Mortgage in Poland, Germany and Spain. All details on how a foreigner can buy a housing by credit in 2023

To get credit for real estate in other countries is not that difficult if you understand everything properly. We will save your time and answer the most important questions in this article: what are the requirements for obtaining a mortgage in Poland, Germany and Spain, where and how you can calculate the size of the possible loan and how looks the algorithm for obtaining a mortgage in these countries.

Lately, we keep hearing about significant increases in interest rates in various countries, which directly affects the attractiveness of getting a mortgage. Today we will find out how mortgage rates are in Poland, Germany and Spain, what are the peculiarities of lending to foreigners there and which expenses to be counted on.

Mortgage in Poland

Foreigners can get a mortgage in Poland if they meet certain requirements. Citizens of EU countries are easier to do so, as they are allowed to arrange a mortgage in the country under the same conditions as the Poles. If you are a citizen of a state outside the European Union, you will have to go through a careful check and provide a number of additional documents. But in general, everything is possible. Also stress that getting a mortgage for a Polish property has the following feature: not all the requirements and criteria are enshrined in the laws, most often specific conditions to be set individually by your chosen bank.

Basic requirements for obtaining a mortgage

How to take out a mortgage loan in Poland? Here is a basic set of requirements:

• First, you need to confirm your identity by providing a valid passport. 
• Plus you must have a PESEL number — this is your identification number in the state system, which is issued after living in Poland for three months or more.
• It is also necessary to justify the legality of your stay in Poland. Note that a visa or visa-free status are not grounds for granting a loan. Another important point: if you want to get a loan for a long period, it is better to have a «Stalego Pobytu card» or a long-term EU resident card, because the «Czasowego Pobytu card» reduces the chances of getting a mortgage (especially for the long term).
• The next step is to confirm that you have a Polish residence permit (meldunek).
• The logical continuation of the process is to document that you have a regular and legal source of income. This income you must get exactly within the territory of Poland, any foreign income is not taken into account, or is considered indirectly. By the way, the level of your earnings will greatly affect the possible amount of the mortgage.
• Another condition for a successful loan is a good credit history (in Poland or in the country of residence).
• Also, foreigners from outside the European Union need to get a permit for the purchase of real estate from the Ministry of Internal Affairs. The main cases in which it may be necessary: the purchase of a private house, land or buying property in border areas. Important nuance: if you do not need such permission, you will need to provide a certificate of absence of such obligations. That is, in any case, you will need a document from the Ministry of Internal Affairs: either a permit, or a certificate that it is not needed.

Possible loan amount and related costs

In Poland, home loans are most often issued in PLN, and since 2017, Polish banks may not cover all 100% of the cost of housing, but only 80% (up to 90% may be at the discretion of the banks themselves).

The interest rate in Poland consists of two elements: the prime rate and the margin of the bank.

Loans with floating interest rates are granted on the basis of the WIBOR (Warsaw Interbank Offer Rate) index — its value depends on what interest rates are set by the Monetary Policy Council. Banks usually offer WIBOR 3M or WIBOR 6M rates — which means that interest rates are updated every 3 or 6 months. The three-month WIBOR rate is now 6.7%, and the six-month rate is 6.54%. In a number of banks the floating rate exceeds 9%. For comparison: a year ago this index was equal to 7.41%, and two years ago—0.21%.

In the case of loans with a fixed interest rate, its value remains constant throughout the term specified in the contract. Right now it is 7.5%.

The second component of the interest rate is the margin. Its final value is determined by the bank according to its individual internal policy. At the moment it ranges from 1.89 to 2.92%.

The amount of possible credit can be calculated in a special calculator.

In addition, you need to be prepared for some extra expenses. Among them, for example: a down payment (at least 10-20% of the property value); bank commission; documentary insurance; payment for the evaluation of real estate by the bank or an expert involved; additional life insurance of the borrower; other fees and commissions (they may appear if you want to pay off the mortgage early or make a late payment).

It is also worth specifying that now more often buyers use the services of credit consultants — and this is very convenient. Such consultants fully accompany the applicant: they help you decide what kind of credit and in what bank to take, telling what documents are needed, and what further steps to take. Moreover, their advice for the buyer of the property is free — they get their commission directly from the bank.

The algorithm of obtaining a mortgage

Here is how the procedure for obtaining a mortgage in Poland looks like step by step:

• Concluding a contract with a developer or seller.
• Submitting all documents to the bank.
• Processing and verification of all information by the bank (usually within 7-14 days).
• Conclusion of a loan agreement, the terms of which are discussed individually in each case.
• Then you can sign the final contract at the notary and send a request to the Cadastral Office.
• Once the buyer submits the contract to the bank, the seller will receive his money.

Also, we recently wrote a detailed article on the First Apartment program (Pierwsze Mieszkanie), which started in Poland on July 1, 2023. You can participate in it, among other things, by taking out a safe loan at 2%.

You can choose and buy housing in Poland with Realting catalog.

Mortgage in Germany

In Germany, mortgages are available to both residents and non-residents. It takes about a month to process, and the loan is usually granted for an average of 20 years.

