1. Flat or creditworthiness – how to start?
Theoretically, the whole process starts with finding the flat of your dreams. But it is easy to imagine a situation in which the bank refuses to finance the entire transactions. Hours spent on viewing too large or too expensive – as it turns out then – flats will be lost. To avoid being disappointed, it is worth checking your creditworthiness with a bank or a financial advisor before starting to search for a flat. When specifying the remuneration level and other monthly liabilities, you will learn about the maximum level of mortgage that you can receive from the bank and the estimated monthly instalment.
See our mortgage calculator >>
2. Searching for a flat – with an agent or on your own?
Nowadays, a great number of “flats for sale” come from real estate agencies. Often it is the buyer who bears costs of agency services ordered by the seller. The buyer can also hire an agent who will help him in finding and then buying a flat. Agents provide services under the agency contract concluded with the customer and charge a fee that usually depends on the value of the flat (usually around 1.5 – 3% + VAT).
When searching for a flat on your own, it is worth doing it online as the Internet is the best source of information on flats for sale. Ads in newspapers, boards in supermarkets and suggestions of friends will surely prove helpful. If you have already picked a preferred spot, you should look around for ads of real estate agencies posted in the neighbourhood (they are often posted on windows and balconies of flats for sale).
Regardless of whom you are looking for a flat with, you need to make sure that it has no legal defects. The first step will be to use electronic access to a land and mortgage register, verifying who owns the property and what rights encumber it. The next step will be to ask the seller to provide documents from the cooperative and the tenants’ association, certifying that there are no payments due, a certificate proving that the seller is not in delay with payment of property taxes and if the seller is an entrepreneur – also a document certifying that the company pays social insurance contributions.
3. While waiting for a mortgage, sign a preliminary agreement
When you find a flat that you are to purchase using funds borrowed from the bank, the seller will have to wait for the money. Usually a preliminary agreement is signed to complete all the mortgage-related formalities with a peaceful mind (or complete inheritance proceedings or delay the moment of purchase in time). It does not have to be concluded in a form of a notarial deed – it will allow you to save on the notary fee, but please note that there is a higher risk then. If the other party avoids fulfilling its contractual obligations (i.e. to sell the flat to you), you can only seek compensation which may not necessarily fully compensate your damage.
A notarial deed guarantees stronger legal consequences, but it is also costly – it depends on the value of the flat and usually amounts to several hundred PLN (check how much you will have to pay to the notary). In such case, you need to add the fee for an excerpt to the costs charged by the lawyer – 36.60 PLN for each copy.
Use agreement templates from otoDom.pl
When signing a preliminary agreement, you usually pay a part of the total amount for the flat – in the form of a deposit or advance payment, cash or a bank transfer, depending on the agreement of both parties.
What to include in the preliminary agreement? The notary and the real estate agent will surely take care of the details – you should inform them about your expectations towards the property in question and the purchase process itself well in advance. The agreement usually contains a date of signing the final agreement (it is worth giving yourself about 2 months to do it due to the mortgage procedure), a price agreed and a method used by the buyer to complete the purchase (for example using a mortgage).
4. Visiting the bank for a mortgage
At this stage, you should have already chosen a bank, because together with buying a flat it is worth comparing – on your own or with the help of a financial advisor – detailed conditions on which different institutions can grant a mortgage to you.
After signing the preliminary agreement, you can officially apply for a mortgage. After preparing all the documents required by the bank, including the application form, and delivering them to the bank (or more often – to several banks), you need to wait for a decision on a mortgage. During this time, a real estate appraiser will visit the flat to establish its value for the bank.
By providing you with a positive mortgage decision, the bank agrees to grant you the funds. From this moment the bank usually gives you a month to sign a mortgage agreement (this period may be longer in some banks). This is a time for the buyer to finally compare conditions offered by other banks, and for the seller – to ensure that the flat is in the condition as agreed in the agreement (e.g. complete renovation, empty the flat).
After choosing a bank, you can sign the agreement. You should dedicate some time to prepare for the meeting. As it involves at least several pages of provisions binding upon you for many years, it is best to acquaint yourself with them earlier instead of skimming over them just before signing. A bank advisor will send you a draft of the mortgage agreement upon request, which will allow you to read detailed provisions and then optionally negotiate them.
