The Mortgage Act entered into force on July 22, 2017. The new law increases the protection of borrowers. Under the new regulations, the bank will have 21 days to make a decision on granting a mortgage. In turn, the consumer has the right to withdraw from the loan agreement 14 days after its signing. Interestingly, the legislator also regulated the issues related to advertising of this type of products.
Poles are eager to take out loans for real estate
The real estate market is getting better. In the first quarter of 2017, 12,480 apartments were bought. For comparison, in the whole 2012, 17.5 thousand found new owners. All because of low interest rates. Investment deposits are not profitable, which is why consumers started investing in real estate. Renting an apartment can bring several times higher income than deposits.
According to NBP, the value of mortgage loans for individuals amounted to PLN 404.5 billion. Poles are more willing to borrow in PLN – the value of the loan in their native currency increased by PLN 3.97 billion compared to June 2017. On the other hand, the amount of the loan in foreign currencies increased by PLN 380 million.
The new mortgage law – greater consumer protection
On July 22, 2017, a new Act on Mortgage Credit and Supervision of Mortgage Brokers and Agents entered into force. Regulations increase consumer protection. The adopted law is to improve the competitiveness of the internal market. Credit agreements are to be consistent and fair. However, information on the terms and risk of the loan will be provided at every stage of the application.
The Act prohibits the so-called tying. Earlier, banks offered other products (e.g. credit card) to lower interest rates or commissions. From the entry into force of the new provisions, financial institutions will only be able to require an invoice. It will still be possible combined sale, so-called cross selling.
It is also worth noting that the new regulations regulate the services of intermediaries.
The agent should indicate whether he acts on behalf of one or several financial institutions. What’s more, he is obliged to inform the client about the amount of commission collected. All necessary data is included in a special information form.
The customer has the right to cancel the loan 14 days after the conclusion of the contract
As in loans, the bank must provide a representative example of a mortgage and indicate the main parameters of the liability. Therefore, during a conversation with a representative of a financial institution, the borrower will receive a special information form. The document will include interest rate and APRC. If the bank presents a combined offer, the consumer will receive two forms – for a loan and an additional product.
Under the new regulations, the customer has the right to terminate the contract with the lender after 14 days of its conclusion. The regulation will force banks to offer the best conditions, because in a situation where the client finds a better offer he will be able to resign from the loan without any consequences.
If, after signing the contract, the bank changes the offer to a more favorable one, the consumer will also have the right to renegotiate the terms of the loan. However, if the institution raises the fees, then the new price will not apply. Moreover, the Act will speed up the verification process. After the client submits a loan application, the bank has 21 days to respond and issue a decision.
Credit holidays for people who have problems with repayment
People who, for legitimate reasons, have problems settling their obligations can sleep peacefully. The new regulations impose an obligation on the bank to ensure debt restructuring. Therefore, the financial institution may propose changing the installments, extending the loan period or temporarily suspending the repayment.
If the borrower is late paying the installments, the bank should issue a request for payment. The deadline for settling the liability in such a situation may not be less than 14 days. Furthermore, the summons must contain information on the possibility of debt restructuring
Early loan repayment without consequences
Until now, there were no top-down rules governing the early repayment of a mortgage. Banks acted independently on this issue. Most financial institutions demanded payment in a situation where the client decided to pay off most or all of the claim before the agreed date.
Under the new regulations, in the case of loans with a variable interest rate, banks may not charge fees after three years of repayment. If the customer decides to settle the debt before this period, the fee cannot be higher than 3% of the sum repaid.
On the other hand, in the case of loans with a fixed interest rate, the fee for paying the debt earlier will be charged throughout the entire fixed interest rate period.
APRC amount in mortgage advertising
The legislator has clearly specified what information must be included in the mortgage advertisement. The spots must include the APRC amount, the total loan amount, the total repayment amount and the effect of exchange rate fluctuations in the case of a foreign currency loan.
The Act prohibits the use of ambiguous statements that could mislead the consumer. The font should be legible. The display time should be long enough for the recipient to be able to read about it freely.
Mortgage only in PLN
The regulations will severely limit taking a loan in a foreign currency. Such obligations will be able to apply for persons who receive remuneration in a currency other than PLN or have the majority of funds or other assets in foreign cash.
This provision was affected by controversies related to loans in francs. Due to the increase in the price of the Swiss franc, many borrowers have to pay a much larger amount than expected.
Mortgage loan in a non-bank institution
Mortgages can only be granted by banks and credit unions. Loan companies do not offer this type of product.
However, the new regulations do not regulate the issue of covered loans. In the light of applicable regulations, a secured loan is not a mortgage. Some non-bank institutions offer payday loans, where the collateral is the debtor’s real estate or vehicle. These types of loans do not require you to specify the purpose for which the commitment is made.