How mortgage loans are approved in Poland

When you apply for a mortgage in Poland, your mortgage broker will submit your application and the supporting documentation to the bank. Then the bank will review your loan scenario and the supporting documentation to determine whether or not you qualify for the loan.

It’s good to know some of the basic factors that will be considered when your mortgage application is reviewed by a bank:

1. Capacity - your ability to repay the loan

Income, debts and liabilities are the most important variables lenders will examine. Lenders need to make sure there is enough income for the proposed mortgage payment and other monthly expenses (including living expenses).

With regard to income, an underwriter will look at the type of work, length of employment, the stability of income, the source of income, the likelihood of its continuance, etc.

In particular, lenders will take a close look at your debt-to-income ratio (DTI). According to Polish law, your total monthly debt obligation should not exceed 65 percent of your net monthly income.

2. Credit - your likelihood to repay the loan

Your credit history is very important factor in the loan approval process. Based on this, lenders predict your ability to make the proposed mortgage payments on time and in full.

3. Collateral - the value and type of property being financed

Banks carefully look at the value of the property you are purchasing to make sure a loan amount does not exceed its value. To qualify for a mortgage loan, most lenders in Poland require you to have a loan-to-value ratio of no more than 80-90%.

In addition, banks also review the type of property you are going to purchase. Most banks in Poland consider an investment property a more risky investment than an owner-occupied home. They assume that in a difficult financial situation, borrowers would more quickly walk away from an investment property than from their primary residence.

Keep in mind that your income, debts and other expenses, credit history, down payment and the property's value will all play a role in whether your mortgage application is approved. Don't stress if your financial picture doesn't seem perfect to you. Your mortgage broker will help you to find a mortgage loan for which you will qualify.