Basic requirements for obtaining a mortgage

When applying for a mortgage in Germany, you need to be prepared for a lot of scrutiny and a lot of questions. So, what exactly will a German bank look at when granting you a mortgage:

• Age. For example, if you have less than 5 years before retirement, you can no longer get a German mortgage.
• Employment Status. You have to be permanently employed. If you're on probation, you can't get a mortgage.
• Income and its currency. First, you need to earn in euros, and secondly — not less than €20 thousand per year. It is also important that each month you pay for the mortgage no more than 35% of your total monthly income.
• Residence permit. You must have a permanent residence permit or EU citizenship to be able to borrow up to 100% of the property value from the bank.
• Debts. Of course, it is best if the borrower has no debts.
• A life insurance policy. It is not always necessary, but it is still recommended.

Possible loan amount and related costs

The money you have to pay for your mortgage each month includes the interest on the loan and the amount for paying off the «body» of the loan. In Germany, most loans have a fixed interest rate, which means that throughout the loan period you will have the same interest rate that was set for you at the beginning.

The interest rate depends on the amount and term of the loan, your credit rating (Schufa), your financial and family situation. For the last five years interest rates in Germany have been 1.5%, now they are at 4%. You can use a special calculator to estimate the amount of your mortgage.

Your down payment on a mortgage will be between 10% and 20% of the value of the property. Without a down payment, to get a mortgage in Germany is also possible, but in this case you will set a worse interest rate. In addition, you may also incur additional costs: you can easily add 7-16.5% on top of the purchase price of the property for taxes, notary, and real estate agent services. And in Germany there is an unusual feature: the mortgage here does not cover the cost of the kitchen, as it is considered a «movable property».

The algorithm of obtaining a mortgage

The bank will give you a mortgage loan after you provide it with a complete set of documents. This includes documents about both the borrower and the selected property.

After reviewing the documents, the bank will offer you possible lending options.

Then you will need to conclude a contract, open a bank account and proceed with the payment.

Also note that to save time, you can contact a financial advisor and delegate to him all checks and conversations with the bank.

You can choose and buy a housing in Germany with the Realting catalog.

Mortgage in Spain

If you are a foreigner and want to take out a mortgage for the purchase of real estate in Spain, it is possible. But it should be borne in mind that residents have several advantages compared to non-residents: they are provided with benefits in terms of interest rates and creditworthiness, plus they can borrow up to 80% of the property value, while foreigners have a chance to cover only 50-70% of the total amount. By the way, most properties in Spain are bought by the British, Germans and the French.

Also keep in mind that mortgage denials have increased dramatically in 2023.

Basic requirements for obtaining a mortgage

Here are the nuances to be considered, intending to get a mortgage loan from a Spanish bank:

• First of all, you will need an NIE number (foreigner’s tax number).
• Although there is no age restriction in the mortgage process, lenders have the right to set their own limits.
• If there are problems with the Spanish language, it makes sense to contact a legal representative or broker, as almost the entire procedure takes place in Spanish.
• Your creditworthiness will be determined based on your income and debts. If you work out of state, you will need to provide information about your earnings for the past 1-3 years, as well as a tax return. You will also be required to provide copies of all your real estate documents (both in Spain and in other countries).
• Many lenders also require borrowers to take out life insurance policies that can cover the outstanding mortgage balance in the case of an emergency.

Possible loan amount and related costs

Non-residents in most cases can get a Spanish mortgage loan for no more than 20 years. Residents of Spain, on the other hand, can get mortgages for 40 years.

Loans that are issued in Spain, in most cases (67% of the total number) — these are loans with a fixed interest rate. That is, the figure that you set at the beginning of the loan will not change until the completion of all payments. Another option is to take a mortgage with a floating interest rate (it changes in one direction or another depending on the current value) or a mortgage with a mixed interest rate (first, the rate is fixed for a few years, and then switches to variable mode). Interestingly, Spain has so-called green mortgages: that is, buying objects with a high energy rating, you can count on lower interest rates.

The fixed interest rate in Spain is from 3.45%; the floating rate is from 5.03%. Approximate monthly mortgage payment can be found using a special calculator.

The down payment when taking a mortgage in a Spanish bank will be about 30%. There will also be other costs: property valuation fees and commission to the bank after the official closing of the transaction (all this will be around 1,500 euros). As for agency, notary and stamp duties, from 2019 in Spain, they are paid by the banks themselves.

The algorithm of obtaining a mortgage

Mortgage loans in Spain are granted by local banks, savings banks (cajas) and some international banks. So, you need to fill out and submit an application for a mortgage, after which the bank will make you a loan offer. You can, by the way, apply to several banks and choose the more favorable option.

Then you sign the mortgage agreement in the presence of a notary. If you can not attend in person, you can ask a lawyer who will do everything for you. After the notary checks and approves all documents, you can proceed to the payment (pre-opening an account at a Spanish bank).

Most likely, you will need to insure the property you have purchased. Banks usually require it in case of fire or other disasters.

After you sign the contract, the bank will give you a printout of the payments you will make as you proceed with your mortgage payments.

You can choose and buy a housing in Spain by using a Realting catalog.