Against this background, the Polish requirement of 20%, of which half can be replaced by insurance, does not seem so restrictive. However, this does not change the fact that for many people it is too much.
As a rule, the own contribution is 60,000. USD when buying a flat worth 300 thousand USD. Added to this are transaction costs, equipment expenses, and renovation and finishing work, and the amount of cash you need can easily get close to a substantial amount of 100,000. USD.
To buy a flat on credit you will need a lot of cash
Of course, not all of this amount needs to be spent immediately (e.g. equipment), some can be negotiated (e.g. notary fee or commission), and above all, some banks will retain the possibility of granting mortgage loans to people with 10% of interest even in 2017. own contribution.
The missing contribution needs to be replaced by insurance, which means an additional cost, but for many borrowers, this will be the only solution that will allow them to live in their own “four corners”.
Without a housing contribution, the apartments would be more expensive even by 20-40%
This is also the biggest minus the introduction of requirements for own contribution – especially for young people it hinders the purchase of their own “M” and condemns to rent and deposit the amount needed to buy. The problem is, even more, pressing in the face of the fact that it will become increasingly difficult to get budget subsidies when buying an apartment (from the “Apartment for young people” program).
For the sake of order, it should also be added that the growing requirements for own contribution also have their advantages – for example, reduced risk and stabilization of the real estate market. The most important advantage, however, seems to be the fact that if banks did not require their own contribution, most likely housing prices in Poland would rise significantly. This is a particularly lively concern surrounded by the low cost of credit on the Vistula River.
Research from the International Monetary Fund from 2011 shows that the increase in the required own contribution by 10 points. percent. limited the rise in property prices by 10 points percent.
It is true that the Korean market was analyzed, but if these results were directly translated into native conditions, one could risk the statement that without the requirements set by banks, housing in Poland could be as much as 20-40% more expensive than it is now (a few years ago not only 100% debt, but even over 120% of the property value).
There may be a paradox here, in which high requirements for own contribution make it difficult for young people to buy their own “M”, but the lack of such requirements would have a similar effect because the flats would simply be too expensive for these young people.
20% own contribution is not much?
It is also worth paying attention to the data collected by Good Finance, which shows that the requirements imposed on banks by the Polish Financial Supervision Authority are not excessively restrictive compared to those in other parts of the world. Data collected by Good Finance from 36 countries show that in most of the banks allow debt to persons who have at least 20% of their own contribution (LtV at the level of max. 80%). This is the case in the 28 countries surveyed, which is roughly three out of four considered.
On the other hand, you can also find countries where the requirements for own contribution are much more restrictive than on the Vistula. At least 30% Own contribution is required by Austrian, Spanish or Slovenian banks. It is even more difficult to get into debt in the United Arab Emirates or Hungary.
In the said Arab country, the requirements for own contribution vary depending on the buyer’s country of origin, type of property and its value, but they can be as high as 50% of the price of the property (development premises under construction).
Hungarians who would like to borrow in a foreign currency will also face high requirements. If a resident of Budapest tries to borrow in Swiss franc or yen he must have as much as 65% of the price of the apartment in cash.