Own apartment is often one of the biggest expenses in our lives. We do not always have enough of our own funds for this purpose and in order to realize this dream we have to support the bank. Questions arise: how much do you have to earn to get a mortgage and what conditions must be met?
When choosing a property that we want to finance with a mortgage, we must match it not only with our dreams and expectations. We must also remember to adapt it to our financial capabilities.
How much do you have to earn to get a loan for an apartment?
A mortgage is one of the most frequently chosen forms of financing the purchase of an apartment. It is worth mentioning that in order to receive a mortgage, more conditions must be met than in the case of, for example, a cash loan. A mortgage, however, is a much cheaper solution, so you should think about it, and spend your cash loan more on furnishing your apartment.
The survey conducted by Polska indicates that we prefer to buy apartments from the primary market because among others we want to be able to arrange a new apartment ourselves. As indicated by the Barometer Metrohouse and Gold Finance reports, apartments with an area of 35-50 sq m enjoyed the greatest popularity in Warsaw.
The purchase of apartments with this area accounted for as much as 38 percent. all transactions. In the third quarter of 2020, flats with an area of 50-65 sq m enjoyed great interest in the capital in 2020. It was similar in other major Polish cities.
What earnings on a mortgage in 2020 will be appropriate?
As for these issues – the first and most important factor determining how much we will pay for an apartment is the location. A person earning about 2600 USD has the option of buying 1 square meter of flat in a small town – of course allocating the entire payment. However, when moving to a larger city for the same square meter, the customer will pay much more.
The average price for a square meter in Łódź is USD 6056 on the primary market and 5,343 on the secondary market. In Warsaw, we already have to pay 10,898 dollars – the primary market and 8,526 dollars – the secondary market for the same square meter.
Monthly mortgage installment – how much do I have to earn?
Bending over the indications of the Polish Financial Supervision Authority expressed in the so-called – (regarding good practices in managing the risk of retail credit exposures), we can note that the installment cannot be higher than 50% of the total remuneration for persons whose monthly income does not go beyond the average level of remuneration.
In the case of more affluent people, earning well above the national average, the installment may not exceed 65% of the total net income. Considering this on the example: if the customer earns about 4000 USD net, with such income the maximum installment cannot exceed 2000 USD.
What conditions must be met to get a mortgage?
The key and also the most important condition is creditworthiness. When applying for additional financing, the borrower must be sure that his income will allow him to repay the debt in a timely manner, and the installment plus interest will not be a financial problem.
When applying for a mortgage, in addition to the amount of income generated, the bank will also pay attention to seniority, the form of the contract (employment contract, civil law contracts or own business activity) as well as financial credibility recorded in the form of a Credit Checker report.
What to do to get a mortgage for an apartment?
It would seem that obtaining a loan is quite simple – unfortunately not always. The loan granting procedure involves a number of criteria that must be met. It may happen that our credit history is not good enough for the bank to find us credible. Therefore, it is important to take care of your creditworthiness in advance. How to do it?
- if we have not taken any loans so far and the bank cannot assess us – we can buy something in installments or take a short-term cash loan. If we pay monthly installments regularly and on time, this will translate into building a credible credit history.
- When we have outstanding loans on our conscience within 30 days credit obligations are such information in Credit Checker will definitely lower our credibility. Let’s try to make an early repayment, and after closing the loan, we can submit a request to the bank to revoke our consent to the processing of information about the loan in Credit Checker. Then such a chargeable credit history will not be visible.
Given the realities of the dynamically changing credit market, it is difficult to clearly determine how much money you need to earn to get a mortgage. It is important, however, that when planning a purchase of a property using a mortgage in the future, we can prepare for the whole process early enough. What is worth remembering?
- income stable and adequate for the price of our dream home
- impeccable credit history
- own contribution at a level of not less than 20% of the value of the property (or 10% using the Low Own Insurance)
When we find the right property, the dreams of your own apartment will come true sooner than it seemed!