Mortgages are usually granted for several dozen years. The shorter loan period means faster payback, but also higher monthly installments. Then the cost of granting the loan is lower. The longer the loan period, the greater the amount we can receive from the bank.
In addition, our creditworthiness increases with the loan duration. So in order to receive a shorter loan period, we must have high creditworthiness, but then our chances of getting another loan decrease. So this is a good solution for those who care about quick repayment and lower global costs.
Mortgage loan in USD and in foreign currencies
However, the extension of the loan period results in a large increase in loan costs. Interest increases, which makes the installment lower, but the global cost of a longer loan is much higher. It is also less stable over time. Interest consists of two parts – one of them is the bank’s margin, i.e. its profit.
The second is the WIBOR indicator, which varies over the time the loan is repaid, showing at what price the bank borrows money on the market. Basically, the lower the interest rate, the lower the cost of credit, but not necessarily – the information about APRC, i.e. the real annual interest rate – the amount of margin, interest and other loan fees per annum is important. It will be higher if the loan period is longer. We must also remember to pay tax or the costs of notary services.
The most reasonable way is to take a loan in the currency in which you earn – from the point of view of exchange rate fluctuations, it is the safest solution. This is also the most popular option because it is available to virtually everyone who meets the criteria of maximum age and creditworthiness. Banks providing credit for 25, 30 or 35 years reserve the upper age limit of the borrower, which is usually 70, 75 or 80 years.
A loan in a foreign currency may be beneficial, however, do not decide on it if you do not have sufficient knowledge about the exchange rate and do not have a trusted financial adviser.
Mortgage loan under the “Flat for young people” program
The MDM program makes it possible to obtain additional payments to the own contribution from the state treasury. Initially, the program concerned people under the age of 35, but now it is also possible to use it for people over this age limit, provided that additional criteria are met.
The program is the most advantageous solution, but we must remember about many restrictions – age, regarding the number of children, the financing period and the cost of a square meter of an apartment.
For an additional charge, we can count up to 50 m² (65 m² for families with three children). The maximum price per square meter depends on the location.
In Warsaw, it is USD 6,363.30, in Kraków – USD 5,239.30, in Poznań – USD 5,814.60. The co-financing rate is the basis for determining the co-financing of own contribution and also differs in given periods and locations. In the first quarter of 2016, it amounted to USD 5,775.73 for Warsaw and USD 4,763 in Krakow.
We can get a surcharge if we have a 15% own contribution
It amounts to 10% for single marriages or single people up to 35 years of age, 15% for people bringing up at least one child, 20% for people with two children and 30% with three children.
If another child appears within 5 years – we will get an additional 5%. People with at least three children can apply for a grant after the age of 35.