You need a down payment under current legal conditions to take out a mortgage. Preferably at 10-20%. For lower amounts, get ready to insure a low down payment, unfortunately quite expensive and rarely profitable, although used on real market opportunities.
Own contribution is still growing
The own contribution increases practically every year due to the increasing average mortgage amount and difficulties in assessing borrowers. Banks do not risk transferring money to household budgets without adequate income. With rising housing prices, the borrower may face the problem of limited own savings. The average mortgage value is over $ 250,000, and this amount is barely enough to invest in a two-room apartment in a larger agglomeration. The own contribution in this case is over $ 25,000, and in the case of rising prices, which is practically certain, even for inflation reasons around 10% year-on-year. Higher own contribution is very profitable because it allows you to manipulate mortgage ratios even with tightened commitment policies. What does this mean in practice? With a larger down payment you get a lower installment with a relatively short repayment period.
Is own contribution always cash?
Own contribution is an obligation. It results directly from the regulations of the Polish Financial Supervision Authority. The guidelines regarding the own contribution appeared in 2013 and are binding to this day. As a standard, you should be prepared for 20% of your own contribution, and at 10% for insurance. Own contribution is not always cash, although this form is the most attractive and predictable. The own contribution may include a plot or even building materials. The higher the own contribution, the better the commissions and lower total costs of the mortgage, which is decisive with the risk of raising interest rates due to the ongoing inflation processes. They have been clearly seen since 2019. The 500+ social program, which is not often included in creditworthiness, has become a great help in building savings. Instead, it allows shaping larger economic surpluses to meet the bank’s demands.