The total cost of a mortgage depends on many components.

The largest part of the loan costs is, of course, the interest rate. In addition, there are also a number of additional one-time or recurring fees, depending on the bank’s offer. When choosing an offer, it’s worth considering the total cost including additional fees because the difference can be significant. Below we show you what most often makes up the total cost of a loan:

The interest rate – the interest rate consists of the MARGIN, which is fixed throughout the loan period and its amount depends on the offer of the bank. The second element is the reference index, the so-called WIBOR/WIRON, which is variable and its amount depends, among other things, on the decision of the Monetary Policy Council. The amount of the monthly installment depends on the interest rate.

Disburement commission – this is a one-time fee charged by the bank at the time of loan disbursement. You can pay the commission from your own funds or include it in the amount of the loan taken out. As a rule, the commission is between 0 and 2% of the loan amount.

Life insurance, unemployment insurance, real estate insurance – banks, depending on the offer, require additional insurances such as life insurance or unemployment insurance. Some banks require these insurances in the first years of the loan and some for the entire period. Real estate insurance, on the other hand, is required for the entire term of the loan.

Fees for cross sell products – Some banks’ offers require additional financial products such as a credit card or bank account.

Low down-payment insurance – Until recently, most banks required a 20% down-payment when taking out a loan, which meant that the borrower should have 20,000 zlotys of down-payment for every 100,000 zlotys of property value. However, more and more offers are appearing that allow taking a loan with a smaller contribution (not less than 10%), but the bank then imposes additional fees to protect itself from risk. The proposed offers are usually much less favorable, so in many cases it is worth accumulating the preferred 20% contribution.

Property appraisal cost – this is the expenditure paid to the appraiser from the bank or to an external specialist that estimates the market value of our property. This appraisal is needed so that the bank can determine whether it can give us a loan for the amount requested. This is because the loan amount cannot be higher than the real value of the property. The cost of such an appraisal is usually in the range of PLN 600-1200.

Official and notary fees – with the purchase of real estate with the help of a mortgage we will incur additional official fees. These include, among others, court fees for entries in the Land and Mortgage Register, such as registration of ownership or establishment of a mortgage. These fees can vary depending on what kind of property we buy and the notary’s offer. In addition, there is a transfer tax if you buy a property on the secondary market.