Working on a contract outside the country is much more profitable, therefore, in this way Poles decide to go abroad to earn to buy their dream apartment or build a house. What does the issue of housing loan look like in practice when we work on a contract abroad?
Problem with currency
We do not have to worry too much, because working abroad we can still apply for a housing loan in Poland. According to the law, however, we have to be aware of certain restrictions on this issue. Currently, Polish banks are required to grant this type of loan only in the currency in which the client obtains its income. So if we work in England and earn the same in pounds, the loan can also be granted to us only in that currency. People earning in less popular currencies, such as Danish krone, may face a bigger problem. Polish banks do not offer loans in such currencies.
The solution in each of these cases, when we do not want or cannot take a loan in a foreign currency, is to attach to the application a co-borrower who earns income in PLN. However, you should be aware that when calculating the creditworthiness of aperson earning in a foreign currency, their income will be equated with the income of the applicant earning in PLN. If we earn in PLN 4,000, and our partner earning in pounds after conversion receives PLN 10,000, the bank will assume that our total income will be only PLN 8,000.
In addition, banks must also assume a 20% appreciation of the zloty, which is the amount of foreign income that is reduced when calculating creditworthiness.
A stable and reliable source of income
In the case of clients earning in PLN, most banks accept income derived from a specific work contract or mandate contract. People who earn in a foreign currency, however, must be prepared for the fact that each financial institution to which they apply will require them an employment contract or its derivatives. These may then be contracts or term contracts. Very often, when familiarizing with the offer of a specific bank , we can also find out that it requires us to have a specific seniority in a specific place. In such cases, the minimum 12 months worked with the current employer is usually considered to be the minimum.
Many people also wonder whether a pension can be considered as a source of steady income in a foreign currency. As it turns out, some banks accept this type of source of income, although there is no such obligation. Therefore, if we want to take out ahousing loan based on such income, we will have to look for a financial institution that agrees to grant such loans.
Loan only for real estate located in Poland
It seems obvious, but it is worth mentioning that it does not raise any doubts. When deciding to take out a housing loan from a Polish financial institution , we must be aware that it can be used to finance only real estate that is located in Poland. Some people may think that if we take out a loan in pounds, for example, we can spend the money just in England. However, this is impossible. In such a situation, when the house or flat would be located abroad, the bank has no right to provide security for it.
Documents required by the bank
Both when applying for a housing loan in PLN and in a foreign currency, we must be prepared for a large number of formalities. Frequent visits to the bank are really something obvious, but it is worth preparing documents in advance that we may need to apply for a housing loan .
People working abroad who are applying for a loan in our country may be asked to provide such documents as:
- employment contract or employment and income certificate;
- bank statement for which we receive remuneration (usually from the last 6 or 12 months);
- tax return from a year or two ago;
- work or permanent residence permit in the given country (only in some cases);
- credit history from an emigration country;
Of course, these are only basic documents which the bank may request. Most clients applying for a home loan must return to the facility several times to provide additional letters of this type. However, it is important that as far as possible all documents are translated into Polish by a sworn translator. Not every bank requires it, but it’s definitely worth doing if we want to slightly shorten the waiting time for a decision. Although it should be remembered that this involves some additional costs on our part.