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Expatriate mortgages + Property in Poland


SigSauer 4 | 413
14 Jan 2018  #1
Good afternoon everyone.

Wondering if anyone has experience getting an expatriate mortgage, not from a Polish bank, as neither me or my fiance will qualify as we don't currently live in Poland. I know HSBC offers mortgages for expats within the UK, but wondering if there is an equivalent for Poland. Also, if there are any tips on home buying within Poland, things that someone from the outside might not know. I am not looking for a full term mortgage, something around 900k zloty that I'd pay off within 4 years, so if there are any suggestions or anyone is aware of something which fits that criteria please feel free to share your own experiences.
polishinvestor 1 | 362
14 Jan 2018  #2
You can try Hamilton May. Generally banks are wary if the loan is going to be attached to a Polish asset, given its cross border and the difficulties in getting a true state of play and of course in the future the possibility of calling in the asset. But you can try Hamilton May. As for buying tips, there is very little safety net here in terms of conveyancing, structural surveys, transfer of funds compared to the UK, certainly for residential assets and cash transactions. The fact you are wanting to use a bank, they will make you go through certain procedures to satisfy themselves that there are no financial surprises, but it usually comes down to you to make sure the house is strucural sound and that there are no hidden issues. There is a 5 year law for flats which allows the new owner to claim for hidden problems from previous owner but I don't know if that extends to houses to be honest.
OP SigSauer 4 | 413
14 Jan 2018  #3
Thanks PI, I am fairly confident that I want to buy a new construction home as there are several close to that point in the area I'm interested in. The cost to purchase flats in the same area are astronomical when compared to the new home prices. The idea of buying 2-3 flats for rentals crossed my mind, but the expected rents are just too low to justify it, it would be a poor return over a longer time than I'm comfortable with. I actually got pitched an investment the other day, I'd like to pick your brain via PM about it.
polishinvestor 1 | 362
14 Jan 2018  #4
Flat prices are starting to go up now, though to be honest they have been dragging near to the lows for a few years now. Of course you have your pockets of excess and higher prices than 2008, but generally most areas are still below or well below 2008 levels. Still, I don't believe flats can be anything more than an effort to diversify as they have a lower yield than commercial and are more hands on (in the case of managed, your yield goes down further).
G (undercover)
14 Jan 2018  #5
I am not looking for a full term mortgage, something around 900k zloty that I'd pay off within 4 years

If you are able to pay off 900k within 4 years, I'm not sure If it makes sense to take a mortgage.
OP SigSauer 4 | 413
14 Jan 2018  #6
I understand where you're coming from, however, I like to keep as much cash mobile as I can. Things can change very very fast in the part of the world I'm in right now, and I need access to a lot of cash in case of different scenarios. If the rates are low enough, it just makes sense to me to use the banks money, or to leverage equity in another property instead of needlessly sinking so much into one project at once. Thats my rationale at least.
shockedInpoland
15 Jan 2018  #7
Are you a polish citizen and do you have a source of Zloty income in Poland?
If not, you will need a large deposit (40%+) and be prepared to pay a higher interest rate.

I should have read your message more carefully.
However, the sentiment will still apply, the yield will be low and the deposit/interest rate high.
OP SigSauer 4 | 413
16 Jan 2018  #8
Hey thanks for your reply. No, I'm not a Polish citizen, I'm marrying one. I receive my money in USD to my US bank account via direct deposit, although based in Horn of Africa/Middle East region. I tried Hamilton May, but as you rightly pointed out, they insisted that I be a resident of Poland and receive an income in PLN.
cms 9 | 1,272
16 Jan 2018  #9
You will find it almost impossible to get either a PLN mortgage or term loan if neither of you earn in zloty.

An important reason for this is that banking regulation forces the banks to make 100 percent, sometimes 150 percent provision in their books when such a loan is issued. So for the guy issuing the loan, there is no motivation as he will not show any profit for the year.

Your best bet might be to buy a smaller flat for cash and trade up when you are more established and earning in PLN.

Note also that as a non EU citizen buying a house still might require a permit (for flatsit does not). You could buy in your girlfriends name but the normal risks apply and it might be an idea to put a ring on it if you are serious.

