How can I finance the purchase of a property in Poland?

There are three ways in which to secure mortgage finance for a Polish property:

• Securing a mortgage against (or refinancing) property in your country of origin and using the cash to purchase a property in Poland.
• Using a specialist credit broker, who will help you secure a loan in Poland against a Polish property.
• Apply directly to Polish banks that specialize in lending to foreign investors.

Can I borrow money with my local bank to buy a property in Poland?

Banks will rarely take the risk of lending against property in a foreign country such as Poland. They probably have limited knowledge of the Polish real estate market, and having to deal with an unfamiliar language and legal system could make the task of repossessing a property (in the event of a default on mortgage repayments) extremely difficult.

Your local bank, however, will gladly lend against your domestic property. Many investors choose to refinance existing properties, enabling them to bring cash to Poland to make an investment. The primary downside of refinancing domestic property to buy in Poland is that it reduces your borrowing capacity. You will not be securing any of the loan against your Polish property, thus reducing collateral which could potentially be used to borrow against.

Additionally, in order to decrease tax bills, most investors favour offsetting interest payments on their loan as an expense against income from their investment. If the loan is not secured against the property from which the income is being generated, there can be difficulties in offsetting interest payments against income, resulting in a higher tax bill.

Can a specialist overseas finance company help to get finance in Poland?

There are specialist credit companies offering overseas mortgages for a range of countries, including Poland. It should be noted that such companies are effectively acting as a mortgage broker to help you secure a Polish loan against a Polish property. They work as intermediaries, preparing the paperwork between the Polish lender and the overseas borrower. For such a service, you will need to pay additional fees and the loan terms are not always as favourable as they would be if you had applied directly with a Polish lender. These credit companies are based outside of Poland and offer loans in a large number of countries, so their knowledge of the Polish market and ability to provide a tailored service may be restricted.

Can I acquire a mortgage in Poland?

Yes, several Polish banks will lend to foreigners who wish to purchase property in Poland. The Polish mortgage market is beginning to open up to foreign investors, so the number of lenders, ease of borrowing and range of products available is continually improving. Foreign incomes will be taken into account by these banks when assess potential borrowing capacity in Poland.

What are the benefits of borrowing directly from a Polish lender?

The primary benefits taking a loan directly with a Polish bank, are as follows:

• The ability to potentially borrow more money by using the collateral of your Polish property.
• More favourable interest rates and set-up fees by applying directly to the banks with no credit brokers to pay.
• Being able to offset interest payments from your loan against income from the property to reduce your tax bill (this may not be possible if you borrow the money against your primary residence, which does not generate income).
• The ability to borrow in a range of currencies (EUR, GBP, PLN, CHF, USD) to either
  • Access lower interest rates of foreign currencies such as Swiss Franks (CHF)
  • Match your loan currency against your income currency. This increases transparency and reduces confusion, as well as avoiding the cost of expensive currency transfers and potentially negative exchange rate fluctuations.
• Typical Loan to Value (LTV) of up to 70%, meaning a reasonable deposit will enable you to secure a property.
• Availability of buy-to-let mortgages for investment purposes, which will also into account a proportion of the income from your property (typically 50%) in addition to your personal income.

Can I get a buy to let mortgage in Poland as a foreign investor?

Buy-to-let mortgages are available for foreigners seeking investment properties. The typical maximum LTV is 70%. Such mortgages are ideal for foreign investors who want to rent their property and ensure that the lender will take into account some of the rental income in addition to their personal income to assess their borrowing capacity. Again, such products are ideal for reducing personal income tax bills by offsetting interest payments against income.

Are interest only mortgages currently available in Poland to foreign investors?

Interest only mortgages are not currently available to foreign investors in Poland.

Where can I get more information about Polish mortgages for foreigners?

See www.poland-mortgage-direct.com for more details. Poland Mortgage Direct is a referral service which enables you to submit your loan requirements and in turn be contacted directly by Polish mortgage lenders who offer loans to foreigners.