A deposit, known as a ‘down payment’, is usually required when you purchase a property in Poland. Here, you will find all of the key information about mortgage deposits in Poland.
What is a mortgage deposit / a down payment?
A mortgage deposit is the amount of money that you pay to purchase a property. The rest of the property will be paid for with a mortgage. So, if you want to buy a property for 800,000 PLN and you have 80,000 PLN deposit, you have 720,000 PLN left to cover by way of a mortgage.
Probably you have heard that there is the difference between “a deposit” and “a down payment”, but in practice from a mortgage perspective it doesn’t matter. They are both money given upfront to close the purchase of a house. It is typically expressed as a percentage of the home’s purchase price.
In this article I will use the word “deposit” or “mortgage deposit” but all information are also applicable to “down payment”.
How much do you need for a mortgage deposit in Poland?
You could be eligible for a 0% deposit with the government-backed mortgage scheme which is available from May 2022.
Read on: The 0% no-deposit mortgage in Poland
For a normal mortgage the minimum deposit is 10% of the purchase price, but having a 20% deposit or more could help you secure the best mortgage rates. Some banks require minimum 20% deposit.
The table below shows what is a minimum deposit at different banks in Poland.
Here is a basic example of how it works in Poland:
- You buy a property for 1,000,000 PLN and you want to borrow 800,000 PLN. Your mortgage deposit will be 200,000 PLN which is 20% of the purchase price.
- You sign a preliminary agreement for the property and you transfer 10% deposit to the seller which is 100,000 PLN.
- You apply for 800,000 PLN mortgage. After mortgage approval you sign a mortgage contract with a bank and a final purchase contract with the seller.
- After signing the purchase contract you transfer the rest of your declared deposit to the seller which is 100,000 PLN. So in total you transferred to the seller 200,000 PLN (100,000 PLN after signing the preliminary agreement and another 100,000 PLN after signing the final purchase contract).
- You provide a conformation of these transfers to the bank and the bank transfers 800,000 PLN to the seller, which is the rest of the purchase price.
- The transaction is completed.
Deposit source
When you apply for a mortgage in Poland you state that your mortgage deposit has not come from any loans. So, you can’t officially borrow money to use it as a deposit. A money for a mortgage deposit can come from any legal sources apart from loans.