If you go for a house be very clear that all media are connected and working and be wary about buying sonewhere with no asphalt road - it can take many years for new roads to be finished and a decade down the line you might be taking your kids to school on a bumpy track that makes you nostalgic for Somalia !
OP SigSauer 4 | 413
16 Jan 2018  #10
Lol yea, I will probably hold off and just buy it in cash in a couple of years. Her moms house is on a dirt road, really gives it some character! Although I must say the houses on this dirt road could rival most American homes, they're huge and nicely put together and landscaped.
Taxpaying voter
16 Jan 2018  #11
You will find it almost impossible to get either a PLN mortgage or term loan if neither of you earn in zloty.

I'm pretty sure that giving a PLN loan to somebody who doesn't earn in PLN is illegal.

You could buy in your girlfriends name but the normal risks apply and it might be an idea to put a ring on it if you are serious.

That has a habit of ending very badly. Well, badly for the bloke who did the buying.

any tips on home buying within Poland, things that someone from the outside might not know.

Don't buy a place until you're ready to live in it. Otherwise her family are likely to move in and then not want to move out.
OP SigSauer 4 | 413
16 Jan 2018  #12
Lol, luckily her mom owns 2 homes and a good chunk of land, so that would be unlikely, but yes absent the possibility of being able to rent, we probably won't be ready to live there for 2-3 more years. That PLN thing may be an issue, as all of the foreign countries I've worked in, I've only ever been paid in USD or GBP, and never in local currency. I wonder if depositing the USD into an account in zloty every month would satisfy that requirement?
cms 9 | 1,272
16 Jan 2018  #13
I dont think its illegal but just goes against the knf rules - and following the rules is a pre-requisite for keeping your banking license.

Of course if you want a loan to buy a shopping mall or an airport then EUR loans are available !

If buying a house then maybe wait for PolishInvestor to comment but my view is they are very illiquid- most people who can afford one like to build to their own spec which usually means too many bathrooms and a huge ugly fence
OP SigSauer 4 | 413
16 Jan 2018  #14
Right so that mirrors what she's told me. The majority of people who live around her all own businesses in other parts of Poland, as theres not a plethora of jobs or industry in this part of the country, and all of the houses look like they're built to suit.
polishinvestor 1 | 362
16 Jan 2018  #15
I once had an offer on a flat from a buyer with Canadian assets and income and his loan fell through too. You can of course purchase cash and then refinance within one year, as I have just done, but you will need to build up at least 6 months of steady income in that time as well as a future flow of income that is reasonable clear. Income from flats or properties gives you a lower multiple as far as how much you can borrow compared to earnings, but you should be able to borrow 4 or 5 times income even so. Just what out for costs and depreciation as it lowers your tax bill which is fine but when taking a loan out privately what counts are earnings after all deductions, whereas for a firm or businesses, they take things such as depreciation into account.

You have a 2-3 year time frame so I would invest some money in commercial property with a long term contract, banks look at these in different light compared to residential property where you run a heavy discount for income to loan ratio. You might be able to find something from half a mil but they tend to start 1M zloty upwards for something reasonable with a tenant that is likely to run the course of the contract. In a year or so you will then be eligible for a loan with which you will able to buy your house. There are some hurdles such as deposit size for houses over 250m2 and 500m2, with the deposit increasing the higher the hurdle you breach, which is worth remembering. The main thing at your stage is to develop an income stream in Poland in the next year or two and keep tax lower costs out of the accounts apart from the usuals such as council tax insurance etc.
OP SigSauer 4 | 413
16 Jan 2018  #16
Perfect, thanks for that PI, just what I was looking for, you pointed me in the right direction.
Taxpaying voter
16 Jan 2018  #17
the knf rules

If you want to be exact, they're just recommendations.

I wonder if depositing the USD into an account in zloty every month would satisfy that requirement?

No, the bank would still face currency risk. It's entirely possible for your USD to halve compared to the zloty in a year (possible but unlikely).
shockedInpoland
16 Jan 2018  #18
If you want to be exact, they're just recommendations.

