Property in Poland in 2015: Is a mortgage in Swiss Francs, Euros, Dollars or Pounds still an option?

When it comes to the issue of taking a mortgage in Poland in a currency other than the Polish Zloty, whether the applicant is a foreigner or for that matter a Pole earning a living outside Poland, it should be emphasised what the lending bank is most interested in. Banks pay attention to the currency of the applicant’s income, their citizenship and the country in which the income is being earned. 

Property investors earning salaries abroad interested in taking a mortgage to buy a property in Poland.

The position of non-Polish tax residents interested in taking out a mortgage in Polish banks has changed drastically since July 2014. The principle reason for this was the coming into force of the so-called ‘Recommendation S’, instigated by the Polish Financial Supervision Authority, which contains the stipulations that a mortgage should be granted based on the currency of the customer’s income, regardless of the amount of that income (Recommendation 6). 

It should be stressed that by insisting that the denomination of the loan match the client’s income stream the Polish Financial Supervision Authority does not otherwise prohibit the granting of loans in foreign currencies in its recommendation. However, taking into account the current policy of Polish banks regarding foreign currency loans, it is clear that access to such loans is limited when compared to the availability of PLN loans.

At the moment, only a few Polish banks are willing to issue mortgages in foreign currencies. At the time of the writing of this article it is still possible to take a mortgage in EUR, GBP or USD in precisely four banks in Poland. Two banks offer loans in CHF and it is possible to take a mortgage in Norwegian NOK in one bank.

It is important, however, to understand to whom these offers are available. They are aimed at Polish citizens who earn their income in such currencies as EUR, GBP, USD, CHF and NOK essentially enabling Polish citizens working, for the most part, in Great Britain, the Eurozone, the US, Switzerland or Norway to use this income stream to buy real estate back in Poland. On the other hand, Poles employed in the Czech Republic, Denmark, Sweden, Canada, Australia or Iceland, would need to earn in a currency other than the currency of the country of their employment in order to be eligible for a loan. The other possibility for such an applicant is to persuade a relative who earns in an ‘acceptable currency’ (i.e. PLN, EUR, GBP, CHF, NOK) to co-apply for the mortgage. 

And what about mortgages for foreigners interested in investing in the Polish real estate market? At the moment, there are no offers from Polish banks aimed at such clients. Due to this exclusion, such potential investors are forced to re-finance back in their own country and/or to invest equity when it comes to their Polish purchase. According to procedures, Polish banks are not permitted to lend to foreigners. There is an exception to this policy – that is if the applicant has ties with Poland (either family or business) but even then financing the property is limited to a maximum of 60% of its value. In practical terms, the bank may also draw attention to other points (income, debts) so its decisions are discretionary even after these other conditions are met. 

It may appear that despite the consolidation of international markets, disappearing economic boundaries and the growth of trade, that banks have a contradictory policy.  On the one hand, concern regarding customers’ problems with debt in foreign currencies might be understandable but on the other hand perhaps more attention should be paid to the problems of Polish citizens working abroad who plan to purchase a property in Poland for residential purposes. It is clearly visible that the ‘recommendation S’ might be an issue due to the limited number of banks offering mortgages in foreign currencies as well as uncertainty in the form of currency risk related to the change of currency income.