CreditforForeigners.pl - mortgage in poland for foreigners

The waiting time for a mortgage

The waiting time for a mortgage is probably the worst time to take out a loan. Imagine, you've booked an apartment, made a down payment and you're waiting. Every day your fear grows, are you sure you will receive this loan?

Depending on the loan decision taken by the bank, it will be known whether you will receive financing, and on what terms it will be granted to you. Waiting for the result of the loan application analysis is difficult and exhausting for many of us. I thought that I should help everyone in this situation by writing an article on this topic.

Recently, I have started a series of articles under the working title: how much does a loan advisor cost. There you will find a number of entries that connect the work of a mortgage expert and answer bothering questions. My last entry, and the first in a series of articles, was about how many banks to apply for a mortgage? I believe he was curious. Today I will tell you about:

how long the bank checks your application
what is the credit process
what determines the variability of operating times in banks?
how to prepare for all this?

Issuing a credit decision and the mortgage loan act

Practically every day I hear the question: how long will the bank take to process the mortgage application? Unfortunately, I always answer that the process of obtaining collateral in the form of a loan is complicated and requires specific procedures. Of course, let's not forget that the application processing time depends on the bank and its internal regulations. Recently, also from the pandemic situation that has been taking its toll on banks. Pursuant to the provisions of the Mortgage Loan Act, banks are required to issue a loan decision no later than on the 21st day from submitting the loan application. If the application is complex, the processing time may be longer. Therefore, in this situation, only peace will save us. Possibly me. How does it look in practice? Well, it doesn't look like that. Unfortunately, banks do not stick to these guidelines and circumvent them differently, but it must be admitted that they are in a formal way. So you could say that you cannot rely on this knowledge. You also cannot make appointments with the seller of real estate based on the guidelines of the act.

The credit process and the waiting time for a mortgage?

I will start by explaining what the credit process is all about step by step. Simply put, it is a multi-stage procedure for granting financial support to the applicant. It starts when the bank examines your application. I present a summary of the requirements that the bank takes into account when examining your mortgage application:

the amount of income,
nature of employment,
age of borrowers,
number of borrowers,
number of people in the household.
completing documents,
meeting on submitting loan applications,
providing supplements required by banks,
analysis for a credit decision (including real estate appraisal),
fulfillment of the conditions for the preparation of a loan agreement,
arranging a meeting and signing a loan agreement,
arranging a meeting and signing a notarial deed,
meeting the conditions for disbursement and disbursement of the loan.

1. Collecting basic documents

The bank will ask you to provide personal documents (current ID card, document confirming marital status, etc.), income documents (e.g. a certificate of employment and earnings) The last document must be completed on a bank form, and if the employer does not want to to do this, it must present its version containing exactly all the points that the bank expects to complete. If this topic is interesting for you, then from my other post you will find out what should be in the employment contract that you need to deliver to the bank, check the employment contract and the mortgage.

Without attaching the necessary certificates to our loan application, no bank will agree to grant us financing or even take the application for analysis. Today, credit processes are centralized in most banks, which means that each application first goes to the so-called gate, and there the compliance of the documents with the check-list that each adviser has is verified. Depending on the bank, this takes from a week to two. This is concrete, this is what you can and should assume.

2. Creditworthiness analysis

The next step in the verification of the application is the property analysis and legal analysis. First. The bank must be sure that the borrower will be able to pay off his liability on time. He must also be sure that the property - in the event of his insolvency - will constitute a security for the loan. In practice, it is about checking the land and mortgage register and the valuation prepared by the bank or the client.

Banks here have different processes. Sometimes they allow clients to provide their own quote, and sometimes you just have to pay the company the bank sublets for the job. My opinion on this is that these valuations often have nothing to do with the market and reality.

The difference in the values presented by the bank in the valuation results from the fact that today, in the growing real estate market, banks are quite cautious about the subject of valuation. Secondly, I think real estate expert do not have access to data because of Covid. The subject of real estate valuation is a matter of an article for the future, for today let's assume that it takes from a week to two, depending on the bank.

4. Issuing a credit decision

The waiting time for a mortgage must have its end. It is the moment when, after a thorough analysis of your credibility and creditworthiness, the bank prepares a report on you. Usually, the analyst gathers together what the bank assessed at various stages, and this is where the final credit decision is made. Rather, it is a zero-one situation and the issues of appeals against negative credit decisions are not practiced today. However, it may happen that the bank's analyst will ask us for additional documents. This is normal and you need to act efficiently so as not to be rejected. Yes, I know what it sounds like from your perspective, but I have already experienced many credit issues and, unfortunately, the customer's sluggishness is not welcome.

5. Signing the loan agreement

If you have received a positive credit decision, it means that you are one step away from signing the target credit agreement. Remember! The loan agreement includes, among others conditions that you must meet in order for the loan to be disbursed. This means that if you are buying real estate on the secondary market, you must sign a contract for the transfer of property, housing insurance, submitting applications to the court for establishing a mortgage, and others. However, in the primary market, it is primarily obtaining the assignment of rights under the preliminary contract with the developer to the bank. You can learn more about what to look for when buying an apartment on the primary market from the series of five articles I wrote about it. Read them on this page: how to profitably buy an apartment on the primary market.

6. Disbursement of funds and further servicing of the loan

Once you have met all the conditions for starting the loan, the final step in the loan process will be completing the withdrawal request. I always recommend to my clients to enter in the notarial deed the deadline for using the consent funds with what is written in the loan agreement. So you have to set a maximum deadline. I know that we all want to mobilize the funds for the purchase of real estate immediately anyway, because that's how it works in our heads. However, it does not work like that in banks, there is a procedure, a queue, waiting time. We assume that you will report to the bank immediately after signing the ownership transfer agreement to start the disbursement procedure. This does not change the fact that one should secure the maximum term in the property transfer agreement.

Why does it take so long to get a mortgage?

The waiting time for a mortgage, in other words, the analysis of a loan application may take from two to even eight weeks. It depends on many factors: type of loan, bank requirements, application rates, credit processes, etc. I will give an example. Periodically, banks have so-called fast decision-making processes. This means that the preferred group of clients at a given time, they may be people employed under an employment contract for an indefinite period and applying for a loan of no more than PLN 1 million, may receive a credit decision up to a week. In the era of a pandemic (I wrote the article in April 2021), we are witnessing that the operating times of banks change day by day. Accelerated processes practically no longer function. Unfortunately, the operational times of issuing credit decisions are getting longer. So how do you fix it? You need to consult a credit expert on an ongoing basis. What you heard a few months ago will probably no longer hold true. When someone comes to my first meeting, they usually want to check their creditworthiness and figure out the loan process. I always inform such a person that if he finds a flat, before he signs anything, he must call me so that I can inform him about changes in credit procedures. In today's volatile banking environment, this is very important.

Feel free to comment. Is the topic of credit analysis interesting for you? Let me know in the comment. Will be happy to help clarify all issues. It is important to me that every topic regarding the mortgage is absolutely explained.