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Non-contributing housing under the Polish Deal

Housing without a downpayment is one of the key, even flagship points of the Polish Deal, the ruling party’s political and economic program. Thanks to BGK’s guarantees, young families are to gain access to mortgages without having to have savings for an own contribution. Who can apply for an apartment without a down payment? Are loans without a downpayment already available?

The Polish Deal and an apartment without a downpayment

The Polish Deal is an economic program of the Law and Justice Party, which aimed, among other things, to reform the tax system in Poland. Although, as experts point out, it still arouses a great deal of controversy, and the tax changes are not understood even by representatives of the National Tax Administration, it has already entered into force and we have to deal with it.

In addition to such solutions as a higher tax-free amount or no taxation of income earned by seniors who give up their due pension benefits, the Polish Deal also introduced the possibility of applying for a so-called ” no-contribution apartment. Thanks to this solution, Prime Minister Morawiecki argued, up to 80,000 families can gain access to mortgages without the need for a 20 percent down payment.

What is a no-down-payment apartment?

A no -down-payment apartment is a term that many people may find confusing, and in the rest of this post we will use it interchangeably with no-down-payment loans and BGK guarantees. This is due to the fact that the Polish Deal did not introduce a solution that would guarantee housing for Poles, but only facilitate access to mortgages, and to that only for some citizens.

Theloan without own contribution, or the apartment without own contribution in question, is to be based on the fact that the Bank Gospodarstwa Krajowego (BGK) will give a certain part of Poles the so-called guarantee of own contribution. Those who meet the conditions set forth in the law and the Polish Deal, which will be discussed in a moment, will be able to apply to commercial banks for housing loans without the 20 percent of the value of the property required by the FSA and commercial banks. The BGK will be the guarantor for the own contribution.

IMPORTANT: The guarantee of the own contribution does not mean that the final part of the mortgage will not have to be repaid. This is because the commercial bank will give a loan for 100 percent of the value of the apartment, and the entire amount, including interest, will be divided into monthly installments.

For whom is an apartment without own contribution?

An apartment without an own contribution is addressed to the group of Poles specified in the Polish Act. Age is significant here, unfortunately, as only people in the 20-40 age range can apply for a loan without an own contribution, which will significantly narrow the circle of people who would like to take advantage of the BGK guarantee.

Credit without contribution
Credit without contribution. Photo: studioroman via Canva

In addition, only families, i.e. married couples with a minimum of one child or single people with at least one child, will be able to apply for a loan without a down payment. The program is therefore addressed exclusively to families with children.

Another condition that must be met in order to apply for a loan without own contribution is creditworthiness. This is because the guarantees of the Bank of National Economy do not exempt borrowers from the need to demonstrate their financial capabilities. Check out how to build a credit history and what affects the BIK.

In order to apply for an apartment without a down payment, you must also not have the right to any other residential property. It doesn’t matter whether it’s only part or 100 percent rights to another apartment or house.

What can a loan with a BGK guarantee be used for?

Quite an important issue of a non-contributory apartment, or more precisely, a non-contributory loan, is that the loan funds can only be used for the purchase of an apartment from the secondary or primary market, and for the construction of a house. Thus, it is not possible to purchase a house that has already been erected. The ruling thus doomed the chance of a loan with a BGK guarantee for those who planned to buy a single-family house. It is not known what the reason for this decision was.

Read also: How long to wait for a mortgage?

In addition to the restriction we mention above, the law on the BGK-guaranteed Polish Ład also limits the maximum price per square meter of bank-financed real estate. This means that most apartments located in larger cities will drop out of the program. In this way, the government wanted to eliminate artificial inflating of housing prices by developers.

From when will an apartment without a contribution be available?

The tax changes and reforms included in the Polish Deal went into effect at the beginning of this year. This does not mean that credit without contribution is already available to those interested. This is due to the fact that the law provides for a so-called transition period, and this is exactly six months. During this time, Bank Gospodarstwa Krajowego must conclude the relevant agreements with commercial banks and prepare all the guidelines and documents necessary for granting guarantees.

The law reached the president’s desk at the end of November, so the first offers from commercial banks that decide to take part in the program should appear in late May/early June 2022.

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