No they are not. EU banking regulators are very strict and very detailed. CMS is spot on about banking license regulations and the risk weighting applied to foreign currency loans. Its not viable to lend to many banks.
Taxpaying voter
16 Jan 2018  #19
No they are not.

They are officially recommendations knf.gov.pl/en/MARKET/Regulations_and_practice/Practice/banking_sector/Recommendations_of_the_PFSA?articleId=44256&p_id=19

But if a bank doesn't follow those "recommendations", it will lose its licence.
delphiandomine 83 | 17,531
16 Jan 2018  #20
It's entirely possible for your USD to halve compared to the zloty in a year (possible but unlikely).

Not impossible though - the PLN gained nearly 20% between January and July 2008 for instance.

Polish banks are very risk adverse, which is one reason why the country didn't have a banking meltdown.
paulinska 9 | 86
18 Jan 2018  #21
I don't intend to hijack the OP's thread, however, i have a question closely related to this topic. My wife's grandfather RIP left a piece of land with a run down house on it specifically for his 2 granddaughters - (My wife & her sister - call her S). Both my wife & S left the mighty Poland over 15yrs ago, to the UK and the States respectively.

They haven't got any financial connection with Poland whatsoever (No Savings or Income in PLN). Late last year, S told my wife she no longer wanted her name attached to the property and she wanted to cash out - circa 500K PLN. She reckons if she liquidated her share & re-invested, she will make much more money - smart move!. My wife on the other hand is very sentimental and wants to keep the grandfather's legacy & presence within the family. She's right bent on keeping the property - only problem is we have to now find avenues of financing her sentiments.

Few questions:
What would be the best way to finance 500K PLN given we haven't got a PLN account.
Given my wife owns half the asset, would it be possible to get a PLN loan/mortgage without any PLN Income?

I've made some inquiries on a UK loan/Mortgage and my mortgage broker friend has warned the rates would be way too high and not favourable or indeed not a wise investment just for the sake of buying out someone, given the property is dormant with no yield whatsoever.

Easiest solution would be for my wife and S to agree to a private payment plan however, Madam S is quite ambitious in her plans and she needs a lump sum if her investment plan is to make any money - again very plausible!

Really, just throwing this out there to get some useful ideas and options before we make any decisions.

PS: We can raise a 15% deposit or maybe 20% at a squeeze, so will be looking for 80/85% LTV.

Looking forward to your input...
Taxpaying voter
18 Jan 2018  #22
would it be possible to get a PLN loan/mortgage without any PLN Income?

Not from any Polish bank., they are specifically restricted to lending only in the same currency that the borrower earns in.

a piece of land which a run down house on it

A million zloty is a lot of money for a bit of land with a crappy house on it. Are you sure this isn't farm land.

the grandfather's legacy & presence within the family.

Split the plot, sell some of the land, proceeds of the sale go to the sister as her cut of the inheritance, your Mrs keeps the house and the rest of the land.
paulinska 9 | 86
18 Jan 2018  #23
Are you sure this isn't farm land.

Thanks Voter - Definitely not a farm land, but it's quite big, will try to get actual size. Part of it is a forest and sits on a steep hill (Mrs calls it a mountain but it isn't) so it might not be so habitable for the faint hearted - My father-in-law spends most of day time up there, god knows doing what!

Split the plot, sell some of the land,

This suggestion has been tabled and wife says she'll only consider this if it's family/family friend buying - Only problem is other family members have their own properties, in close proximity to this either through inheritance as well or private purchases, so not much quorum to get her ideal purchasers. In fact her mum is now touting in hope someone close to family can afford to buy it. Thanks though
Atch 17 | 2,712
18 Jan 2018  #24
To be honest, if your wife's sister wants to cash in her share and you wife can't afford to buy it without a loan and can't secure one, then the pair of them will have to lump it. Even if your wife could get a loan, do you really want to take on a sizeable debt for a property you'll never use or live on, just for sentimentality. If the sister can sort out a buyer off her own bat, great - and your wife will have to accept that part of the land may go out of family ownership.


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