Is it enough to have creditworthiness to buy your own mortgage property? Unfortunately, this is not enough. The potential borrower must have at least 10% own contribution.
But that’s not all. There are several fees that we will have to cover in the process in cash. What is own contribution? What fees do I have to pay in cash? Can I finance my own contribution from the loan?
Own contribution is the basis
The obligation to have an own contribution appeared from 2014 on the basis of recommendation S introduced by the Polish Financial Supervision Authority. Currently, the minimum value that we must have at our disposal 10% of the property value.
However, there are banks that will require more – up to 20% or 30% of the own contribution. Of course, the greater the own contribution, the more favorable credit terms we can count on. How to calculate your own contribution? How much cash do I need to buy a flat worth PLN 500,000 ? A minimum of PLN 50,000 in cash, and optimally even PLN 1,000,000.
The more own contribution, the cheaper the loan – read about LTV
I recently took a mortgage. Theoretically, 10% of your own contribution is enough, but in fact the full range of offers starts from 20%. More cash opened my way to a cheaper loan. I know that the Advisor has chosen for me the cheapest offer available on the market with my risk profile.
Where and when do I make my own contribution?
The bank will not require me to make a deposit before applying for a loan. In the application process I will not have to prove that I have my own contribution. However, after signing the contract, and before running the loan I will have to transfer the middle. Where? Not to the bank, but to the seller. The bank will only ask me to confirm the transfer, which will be the basic one for starting the loan.
What does the mortgage settlement look like?
Real estate appraisal
The loan application process is a multi-stage process. First, I submit the application with the required documents and wait for the first financial decision. Only after it will the bank ask me to pay a fee for the appraisal to the indicated account number. This is the amount that I obviously have to cover from my own funds.
The cost of real estate valuation varies from bank to bank and depends on the type of property. The cheapest will be for plots and flats, while the most expensive will be for houses. Therefore, I have to take into account the need to pay from 300 PLN to even 1200 PLN.
The property valuation is ordered by the Bank and requires an additional fee from the Customer. Depending on the property, the fee may be as much as PLN 300 – 1200.