New credit holidays in 2022 and 2023 introduced by the government are expected to help borrowers deal with mortgage payments, which are becoming more expensive due to inflation and rising interest rates. The president signed the loan vacation on July 14, and the law will come into force after 14 days. Banks inform that applications can be submitted from 29 July. What you will learn in this article:
Credit holidays and government assistance. How will they work?
Can government-proposed credit holidays really help borrowers?
What other support does the government offer for borrowers?
Government Credit Vacation FAQ. Frequently Asked Questions.
Due to high inflation, the Monetary Policy Council at the NBP introduces further increases in interest rates, which results in rising mortgage rates and an increase in monthly installments. More and more people are unable to regulate them, which is why the government decided to develop a support plan for borrowers, the main pillar of which will be government loan holidays.
Statutory credit holidays under the government support for borrowers are granted on slightly different terms than credit holidays normally offered by banks. The difference between statutory credit holidays is mainly that banks should grant them to borrowers according to top-down regulations, and not according to an individual decision. Such a solution was in force, for example, during the coronavirus pandemic, when suspension of installments could be applied under the provisions of the Anti-Crisis Shield.
It was enough to submit a simple application electronically and declare that due to Covid-19 you lost your job or source of income, and the bank was obliged to postpone the repayment of 1, 2 or 3 loan installments. Over 700,000 people took advantage of credit holidays during the coronavirus pandemic borrowers who, thanks to them, were able to recover faster after financial problems caused by subsequent lockdowns.
Credit holidays in 2022 and 2023 will work in a similar way, but this time they are to help only people struggling with paying off more expensive mortgage loans. Therefore, people who took out cash loans or loans in Swiss francs currently cannot count on government support.
The law entered into force 14 days after the President's signature. From July 29, Poles can submit applications to banks to take advantage of the statutory credit holidays. Those whose installments are due on the first days of August will also benefit from this.
Before the act was introduced, it was feared that in this case it would be necessary to postpone the repayment date and sign a paid annex to the contract. The exception will be PKO Bank Polski, which will allow customers to submit an application only on August 1.
Worth knowing!
Credit holidays are not treated as overdue loans. Credit holidays are not about writing off installments. When taking advantage of credit holidays, it is necessary to pay insurance premiums. If you are using contractual (provided by the bank as part of your contract) credit holidays, applying for a statutory holiday will end the former.
According to the government's announcements, credit holidays in 2022 and 2023 will be available to those who repay mortgage loans in zlotys who are unable to regulate them due to inflation. In particular, the solution will be used by borrowers who, due to the increase in interest rates, have increased the amount of the monthly installment.
Such a suspension of mortgage repayment is to be based on the possibility of:
shifting 1 full principal and interest installment once a quarter (i.e. every 3 months),
deferral of a total of 4 loan installments during the year.
Important!
Suspending the loan installment will not result in additional interest being charged! However, keep in mind that you still have to pay the insurance premium. There is no break in repayment here. It is worth remembering that bridging insurance depends on the loan amount, real estate insurance depends on the value of the house or flat, and life insurance is calculated on the basis of the debt balance.
The cost of insurance may therefore vary from several dozen to even several hundred zlotys a month. Since the solution is in force in 2022 and 2023, a total of 8 loan installments can be deferred. Importantly, their suspension will not result in additional interest being charged. Applying for such a credit vacation is also supposed to be simple, so it should not require additional formalities.
Banks should enable customers to submit an online application and inform about the decision quickly enough, especially those who will want to postpone their loan repayment on August 1. Statutory Credit Holidays will have a restriction. A borrower paying off more than one mortgage will only be able to apply for a suspension of repayment under the scheme for one loan agreement to meet his / her own housing needs.
In principle, the new credit holidays proposed by the government are intended to help borrowers survive a period of high inflation and interest rate increases. Let us recall that the Monetary Policy Council, in order to slow down the price growth, has been increasing rates systematically since October 2021. This translates into an increase in the WIBOR® ratio, which has a direct impact on the interest rate on loans. Rate increases are felt most by people who pay off their floating-rate mortgage loans, as their already high installments have grown by as much as half in a few months.
Credit holidays should help you deal with the repayment of the debt for a simple reason: thanks to the suspension of every third installment, you will be able to save a lot of money. Annual loan servicing costs should drop by 1/3. It is worth emphasizing that it is no coincidence that new credit holidays have been planned for 2022 and 2023.
According to experts, the peak of inflation is still ahead of us and is to be in the coming years. This, in turn, heralds further rate hikes, as well as a further increase in the cost of servicing mortgage loans. Borrowers' support is badly needed. Without appropriate solutions, there is a risk that many of them will lose their financial liquidity and the ability to pay their liabilities, which may even result in the loss of real estate purchased on loan.
Remember that if you have any doubts, I am happy to offer you advice and assistance. Let's meet, you will find that my help in choosing the best mortgage can be invaluable.
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Mortgage broker
Michal Kaplon
os.Stefana Batorego 80
60-687 Poznan
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