of the property itself, so we have to request it from the developer, for example. Secondly, because it is necessary to perform several additional steps, such as concluding a preliminary agreement. We outline the exact steps with a mortgage that must be followed in a separate post.
How long does it take to get a mortgage?
The procedure for a mortgage, as we wrote above, is complex and you need to prepare for it quite diligently. Whether all the paperwork will be completed in a relatively short time depends on ourselves, but also on the seller of the apartment. It so happens that it is the seller who can “hinder” contacts, even when we care about the apartment or house.
What is bridge insurance?
The bank itself usually takes no more than 21 days to process a loan application, as stipulated by law, but this also depends solely on whether the application was submitted completely, i.e. with all the required documents. If the analyst notices the absence of any of them, we can expect to be called to complete the deficiencies, and the time for processing the application will start running again.
IMPORTANT: Based on the Law of 23.03.2017 on mortgage loans, the bank has a maximum of 21 days from the time of delivery of the required documents to issue a credit decision. It should be emphasized that it is the set of required documents that is crucial. Every time the bank contacts you to ask you to provide another certificate or other document, it will effectively extend the time to obtain financing.
Based on the experience gained in recent years, we can assume that the credit procedure takes an average of 4 to 6 weeks, but as a result of certain consequences can be extended even to 2, and sometimes 3 months. This is because it all depends on both ourselves and the number of credit applications submitted to a given bank during this time.
