A mortgage step by step: from borrowing capacity to the notarial deed

The whole path and realistic timescales

A mortgage is not one visit to the bank but nine stages, each with its own clock. The table below shows realistic ranges, not promises from a leaflet. The Polish Mortgage Credit Act gives the bank 21 days to make a decision, but that clock only starts once a complete application has been submitted - and the bank decides what counts as complete.

All in all: from submitting the applications to having the keys in your hand usually takes 2-4 months. Stage 9 happens after you have moved in and costs you money (bridging insurance), but requires nothing of you except patience.

Nine steps, in order

1. Borrowing capacity and BIK

You start with a number, not a flat. The bank will calculate your borrowing capacity at an interest rate raised by a buffer of at least 2.5 percentage points (a requirement of Recommendation S of the KNF, the Polish Financial Supervision Authority), so the actual loan amount will be lower than what your monthly payment suggests. We break the mechanism down in "How a bank really calculates your borrowing capacity", and you can work out your own in the borrowing capacity calculator.

At the same time: download your own BIK report (BIK is Poland's credit bureau; the report costs a few dozen zloty) and check it for errors - they do happen. Close your credit cards and overdraft limits, ideally 2-3 months before applying, because that is how long it takes for the data to be updated.

2. The property and the preliminary agreement

The bank will not issue a decision for "some flat for around 600 thousand". It needs a specific address, the land and mortgage register number and the price. That is why the order is: first the preliminary agreement, then the application.

A preliminary agreement in the form of a notarial deed is more expensive, but gives you the right to enforce the conclusion of the final agreement. In ordinary written form it is cheaper, but in a dispute all you are left with is the deposit. Put a deadline in it that matches how banks actually work - at least 8-10 weeks, not "a month", because a month is almost never enough.

3. Gathering documents

The most laborious and most underestimated stage. You will find a detailed list below. The rule: gather everything once, in several sets, because you are about to submit the same thing to several banks.

4. Applications - to several banks at once

This is the moment when most people lose money. The difference between offers on the same day can amount to tens of thousands of zloty of borrowing capacity and a fraction of a percentage point of margin, which over 25 years turns into tens of thousands in interest. Apply to 3-4 banks.

5. The credit decision

By law the bank has 21 days from receiving a complete application. During that time it orders a property valuation (which you usually pay for) and analyses your documents. A very common scenario: the analyst asks for additional documents and the 21-day clock starts again. Reply within 24-48 hours.

If the valuation comes in below the purchase price, the bank will calculate the LTV from the valuation, not from the price. The result: you have to make up the difference out of your own pocket. This is one of the most common reasons why a transaction falls apart in the final stretch.

6. The loan agreement

The bank is obliged to give you a draft of the agreement before you sign (and an information form). Make use of it. Check at least:

• the margin (it is the only part of the interest rate you negotiate),
• the conditions for a margin discount for cross-selling (account, card, insurance) and what happens if you drop them,
• the cost and duration of the bridging insurance,
• the terms of early repayment (with a fixed rate, the bank may charge compensation during the first 3 years),
• the list of conditions you must meet before the funds are released.

7. The notarial deed

The transfer of ownership. You pay the notary's fee, PCC (the Polish tax on civil-law transactions - 2% of the price on the secondary market) and court fees. In the deed you also establish a mortgage in favour of the bank and file the application to the land and mortgage register - usually the notary does this for you.

8. Release of the loan

The bank transfers the money to the seller's account (not yours). On the secondary market there is usually one payment. When building a house or buying from a developer - tranches, paid out after successive stages, each once documents are delivered. During the tranche period you usually pay only interest on the part paid out, and the full payment starts after the last tranche.

9. The mortgage entry in the land and mortgage register

The last stage, over which you have no influence at all, and which costs you money every month. Until the mortgage entry becomes final, the bank has no security, so it charges bridging insurance - most often in the form of a higher margin. Depending on how busy the land registry court is, this takes from a month to half a year.

Once the entry becomes final, take a copy of the KW entry to the bank. The bank will not remove the bridging charge immediately of its own accord - and every month of delay is your money. If the bank charged bridging insurance beyond the date of the entry, you are entitled to a refund of the overpayment.

Documents: what to prepare

The list varies between banks, but the core is the same. Prepare everything in several sets - after all, you are applying to several banks.

The side costs of the loan that nobody counts

The down payment is not the only money you need to have in cash. Below is the full breakdown for a realistic case: a flat for PLN 600,000, a 20% down payment (PLN 120,000), a PLN 480,000 loan, 7.5%, 25 years. The monthly payment on such a loan is PLN 3,547.16.

This is money the bank will not lend you (the arrangement fee can sometimes be added to the loan, but PCC and the notary cannot). You need to have it on top of your down payment. Someone who has saved exactly PLN 120,000 for the down payment and not a zloty more will not be able to buy this flat.

The most common reasons for refusal

A refusal is rarely a surprise - it can almost always be predicted in advance. Here is the list, from the most common:

Checklist before you apply

1. 6 months before: stop buying anything on instalments and submitting credit applications.
2. 3 months before: close your credit cards and overdraft limits, get certificates of closure.
3. 2 months before: download your own BIK report and check it for errors.
4. 1 month before: calculate your borrowing capacity with the buffer and set a realistic budget for the flat.
5. Before the preliminary agreement: make sure you have cash for the down payment plus 3-5% of the price for the side costs of the loan.
6. Finally: get the income certificate (valid for 30 days) and submit all the applications within two weeks.

Do the maths yourself

Read on

• Down payment: how much you really need and where to get it - 10% or 20%, what low down payment insurance costs and why a cash loan for the down payment will never get through.
• How a bank really calculates your borrowing capacity - the 2.5-point buffer, DSTI and the credit card that takes PLN 66,000 off your borrowing capacity.
• APR or interest rate? - before you compare four credit decisions, learn to compare them honestly.

Assumptions behind the calculations: a PLN 600,000 flat, a 20% down payment (PLN 120,000), a PLN 480,000 loan, an interest rate of 7.5%, a term of 25 years, equal instalments. The PLN 3,547.16 payment and all interest amounts were calculated with our engine (js/finance.js), the same one that powers the loan repayment calculator. Bridging insurance is modelled as a 1-percentage-point increase in the margin until the mortgage is entered. Borrowing capacity was calculated for net income of PLN 9,000, a 2-person household, living costs of PLN 2,500, DSTI of 50% and a 2.5-point buffer. The notary's fee is based on the maximum rates in the regulation (PLN 1,010 + 0.4% of the amount above PLN 60,000, plus VAT) - a notary may offer a lower one. The ranges of market fees (valuation, insurance, arrangement fee) are indicative and vary between banks. Official and court timescales depend on the location. This text is educational and does not constitute credit advice.