Two types of employment contract I want to discuss here – permanent and fixed-term.
In both cases you can get a mortgage but Polish banks have different approach to this types of contract. I will also mention what kind of documents you will need to prepare.
You won’t find out here how high your earnings should be to get a certain amount of mortgage loan – this is a subject for another article.
In order to get a mortgage loan your income should be (in the bank’s judgement) stable and regular. Banks prefer therefore customers who get income from employment contracts because it is certainly regular and usually stable. But each bank evaluates this according to its own criteria and has a different policy.
Pernament job contract
Lucky you! There is no doubt that bank likes this type of income the most. ‘Pernament’ means contratc for an indefinite time. Actually, the only issue that needs to be mentioned here is the length of service. So the minimum length of service is… 3 months. Yes, exactly, if you have worked for the same company for at least 3 months (included a trial period ) and you have a permanent job contract, you can apply for a mortgage loan.
Of course, not all banks will accept such a short length of service, but fortunately among them are a few that have a reasonable offer – ING, mBank, Millennium. Another banks requires 6 months (or more) of continuous employment.
This does not necessarily have to be the same employer. If you have changed the employer, you will need to confirm your employment record by presenting a certificate of employment from your previous employer.
There are also banks that will require a longer period of employment (e. g. Pekao), but generally, if you’ve completed 6 months of work and you can document this, you will have enough mortgage offers to choose from.
Fixed-term job contract
This means that your contract would have end date included – for example, it ends in 2 years. Certainly you guess it’s going to be a bit more difficult, but, most importantly, you still have a chance to get a mortgage.
Generally a longer employment record will be needed. Although there is a single bank which requires only 3 months (mBank again), but if you want to have more choices you need a minimum of 6 months’ seniority. As in the case of an permanent contract, this does not necessarily have to be the same employer.
What is more important is the duration of the contract from the moment you submit your credit application. Hm, you may be surprised, but it is enough that your agreement will be valid…. 6 months ahead. The same banks – mBank, Millennium but also BGŻ, Pocztowy, Raiffeisen will accept the income from such a contract. The more restrictive banks will want the contract to last longer – 9, 12, and even… until the end of the lending period (Alior).
By the way, did you know that according to Polish Labour Law, an employer can only enter into 3 fixed-term contracts with you? The next contract by operation of law is to be considered a permanent contract.
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Bonuses, commissions, incentives…
Banks usually use average of 3 or 6 months’ income to calculate your mortgage affordability. The bank’s analyst will compare the average on the certificate with the average of the account inflows and will assume a lower value. However, if there is a high volatility in your monthly earnings during the analyzed period, the bank will surely want to look at your earnings a little bit more closely…
This will be the case when a significant part of your salary consists of the so called variable part, i. e. all kinds of bonuses, commissions etc. The bank will not always calculate average in such a situation. If you have received an annual bonus during this period, the bank will only accept a portion of this income for the calculation of the average.
I don’t want to go into details on this matter here, but I would just like to point out to you that this must be kept in mind. Each bank will have a different policy here, and even in the same bank – two different analysts can use different income calculations. I recently had a customer with a relatively large part of his income being bonuses (he is a salesman) – each of the three banks to which we applied set a different level of income. In all cases, this was less than the average.
If you are going to use the services of a mortgage broker in Poland, let him know at the very beginning that a part of your salary includes variables – a broker must take this into account when choosing the banks to apply to.
Documents required by banks if you have an employment contract
Salary certficate (standard requirement)
It is a one-page form containing basic data about your employment. Your employer (HR department, if you are working in a big company) completes this form and you must provide it to the bank in the original form. This is the basic document – all fields should be filled in with no deletions or corrections. The bank will call your employer and confirm the data contained in the statement.
Statements of account (standard requirement)
For a 3 or 6 month period. These can be statements in a PDF file that you will generate through an online banking service. Of course, statements must refer to the account to which your salary inflows 🙂 The bank will match the total inflows of your salary with the amount on the certificate. By the way, a bank’s analyst will also scan all the operations on your account 😉
PIT-37 or PIT-11 (sometimes, in some banks)
Sometimes a bank may also ask for your tax return for the past year. Bank Pekao normally asks for PIT-11 (the one you get from your employer) or PIT-37 and verifies your earnings for the previous year.
Certificate of employment (from the previous employer)
Only when you need to prove your employment record. Sometimes a contract with a previous employer may also be used as a substitute.
Certificate from the ZUS
(Social Insurance Institution) of the amount of contributions paid by the employer. Only if you are paid in cash and cannot confirm your incomes by account statements.
Confirmation of engagement
This is a special certificate issued by an employer, confirming that after the expiry of the current contract he is interested in hiring you for the next period. Some banks may require it when you have fixed-term job contract (e.g. PKO BP).
Let’s summarise most important facts:
Please note that in the course of the credit process, the bank may ask for additional documents, and this is often the case. All the information I have given here is based on data provided by banks and my own professional experience, but I would like you to know that banks can change their policies and requirements at any time. I would also like to point out that I have described here the banks’ approach to mortgage loans only, and the same banks may have different policies when handling other applications such as personal loans or credit cards.
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