If we want to have our own apartment or house, we must meet a number of requirements set by the bank. People employed under an employment contract have the greatest chance for a mortgage. In the case of our own business, we have to run it for at least two years.
Financial stability and liquidity
Banks will grant a mortgage only to those people who can prove their stability and financial liquidity. We have to show that we are able to bear the multi-year financial commitment. We are required to submit a loan application and then present documents on the source of income and the property being purchased. However, a person employed under a contract of employment is a desired customer by banks. On the other hand, the business owner must prove not only that he is a reliable borrower, but also an entrepreneur. That is why banks pay special attention to how much our company operates in the market. People who have been running a business for many years are in a better position. However, if we have just started a business, do not expect that we will get a mortgage from any bank.
A more difficult path for entrepreneurs
The entrepreneur has a harder time when applying for a mortgage. People engaged in freelance professions or those who run a company, but it is a continuation of previous employment under a contract of employment, commission or specific task, are in a better situation.
Some banks offer mortgage loans to entrepreneurs who have been operating for 12 months. However, the amount of the loan is then below PLN 300,000. If the loan were to be higher, the company must operate on the market for at least 24 months.
However, within 5 years the banks shortened the required period of operation anyway.
The period of operation is not the only requirement. The entrepreneur must deliver a stack of documents. In addition to the loan application, he must provide documents regarding the property being purchased, as well as those regarding the company. It must take into account the transfer of certificates and confirmations that are required by the bank.
First of all, he must provide documents confirming the income he receives. They depend on the chosen form of settlement with the tax office. They can be as follows:
- tax declaration for the previous year,
- revenue records or balance sheet and profit and loss account for the current period,
- decision on the amount of tax in the form of a tax card.
The entrepreneur must also provide a certificate of non-arrears with payments to ZUS and the tax office.
However, this is not the complete list of documents that your bank may require. During the creditworthiness analysis, the entrepreneur may be asked for additional explanations, contracts, licenses or amortization tables.
For several years, banks no longer finance the entire property. If we want to apply for a mortgage, we must have savings. At the same time, let’s remember that granting a mortgage will significantly worsen our creditworthiness. Therefore, if we need additional funds for furnishing or renovating the apartment, we must include them in our savings.
Our own funds must be at least 20% of the property value. However, some banks present special offers in which they offer 10% of their own funds. However, the number of banks in this case is limited. We also have to take into account the additional loan costs.
If our own funds are higher, the margin charged by the bank will be lower. Therefore, the loan will be on more attractive terms.
The amount of the loan granted depends on the value of the property and our creditworthiness. Creditworthiness depends on our financial standing. Each bank individually determines the capacity of its clients. The basic factors include the borrower’s place of residence and age, marital status and the number of children. The creditworthiness analysis may also take into account the situation of potential borrowers, other financial liabilities and previous credit history.
Before we start applying for a loan, let’s initially estimate your creditworthiness. For example, we can arrange a consultation with a bank advisor or credit broker. He can also calculate the maximum installment and additional loan costs.
The source of income and the amount of remuneration are also very important. People employed under a contract of employment are in the best situation. If we want to improve our creditworthiness, first of all, we will pay off our existing liabilities.
Banks change the rules of creditworthiness analysis from time to time. Therefore, you should check that nothing has changed and we can still apply for the loan. Let’s also verify the list of necessary documents that we are to submit with the loan application.
When applying for a loan, we can use the help of an intermediary. He will compare the current mortgage loan offers and independently select the banks with which we have the best chances for a loan.