Purchasing Process Print E-mail

See generic Purchasing Process in addition to this section

There are two contracts involved in a property purchase in Poland.

A preliminary contract - commits both parties to the sale, and is accompanied by a deposit of between 10% and 30%. The preliminary contract sets a date for the signing of the final contract in the presence of a notary. The role of the notary is to check the property title for undisclosed charges and to ensure that the seller has the right to sell.

The final contract officially transfers the title of the property from the seller to the buyer, and is signed by both parties before the notary, who then adds the official stamp to the contract.

The notary then logs the change of title at the property registry. This is a slower process than in many of the new European member-states, registration can take up to three months. The purchase price is transferred after the final contract is signed.

Mortgages

The property system in Poland is similar to that in the UK in many ways, but not as sophisticated. While it is possible to secure a mortgage in Poland, some Polish lenders do not lend to foreigners. This is likely to change over the next few years, but for now it is a fledgling financial services market

There are a number of options for financing a Polish property:

  • Releasing money from a UK property and using the funds to finance a Polish purchase

  • Working with a mortgage broker, either in the UK or in Poland

  • Raising money by applying directly to those Polish banks that offer foreign national loans (not all of the Polish banks do) to finance the property purchase

  • Raising money against an existing Polish property to fund a subsequesnt purchase 

Releasing money in the UK

Not many banks will feel comfortable lending against a foreign property, unless they have a presence in that country. They will not be familiar with the local housing market and conditions. They will be far more willing to lend against property in the market they operate in. Some banks however, may limit the amount of funds or number of properties funded in this way on the main home e.g funding more than a second home or holiday home in this way may be considered as a commercial buy to let mortgage

Mortgage Broker

There are specialist overseas mortgage brokers, both based in the UK and in Poland, who have relationships with a number of banks. The advantage of dealing with these is that they can take an overview of the banks and judge who may be best to apply to, or who is offering attractive deals at the time of application. They will tend to help with the application process and check that all the necessary supporting documentation is in place, to enable the mortgage application process to go as smoothly as possible. In some instances, it may be that multiple applications can be made at the same time, to speed up the overall process. Using a mortgage broker may incur a fee, although not all charge the client, so the benefits of using them need to be weighed up against this.  

Polish Bank Option

It is useful to select a bank that is used to lending to foreign nationals, as they are more likely to have some of their application forms in English. Polish Banks do not offer the same range of mortgages that are available in the UK e.g interest-only loans are not available, only capital and interest and buy to let mortgages are not available. Usually borrowing is based on income when assessing potential borrowing capacity in Poland. Rental income does not tend to be taken into account, if it is a possible future income stream.

A bank may consider lending against a property that is already let out and has an established rental income stream. This is a viable option for some purchasers, who have already bought buy to let properties, have experienced captial growth and who subsequently want to use this as an asset against which to secure a loan for a further Polish purchase. 

Polish banks do offer mortgages in a range of currencies (EUR, GBP, PLN, CHF, USD).

Swiss Francs have in the past proved a stable currency and offer the ability to get mortgages quite often at lower rates to say a Polish Zloty mortgage. Or if the property purchase is for buy-to-let purposes and if the rental income is in Polish Zloty, it can quite often make sense to match income and outgoings in the same currency. This means less exposure to exchange rate fluctuations. 

Typically, Loan to Value (LTV) ratios can be up to 80%, with 100% mortgages available under certain circumstances. However this tends to come at a price and the rates of interest tend to be less competitive.  

Property purchase costs

It would be wise to allow for about 7-10% of the property price to cover purchase costs:

  • Both buyers and sellers may pay commission to estate agents or brokers, with charges ranging from 2-5%

  • Legal, court (1%), notary (1% + VAT) of about 2% of the property price

  • Stamp duty is about 2% of the property price, payable to the Treasury Office

  • Survey costs

  • Government taxes

  • Translation costs approximately 0.2% of purchase price