5. Buying a property
When you are sure that the bank will grant you the mortgage for the flat, you can proceed to sign the final agreement. It will take place at a notarial office, in the presence of the buyer, the seller and potential agents representing the parties. You will need:
* a notarial deed certifying acquisition of property by the present owner,
* a current copy of entry into the land and mortgage register, informing about the legal status of the property,
* a certificate from the bank that the buyer has been granted a mortgage to buy the the property,
* a certificate that there are no fees due for using the flat.
Signature of an agreement is another expense that comprises: a stamp duty (2% of the market value of the subject matter of the agreement), notarial costs – a notary fee plus 23% VAT, a court fee for application for entry into the land and mortgage register (200 PLN) as well as a fee for a copy of the notarial deed (up to 6 PLN for each document page plus 23% VAT).
6. Establishment of a mortgage and payment for the flat
After signing the notarial deed, it is time to file an application to the appropriate district court keeping land and mortgage registers to establish a mortgage on the property. You can commission it to the notary (additional cost of several hundred PLN in the form of a notary fee) or do it yourself; for this purpose, you should fill out an application form (available in the Regulation of the Minister of Justice). The court fee in the form of a stamp for one form is 200 PLN. You need to include the following documents with your application:
* a certificate on establishment of a capped mortgage for the bank, signed upon the execution of the mortgage agreement,
* a certificate from the bank that the mortgage has been granted.
Now it is time to visit the bank to present:
* a certificate of applying for a mortgage, and
* a notarial deed certifying acquisition of property.
On this basis, the bank will accept the order to transfer funds from the mortgage to the seller’s account.
Note! It usually takes several months to enter a mortgage to the land and mortgage register. The court will send a confirmation that the entry has been made to the buyer of the property by regular mail. You will then need to visit the bank with information about updating the land and mortgage register. Until that time, due to the increased risk, the creditor will charge you with a special fee in the form of bridging insurance. Sometimes banks will ask you to pay an additional fee for an extended time of waiting for the mortgage to be established. In such case, they indicate a deadline in the mortgage agreement, upon expiry you will have to pay a penalty when delivering the certificate.
7. Handing over a flat
After all funds are transferred to the seller’s account (the bank usually does it within a couple of working days), it is time to hand the flat over. It should be in the condition that both parties agreed in the agreement. The last meeting with the seller should take place in the flat and be completed by signing a delivery and acceptance protocol. You can draft such document on your own (download a template) so that it contained an entry about current meter readings and other remarks concerning condition of the flat.
Once both parties have signed the protocol, this will be a confirmation that the flat is ready to be taken over. At this point the owner should give you keys to the flat, the basement, the garage, etc.
8. Official formalities after purchasing a flat
After purchasing the flat, you will need to visit the tax office. You should pay the tax on establishing the mortgage to the account of the tax office competent for your previous place of residence. You need to do it within 14 days of establishing the mortgage, i.e. from the date of signing the declaration on establishment of a mortgage for the bank. This tax is 19 PLN when securing debt of an unspecified value (a capped mortgage) or 0.1% of the secured debt of a specified value (a standard mortgage); the mortgage type has been specified in the agreement, in the part defining the obligatory collateral of mortgage repayment. At the same time you need to file a declaration in the tax office, stating that you have paid the tax on civil law transactions on the PCC-3 form.
You also need to visit the city council or the commune office competent for your place of residence in order to inform that the owner of the real estate property has changed. At the same time you will need to inform the council/office about change of a payer of the property tax. There, you will also file an application form for registration of permanent residence (not required when purchasing a flat) or temporary residence, and information about this fact will be sent to the office appropriate for your previous place of residence
It is not the end of your visits to various institutions. The existing contracts with media supply companies will need to be transferred to the new owner. It is worth paying a visit to the co-operative or the tenants’ association to introduce yourself and become familiar with the applicable regulations. In addition, you should inform the bank, your employer, university and any other institutions that may need to update data about your new place of residence.
Even though you could think that the formalities never end, some people say that this is the moment when your duties just start. During moving-in you should not downplay the role of “informal duties” such as introducing yourself to your neighbours. Paradoxically, not addressing the least formalised matters may result in the most noticeable consequences.