Mortgage in Poland - basic fees and charges

To compare mortgages accurately it's important that you take into account all fees and charges rather than looking at just the headline interest rate and margin. The most common types of fees you may need to pay are listed below.

Arrangement fee

It is the fee your mortgage lender charges to set up your mortgage (sometimes also called a completion fee, application fee or administration fee). This fee is paid before the mortgage starts. You usually have the option to pay this upfront, or add it to the mortgage balance.

Typical cost: anything from 0% to 5% of the loan amount

Higher Lending Charge (HLC)

Not all lenders charge this fee and it’s only likely to be a requirement if you have a small deposit (20 - 30% or less). This fee is used by your lender to buy insurance that protects them if they repossess your property and sell your home for less than the amount outstanding on your mortgage.

Typical cost: HLCs vary between lenders and also depend on the value of your property, the amount you borrow and the term of the loan. It is usually charged monthly (e.g. 0,02%) until some part of loan is repaid.

Valuation fee

This fee may be charged by your mortgage lender for the property valuation. The lender needs to assess that your property is worth at least the moneythat you're paying (and borrowing) for it. Valuation fee is usually paid on completion; however, sometimes you have to pay this upfront when you make your mortgage application.

Typical cost: from PLN 0 to PLN 1000

Investment control fee

This may be charged if the property is being built and fund are released in tranches.

Typical cost: from PLN 0 to PLN 300 (paid before each tranche)

Risk commission/bridging insurance

This fee is charged monthly until mortgage is registered.

Typical cost: from 0,025% to 0,20% (monthly)

Building insurance

Banks require you to take out buildings insurance so that, if your property burns down or is destroyed, their asset is protected. Generally you are free to take out this insurance with any provider. However, some lenders want to sell you their own insurance and will penalise you with a higher margin (e.g. + 0,1%) if you decide to go elsewhere.

Overpayment fee

An overpayment is any payment on your mortgage that exceeds your normal monthly repayment. If you make an overpayment, you reduce the amount you owe and reduce the overall cost because you do not pay as much in interest, which is charged each month you are in debt. Some banks will penalise you if you make excessive overpayments within the first 3 years.

Typical cost: from 0% to 3% of the amount you overpay

Early Repayment Charge(ERC)

This fee  is charged if you wish to remortgage or pay off your mortgage early and is calculated as a percentage of the outstanding loan. In Poland ERC applies within the first 3 years of the loan but it depends on bank (sometimes it's not charged).

Typical cost: from 0% to 3% of the outstanding loan

If you know the interest rate of the mortgage you are considering, it is easy to figure what your mortgage repayments will be. Figuring out the true cost of the mortgage, however, is more complex.