For those of us struggling with finance in Poland, it may be of interest that the largest Polish bank, PKO Bank Polski has opened a branch in London and will offer non-resident mortgages to ex pat Poles and UK investors.

Apparently they will offer up to 100% LTV in Polish Zloty, Sterling and Swiss Francs.

Also, another Polish lender, mBank has opened in London and will offer British buyers Polish, Czech and Slovakian mortgages soon.

No idea of rates but hopefully this will make investors' lives easier in future. PS, how about talking to these guys about preferential deals?
Huw

Hi Huw,

Sounds like great news. We've had mixed results in some markets with UK branches of foreign banks, but this looks much more promising.

If they can put together a really simple process for applications, and competitive rates then we'll make sure that they get listed on our site.

One of the biggest hurdles we've had in local markets is that even when the customer-facing staff speak English and understand the needs of investors they still sometimes have problems with their risk assessment departments. With the bank based in London they should have that sorted out.

Wonder how they'll treat clients who are heavily leveraged in the UK and tight for cashflow. Thanks for posting this - the more we can share this kind of information the better we'll all do (and I speak not only as a director of the company but as a private investor in Poland with a mortgage to arrange in the near future......)

Best wishes

Peter

Hi Peter

They're advertising suggests 100% mortgages and also availability in GBP which would remove currency risk. As interesting is that they promise documents in English!
Huw

Hi Huw,

I contacted the bank today and got confirmation that the mortgage loan is available for people who can prove their UK income. It could be use to finance off-plan and secondary properties in Poland (possible to include fit-out and additional costs, like notary fees).

All documents are in Polish and in English and don’t have to be translated.

The max LTV is 100% and max term is 40yrs, but typically you would get 80% over 30-35yrs. The interest rates start from 7% for GBP, 6.8% for PLN, 4.3% for CHF and 6.1% for Euro. Arrangement fee is up to 3.5%.

As we can see, the terms are very similar to those available in Poland. Assuming that the monthly rent would cover the monthly repayment, the question is: Is it worth it?

Sure, you can save on going to Poland and signing the docs or paying a lawyer to do it for you or on translating the docs, but…

Rent would be paid in PLN to a Polish account, which is also needed to pay the management fee. You would have to transfer the money every month to the UK so you’ll face the exchange risk and cost of transfers.

Additionally, taking mortgage in UK would affect your credit score and possible mortgage offers in UK. If you have mortgage in Poland, the UK credit check doesn’t show it.

What do others think?

Cheers,
Anna

Anna, you're correct on the currency risk if you take the mortgage in GBP. However, presumably if you got the mortgage in PLN the issues you mention go away as you could make the payments in Poland from your Polish bank account.

I also assume the issues with a SFR mortgage are the same as they would be if you got a SWF mortgage in Poland.

Some further investigation required I guess.
Huw

As to the question is it worth it, have you tried getting a mortgage in Poland?!

Anna,

I have spoken to one of their consultants about the process for getting a mortgage. She said the process from application to decision takes 10 working days with a further 3 days for the formal offer - great if true.

However, it they did seem to be acting as a postbox for passing information back to Poland rather than as a fully British operation (e.g you have to supply a credit check, so they cannot have the access to credit records a British company would). This being the case are you sure a loan would show up on future credit checks.

Regards

Alan

Hi all

I've just had a detailed conversation with one of the bank's mortgage advisers. He didn't think there would be any problem in me getting the required loans (which is a joy, if true, because this guy works for the mortgage bank and is not a broker). There would be a 1.3% set-up fee, mortgage in CHF at 4.7%. I could go into the Shaftesbury Avenue, London, office with all my documents and he would verify them there. No POAs, no notaries, no waving goodby to your documents for weeks. He even offered to help me fill in the forms. Snags include difficulties with getting mortgage cover for white finish and kitchens if they are not included in the developer's contract. If the mortgage is for over 400,000PLN then a Polish surveyor has to look at your property, off-plan or not, at a cost of 500PLN — not an excessive price but a bore to arrange.

PKO has a link-up with NatWest. You start a NatWest welcome account and you can transfer monies to your Polish account free of charge. The exchange rate risk is the same as it would be if you were arranging the mortgage in Poland and having a mortgage in a different currency to the rent.

Anna's description of the mortgage process is light years away from my experience. I went to Property Secret's recommended partners, and I was given agreement in principle, but some took ages to even respond to emails and gave me no confidence at all. Most had too many applications to deal with. Eventually turned to Deutche Bank, a very reputable institution. I was given agreement in principle, and I sent all the papers which verified what I claimed to be true. They took 8 months to decline my application, and gave no reason, and no room for appeal. Meanwhile TGC Lawyers committed me to the purchase, whilst I was on holiday (and with only 7 days to say that I couldn't proceed), I missed the deadline and was committed. I used TGC Lawyers to secure the mtge. They said it would take a couple of weeks, but it has in fact taken several more months. The rate is significantly higher than Property Secrets initially suggested - nearer 7% than 4%, the fees are extortionate - some 3 times higher than PS suggests, and so it will be very difficult to make the maths work. In addition, the PLN has strengthed by more than 20% against GBP in the last 12 months, so when PS used a rate of 5.8 PLN, we are now looking at 4.6 PLN to GPB. OOCH! Neither PS nor TGC supply repayment schedules, so you can't actually book your PLNs in advance for scheduled payments to fix the rate. TGC's fees are also quite steep, and their service is limited - for example, they won't translate your documents, so when you get your payment schedule from the Bank with only 7 days to make the payment, and you don't actually know what it says, it gets a bit tricky! As the developer only gives you 7 days notice of when a payment is due, if you haven't got all your ducks in a row, you can quickly be hit with penalty interest and at 11%, this also hurts. I convess I am a novice investor in foreign markets, and like many thought this was an opportunity to boost my pension. PS made it sound easy. I'm in it for the long term, but at the moment am finding it exceedingly difficult to see where my profit is going to come from, reading about difficulty with lettings, the price of kitchens, management costs and a cooling market. This is not for the feint hearted! Think things through carefully before you commit! I understand progress has been made ironing out some of these issues, but it was all too slow for me, and If I had my time again, I would not have got involved. I've had a very stressful year getting all of this resolved and will be forking out significantly more than I anticipated.

this sounds interesting - does anyone know how long they keep their mortgage offers valid for? I understand 6mths is typcial for PS' usual partners, just wondering if this is any different?