While it is possible to secure a mortgage in Poland, most Polish lenders do not lend to foreigners.
As in the UK, borrowers need proof of income and banks also consider disposable in-come relating to factors such as dependent children and credit card debts to calculate how much they will lend against a property.
Some banks will lend up to 80% LTV with one or two lending up to 90% if their criteria are met.
Lending rates in Poland are more expensive than in the UK, partly because of the lack of competition and partly because of past bad debt problems in the Polish banking sector.
Most private investors, especially British buyers, finance their Polish purchases by remortgaging their UK properties through intermediaries in the UK.
However, there are specialist UK lenders that will lend money secured against properties in Poland.
While borrowers are effectively borrowing money from Polish lenders such companies administer the paperwork from the UK, making the process more manageable.
In Poland, a home buyer’s survey is not an integral part of the house buying process. Few Poles have any sort of survey carried out when they are buying properties, although reports can be commissioned from licensed builders. These cost around £45.
The hotspot for investment in Poland is the capital Warsaw, which lies almost in the centre of the country. Residential property prices have risen by more than 30% in Warsaw in the past year.
Small, centrally located two-bedroom apartments cost be-tween £40,000 and £110,000 and prime locations are Ursynow, Bilolk, Ochota, Saska, Kepa, Upper, Mokotow and Old Zoliborz. Krakow, near the southern border, is another hotspot. A good number of tourists visit the city each year (this figure was up 30% in 2006) which means the short break accommodation market is buoyant.
And with low-cost flights to Krakow’s international airport, house prices have risen because of investment by Irish, British and German investors.
Other popular areas include the Old Town and Kazimierz. Residential property prices here have risen by 30% on average in the past two years but are still about 50% cheaper than in Warsaw.
A two-bedroom apartment close to the city centre costs around £70,000 while a two-bedroom flat within 10 minutes walk of the centre costs £50,000.
As you move further out of the town, prices fall and vary according to property type and condition.
Krakow is a big tourist destination all year round, although Christmas and summer are the most profitable times for rentals. There is often a shortage of accommodation during these periods.
Students ensure long-term lets but these are often less profitable than summer season short-term tourist lets.
With budget flights to Poland and an increasing number of tourists and investors in the country it seems the property investment boom is set to continue.