Interest rate on the home loan

Many people cannot afford to buy an apartment for cash. This is partly due to rapidly rising property prices. In some Polish cities, housing prices increased by 20% during the year. The second thing is the financial situation of young people. Unless they have rich parents, their first jobs do not allow them to accumulate sufficient savings to buy a flat. The only way to get your own four walls is then credit. The offer of housing loans is very diverse, virtually every bank has in its offer a housing loan, but not all of them are beneficial for the borrower. An assessment at

What to look for when choosing a home loan? Credit comparison websites as well as rankings come with help. For example, the September 2018 ranking on a site compares eight home loan offers. In the first place is the offer in which the interest rate on the housing loan is 2.81% and APRC 3.18%. The remaining eight loan offers offer an interest rate of 3.21% – 3.91%. In turn, the APRC is between 3.26% and 4.01%.

The offer in last place, despite everything, is also worth attention, because in this case the bank does not charge any commission, and the interest rate is 3.21%, which results in one of the lower installments.

If you do not feel fluent in finance to analyze housing loan offers yourself, we can go to specialists who will help you choose the best option.
For those determined to get information, I recommend using loan comparison websites and calculators. You can find them on different pages – it’s worth using more than one.

What exactly is a home loan?

What exactly is a home loan?

This is a form of mortgage, where the loan is secured by a mortgage for the bank. The mortgage is a limited property right and charges the property to secure a specific claim. In practice, this means that the purchased apartment is owned by the bank until we repay the loan to the end. The mortgage also requires a down payment of up to 20% of the loan amount, depending on the offer. The maximum time you can take a mortgage is 35 years. Therefore, these loans are mainly granted to young people for the period of their professional work.

The mortgage interest rate is an important, but not the most important, component of the cost of a particular liability. The mortgage interest rate varies depending on the bank and depends on the loan margin, the reference rate, as well as what conditions were negotiated.

What is the mortgage margin? This is a permanent parameter that must be specified in the loan agreement. Of course, you can negotiate the value of the margin until the contract is signed, as long as the bank agrees. In turn, the reference rate is an indicator with which we cannot do anything anymore, neither we nor the bank granting the loan. Why is it like that?

When a bank grants a mortgage, it does not borrow its own money, but rather assets derived, among others, from deposits paid by other customers. As a result, banks must borrow funds between themselves. The interbank reference rate is the interest rate for such transactions. Thus, the interest rate on the loan is in one part the Euridor 3M reference rate and in the other the bank’s margin. For example, a loan interest rate of 4.7% may consist of a reference rate of 2.7% and a bank margin of 2%.

Is a home loan a good solution?

Is a home loan a good solution?

It depends on the individual situation of the borrower. However, you should always think seriously before making such a big commitment. It is also worth remembering that we will not receive a mortgage overnight, it is quite a long procedure. So if we need a source of quick financing, it is better to be interested in a housing loan, which requires less formalities.

In addition, if we decide to buy a new apartment from the developer, we can often count on help in finding a favorable home loan. It may even be possible to circumvent the need for own contribution, for example by taking out a mortgage loan for own contribution. However, a word of caution – after all, you should review the housing loan offers yourself, because the developer can offer us a bank with which it has a contract, and not necessarily the one with the best offer. 

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