Hardly anyone is able to buy an apartment for cash. Hence, most buyers must take out a loan to buy an apartment. However, it is required to have a proper own contribution, depending on the price of the flat. Sometimes these are large sums exceeding the possibilities of a family or a couple. Fortunately, it is possible to take out a loan for own contribution – but how to do it?
Owning your own apartment is a dream for many people. Let’s add that the dream is difficult to realize at current housing prices. Of course, the final price depends on the city and the specific location of the property, as well as its size and possible other additional advantages (such as a balcony, proximity of greenery, quiet neighborhood, etc.). However, they are always huge costs.
What is the own contribution for a housing loan?
In the past it was possible to take flats entirely on credit – this means that own contribution was welcome but was not required. However, the 2014 changes made it necessary to have additional savings to make a home contribution to the housing loan. Everything is related to the S recommendation introduced by the Polish Financial Supervision Authority and the general tightening of credit policy. Banks that were able to grant loans without a down payment up to 110% of the value of the property up to that point had to give it up.
Changes were introduced gradually. In 2014, the required own contribution was only 5% of the total value of the property, which was quite a lot anyway. However, in 2017 and 2018 it was as much as 20%. You can calculate the cost of your own contribution using the online loan calculators. However, these are large sums, and yet housing prices are constantly rising, which also means that the amount of own contribution is constantly increasing. It is hardly surprising that a lot of people are looking for some way out of the situation – preferably a loan to pay for their own contribution and then pay back the loan of their own apartment instead of paying someone for rent.
Own contribution loan – is it possible?
Just a few years ago, you could easily take out a loan without a down payment . Today this is not possible – unless the bank obtains some additional, solid collateral for the housing loan. However, is it possible to take a second loan to pay for my own contribution? Ideally, someone in the family – for example, the parents of a young couple who wants to buy an apartment – should be able to take out a loan. Then it does not burden the newlyweds, who can easily use the money and take out their own debt, i.e. a housing loan . However, if your parents or anyone else is unable to help, you need to think about a loan for own contribution obtained in a different way. Yes, it is possible, although not in a traditional bank.
How to get a loan for own contribution?
The best option is to look for a property offer that the developer grants loans for own contribution. These types of offers are very popular. Since housing prices will rise, and therefore it will be more difficult to raise funds for own contribution, it can be assumed that there will be more such offers. However, this option only appears if you are buying a flat from the primary market. Even if the selected developer does not announce it in its offer, it is worth asking him about financing his own contribution – maybe something similar works in the selected company and you will be able to use this option.
Those who work in large companies are also in a favorable situation. They can always get a loan from the company cash register. It can be used to finance own contribution. What’s more, you won’t have to pay additional commissions or think about interest rates – so this is a good solution, towering over loans from banks or loan companies.
What instead of own contribution?
Recommendation S, introduced by the Polish Financial Supervision Authority, prohibits financing the own contribution from borrower’s loans and credits. Funds should be collected by a specific person or persons by themselves. You even have to make a special declaration to the bank that the money that you spend on your own payment does not come from loans, but has been collected by applicants for a home loan. However, if you do not have the right amount and all loans from a particular person are out of the question, it is worth checking to see if the bank is replacing your own deposit with another security. It is possible to secure the loan with another property or treat the plot as own contribution. There is also another option – increasing the margin rate. If the borrower agrees to such collateral, the bank can finance up to 90% of expenses. For many people, this solution may be the most reasonable – so you should think about it.