A mortgage loan and a fixed-term contract – who gives?
April 25, 2019 Are you planning to buy an apartment? A mortgage loan and a fixed-term contract is a very important topic for you. According to the results of the CBOS survey conducted in 2018, as much as 18 percent. Poles have no permanent contract. Can they still get a mortgage anyway? How do banks view a fixed-term contract? What happens if you change jobs? If you’re in a similar situation, check what your chances are to live on your own!
Will I get a mortgage with a fixed-term contract?
The form of employment is one of the most important criteria taken into account by the bank when applying for a mortgage or cash loan. It affects the assessment of the creditworthiness of the possibility of timely repayment of debt. In the case of a loan for an apartment, the debt reaches several hundred thousand, hence the banks scrupulously look at our incomes, monthly expenses and our credit history. The source of income also has a significant impact on the bank’s final decision. Does a fixed-term employment contract cross out our chances for a mortgage?
No, most banks put on a fixed-term contract and an indefinite contract. However, if we still have a month or two up to the end of the contract, we must try to extend it. We can also ask the employer for a certificate indicating that he intends to continue cooperation with us. In addition, many banks require a minimum period of employment for a loan – in the case of a fixed-term contract, it is usually 6 months (three months are sufficient for a contract of employment).
Third fixed-term contract – changes in regulations
Good news for people employed under a contract of employment are changes in the Labor Code. From February 22, 2016, new regulations apply, modifying the principles of employing employees on fixed-term contracts. According to government regulations, you can now sign a fixed-term employment contract for a maximum of 33 months. What’s more, the number of fixed-term contracts is also limited. The employer may sign with the employee a maximum of three contracts for a definite period. Each subsequent contract is automatically transformed into a contract for an indefinite period.
The new rules regarding the third fixed-term contract do not apply to:
- an agreement concluded to replace an employee for the time of his justified absence from work,
- contracts concluded for the purpose of performing occasional or seasonal work,
- contracts concluded for the purpose of performing work for the duration of the term of office.
The time and quantity limit also does not apply when the employer is unable to sign a permanent employment contract for objective reasons on his side.
How to get a loan for an apartment with a fixed-term contract?
There are several ways that can help us sign a mortgage contract without a permanent employment contract. For the bank, the continuity and amount of our earnings is as important as the form of employment.
Our chances for a mortgage will increase if:
- we will have a fixed remuneration that will allow us to deal with the repayment of the installment. In the mortgage calculator, we will quickly verify what installments we will have to pay for the given loan amount. It is worth applying for a raise or finding an additional source of income,
- We will pay off all other liabilities and, above all, we will settle other loans and give up credit cards,
- we will limit the amount of monthly expenses,
- we will take care of a positive credit history. If we have rarely used financial products so far, let us do small purchases in installments. We quickly settle the installments and show that we are reliable payers,
- we will postpone our own contribution. According to Recommendation S, the minimum own contribution is currently 20%. property values,
- we will apply for a loan with another person, e.g. with a partner or a parent. The second borrower will increase our chances of a loan provided it has a positive credit history and good creditworthiness.
How much do you need to earn to get a mortgage? According to the data of the Polish Bank Association of 2018, the average value of a mortgage loan is PLN 220,000. zł. With such a loan contracted for a period of 25 years, the monthly installment will amount to PLN 1,023.92. Let’s see if we are able to allocate such an amount to repay the loan and remember that this installment will accompany us for the next 300 months!
Mortgage and job change
Can a change of job thwart our plans for a mortgage? Sometimes, together with the search for a dream apartment, we look for a more financially attractive job. In the end, the loan installment for a flat is a big expense. Unfortunately, it may turn out that we have to postpone our plans for a moment M. Why?
Banks like stability and, as we have already mentioned, require a minimum period of employment. This means that when we change jobs, we need to get a few more salaries from the new employer, before we apply for a mortgage. Banking procedures may vary, let’s check what minimum period of employment our institution requires.
There is no problem, in turn, change work during the mortgage. Some banks require notification of this fact, but as long as we regulate installments in accordance with the repayment schedule, this does not matter much. It would be much more important to lose your job or significantly reduce your income, making it impossible to make your payments. In this situation, we must contact the bank as soon as possible!
Mortgage loan and contract of mandate
The commission contract does not have to be an obstacle to getting a mortgage. We already know that banks value stability and invariability. Therefore, even when we are employed under a civil law contract, we can apply for a loan, provided that we have a sufficient period of employment. Such forms of cooperation require at least 12 or 24 months to take up a position with a given employer. The situation will be similar when it comes to economic activity. If we show that our source of income is stable and we show high income, we should receive a positive credit decision. Banks can also accept income from a pension or pension. The condition is to provide a certificate confirming the granting of these benefits permanently and documents indicating their current amount.
With the contract, we can also apply for a cash loan, which is an alternative to a mortgage! It is more expensive, but it is much easier to get it. Banks often grant credit without certification, which requires only a personal ID card.
In which bank to take a loan?
Regardless of the form of employment, it is always worth looking for the offers of the cheapest mortgage. Its costs depend mainly on interest and commission. The most popular loan is variable interest rate, because it reduces the total cost of the loan. The fixed interest rate gives a greater sense of comfort and security, but it is more expensive solution.
The commission is from 1 to 3 percent. the value of the mortgage. We pay it in a single payment or it is included in the installments. The first way to regulate commission costs is more beneficial. Although we are initially expecting more expenses, we will save a lot of money on that.
Do not rush to choose a mortgage offer. We need to be sure that its conditions suit us and, above all, that we will be able to repay it.
A loan without a contract of employment
The non-bank institutions are definitely less strict in terms of the form of employment. They provide loans online regardless of the source of income. What’s more, they also accept family benefits and alimony. The amount of influence is crucial, which allows for a trouble-free return of debt.
It is true that the loan will not finance the purchase of the flat, but it can support us in achieving this goal. Taking a loan for own contribution, we will not have to worry about the capital necessary to receive financing for the purchase of real estate. If we do not have a small amount, we only need a payday, while larger amounts will be provided by installment loans. Their most attractive offers can be found in the installment loans ranking.
We already know everything about: a mortgage and a fixed-term contract. Such a contract does not prevent our chances of having our own four corners. That is why today we can get interested in the offers of banks and submit a loan application, which we need for the implementation of plans!