Glossary
Short, plain definitions of the terms you will meet when taking out a mortgage and buying a flat in Poland — from RRSO and LTV to the land register and PCC tax.
A
Part of the price paid upfront, before the sale agreement is concluded. If the transaction does not go ahead, the advance payment is, as a rule, refundable — regardless of who was at fault.
A one-off fee for granting the loan, usually calculated as a percentage of its amount. You can pay it upfront or add it to the loan.
Transferring to the bank the right to compensation under your property insurance. If the flat is destroyed, the insurance money goes first to the bank to repay the loan.
B
The part of a variable interest rate that is set by the bank and usually does not change for the whole loan term. A variable rate is the sum of the reference rate and the margin.
A government programme of subsidies towards the instalments of a loan for a first home, launched in July 2023. Banks stopped accepting applications at the end of 2023 — it is no longer possible to join it today.
An institution that collects data on loans and their repayment, supplied by banks and SKOKs (credit unions). Banks check BIK before every credit decision.
A points-based score prepared by BIK on the basis of your credit history. It shows how BIK estimates the risk that you will not repay your commitments on time.
Additional security for the bank for the period from the loan payout until the mortgage is entered in the land and mortgage register. It most often takes the form of a higher margin or a separate fee during that period.
C
A person who takes out the loan together with you and is liable for repaying it in full, not just their share. Most often a spouse, partner or family member.
A limited property right to a flat in the housing stock of a housing cooperative. Formally you are not the owner of the unit, but you can live in it, sell it, rent it out, pass it on by inheritance and encumber it with a mortgage.
The bank's response to a loan application, issued after assessing your creditworthiness, BIK history and the property. A positive decision means the bank is ready to sign an agreement with you on the stated terms.
A firm or person that professionally helps you obtain a loan: compares offers from the banks it works with, prepares the application and guides you through the process. A mortgage credit intermediary must be entered in the KNF register.
The bank's assessment of how large a loan you can safely repay given your income, expenses and commitments. It determines whether you get a loan and for what amount.
D
An instalment in which the principal part is constant and interest is calculated on the decreasing debt. That's why the first instalments are the highest and each subsequent one is lower.
An agreement in which the developer undertakes to build the building and transfer ownership of the unit to you, and you undertake to pay the price. It is concluded in the form of a notarial deed.
A fund that protects the money of people buying flats from developers, e.g. when the developer or the bank holding the escrow account goes bankrupt. It is managed by the Insurance Guarantee Fund (UFG).
The part of the property price you pay from your own money rather than from the loan. Its size affects the LTV, the margin and whether the bank will grant the loan at all.
A ratio showing what share of your monthly net income goes on the instalments of all your loans and credit. The bank uses it to assess whether you can afford a new commitment.
E
Repaying the whole loan before the date in the agreement. You can do this at any time, and the bank must reduce the total cost of the loan by the interest and costs attributable to the remaining period.
An amount paid when the preliminary agreement is concluded, which secures its performance. If the sale goes ahead, the deposit is counted towards the price.
A limited property right that encumbers a property for the benefit of another property or a specific person — e.g. a right of way across a plot or a right to live in a flat.
An entry in Section IV of the land and mortgage register that establishes a mortgage in favour of the bank. The application for the entry is usually filed by the notary right after the deed is signed.
An instalment that is the same every month as long as the interest rate does not change. At first you mostly pay off interest, and over time an increasing share of the principal.
European Standardised Information Sheet (Europejski Standardowy Formularz Informacyjny) — a document in which the bank presents your individual loan offer in a uniform layout. It includes, among other things, the amount, RRSO, instalments, costs and early repayment rules.
F
H
All the owners of units in one building or property. It comes into being by operation of law when the first unit in the building is established as separate property belonging to someone other than the previous owner.
A special bank account into which you pay the money for a flat bought from a developer. The bank that holds the account controls when and how much the developer can withdraw from it.
I
K
The state authority that supervises the financial market in Poland, including banks, insurers and credit intermediaries. Among other things, it issues recommendations that banks follow when granting mortgage loans.
A government programme for saving towards a first home: the state adds a housing bonus to regular payments into a special bank account. The money must be used for a housing purpose specified in the Act.
L
A public register kept by the district court that shows the legal status of a property: who owns it and what rights and encumbrances relate to it. You can check the register's content free of charge online in the EKW system (Elektroniczne Księgi Wieczyste) if you know its number.
A specialist with state qualifications to determine the value of real estate. The result of their work is a valuation report (operat szacunkowy).
An agreement in which the bank undertakes to make a specified amount available to you, and you undertake to repay it with interest and costs on the agreed terms. For a mortgage loan it also sets out the security, including the mortgage.
The period for which you take out the loan and over which you repay it in instalments. A longer term lowers the instalment but increases the total interest.
