From today, July 14, Alior Bank’s offer includes a mortgage loan without own contribution. This is the first such proposal on the market, although several institutions have signed contracts with BGK that operates the program. See here the financing conditions.
At the end of May 2022, the law entered into force, which meant that after a few years of interruption on the market, preferential mortgage loans will reappear. This time, the main element of the program is not the subsidy, as was the case with the “Youth Apartment”, but a guarantee that allows you to bypass the requirement to make a minimum own contribution.
Let us recall that from 2017, banks should, in accordance with the recommendations of Recommendation of the Polish Financial Supervision Authority, require at least a 20% own contribution when granting a mortgage loan for residential real estate. However, the recommendation allows for a payment that is half the amount, if 10 percent. the cartridge is properly secured. Most lenders use this option, with the exceptions currently being ING Bank Śląski , BNP Paribas Bank , Bank Pocztowy and Citi Handlowy.
As late as in the fall of 2021, when the law on guaranteed housing loans was passed, it seemed that the lack of funds for own contribution was the main barrier to access to a mortgage. However, successive increases in interest rates, and then new supervisory recommendation , made the lack of creditworthiness the number one obstacle.
What is a “no deposit” loan?
Access to the loan “without own contribution” is limited by a few conditions provided for in the act. First, Bank Gospodarstwa Krajowego guarantees 10 to 20 percent. the value of the real estate purchased on the loan . This guarantee replaces the own contribution, but it is limited in amount – up to PLN 100,000. zloty. This means that a preferential loan cannot finance the purchase of a property more than PLN 500,000 zloty.
The second limitation is the price limit per square metre of the property. In practice, with today’s level of statutory conversion rates, the housing stock available to borrowers without contribution is very modest. However, parameter modifications are soon to be announced, which may change the picture.
The act also introduces several equally important conditions, important from the borrower’s point of view:
- A mortgage with a guarantee of own contribution must be granted for at least 15 years, in the Polish currency.
- People in the borrower’s household may not have the right to another real estate, nor may they dispose of such a right by donating to their relatives within 5 years before submitting the application. This condition “cancels” the possession of children, although then the number of real estates (max. One) and its usable area (depending on the number of children) are limited.
- Until the guarantee expires, the real estate purchased under the loan may not be used for business purposes.
It is worth emphasising that the money from the guarantee does not go into our hands . The warranty is a conditional benefit that only applies in a certain scenario, not a surcharge. Therefore, if we take out a loan without our own contribution, our debt will be equal to the price of the property.
Mortgage loan without own contribution at Alior Bank
The first bank to introduce a loan with a guaranteed own contribution is Alior Bank . The institution will accept applications from July 14, 2022. This loan will not be a separate product with its own price list (as was the case with previous preferential loans).
The bank informs that the option will be available for all mortgage loan offers, including promotional ones. Let us recall that the lender is one of the few institutions on the market that offers a product with a periodically fixed interest rate for more than 5 years – Alior Bank offers a frozen rate for 7 years.
Special financing conditions at Alior Bank have been prepared for buyers of real estate in two agglomerations. The “Own M in the capital and neighbourhood” campaign was joined a few months ago by the promotion “Own M in Krakow and the surrounding area”. Merchants in the above-mentioned cities and several communes and counties in the Warsaw and Krakow agglomerations can count on special financing conditions.
The bank does not charge a commission for granting financing and applies a zero margin while waiting for the mortgage to be entered in the land and mortgage register, moreover, no additional cross-sell is required, i.e. purchase of life insurance. Making your own contribution in the amount exceeding 20% can count on a margin of 1.99 pp.
The price element imposed by the Guaranteed Mortgage Act is the 1% commission charged on the guarantee sum. It is paid in advance to Bank Gospodarstwa Krajowego. For borrowers, this means an expense of up to PLN 1,000 PLN, using the program’s “full” capabilities.
Source: Bankier