A part of the loan paid out at a specific point. When you buy from a developer, the bank often pays out the loan in tranches, according to the payment schedule in the developer agreement.
Security the bank requires when your down payment is below its standard threshold. It protects the bank, not you.
The ratio of the loan amount to the value of the property, expressed as a percentage. For example, a loan of PLN 400,000 for a flat worth PLN 500,000 means an LTV of 80%. The higher your down payment, the lower the LTV.
M
A limited property right in real estate that secures repayment of a debt, most often a loan. If the debt is not repaid, the creditor can recover the money from the property, regardless of who owns it.
A loan secured by a mortgage on a property, usually granted to buy, build or renovate a flat or house. You repay it in instalments over many years.
Consent of the minister responsible for internal affairs (MSWiA) for a foreigner from outside the European Economic Area and Switzerland to acquire real estate — required only in cases specified in the Act on the Acquisition of Real Estate by Foreigners.
N
The main interest rate of Narodowy Bank Polski (NBP, the central bank of Poland), set by the Monetary Policy Council (RPP). It affects the cost of money in the economy and, indirectly, market indices and the instalments of variable-rate loans.
A document drawn up by a notary that has the force of an official document. Without it you cannot effectively transfer ownership of a flat or house.
The notary's remuneration for drawing up a deed and other acts. The maximum rates are set by a regulation of the Minister of Justice and depend on the value of the subject of the agreement.
O
P
A tax paid, among other cases, when buying property on the secondary market. The buyer pays it, but the notary collects it when the deed is signed — the notary is the tax remitter (płatnik) and passes the tax to the tax office, so you don't file a return yourself.
The right to use land owned by the State Treasury or a local authority for a long period set in the agreement, for an annual fee. It works similarly to ownership, but the land formally belongs to the state or the municipality.
A personal identification number in Poland. Banks, notaries and public offices use it for identification, which is why you need it, among other things, when applying for a loan.
Polish Short Term Rate — the new reference rate that is to replace WIBOR. It is based on actual transactions rather than on banks' declarations.
An agreement in which the buyer and the seller undertake to conclude a sale agreement in the future on agreed terms. Among other things, it sets the price, the date and the method of payment.
The sale of new flats and houses directly by a developer — you are their first owner. You often buy while construction is still under way, under a developer agreement.
A written, conditional commitment that a specific action will be taken once you meet stated conditions. When buying a flat you will most often come across a loan promesa and a promesa from the seller's bank.
A business that builds flats or houses and sells them under a developer agreement. Its obligations towards buyers are set out in the Developer Act of 2021.
R
A set of KNF recommendations for banks on loans secured by a mortgage. Among other things, it sets acceptable LTV levels, how creditworthiness is assessed and the rules for informing customers about risk.
A published interest-rate index on which the variable interest rate of a loan depends. The bank adds its margin to it.
Repaying your current loan with a new loan, usually at another bank, on better terms — e.g. with a lower margin or a different type of interest rate.
A list of loan instalments with payment dates and a breakdown into principal and interest. With a variable rate it changes after each update of the index.
A calculation of loan costs based on specific sample assumptions: the amount, term, interest rate, RRSO, number and size of instalments and the total amount payable. The bank must provide it in loan advertising.
An agreement with a developer that takes the chosen unit off the market for other people for a set time. It is often signed before the developer agreement, e.g. for the time you need to apply for a loan.
A document confirming a foreigner's identity and their right to stay in Poland on the basis of a permit — for temporary residence, permanent residence or as an EU long-term resident.
The total cost of the loan expressed as a percentage per year. It covers not only interest but also the arrangement fee, mandatory insurance and other charges you have to pay to get the loan.
S
Buying a flat or house that has already had an owner — most often from a private individual. You can usually view a finished unit and move in sooner than on the primary market.
A monthly payment to the homeowners' association or the cooperative, paid independently of your loan instalment. It covers, among other things, the upkeep of common areas, the repair fund and advance payments for utilities.
The seller's statutory liability for physical and legal defects in the property you bought. For defects in real estate you can, as a rule, rely on it for five years from when the unit was handed over.
T
V
A document drawn up by a licensed property valuer that sets the value of a property and describes how it was calculated. The bank uses it to assess the security for the loan.
An interest rate that is the sum of a reference rate (e.g. WIBOR or the index that is to replace it) and the bank's margin. When the index rises or falls, your instalment changes after the next update.
When you buy a flat from a developer, VAT is included in the gross price — you don't pay it separately. A reduced rate applies to residential units up to a floor area specified in the Act.
W
These definitions are for information only and describe the law in simplified form — they are not legal, tax or financial advice. Lendean is not a credit intermediary. Always confirm the details in your contract, with a notary or with the bank.