Changes in the WIBOR rate, decisions by the Polish Financial Supervision Authority (KNF) — we all know how these factors can affect potential borrowers. But what can you do to reduce their negative impact if you already have a mortgage?
In this article, we’ll focus on a term that has recently gained popularity in the public discussion: REFINANCING.
What is loan refinancing?
Refinancing a loan means transferring your debt (or debts) to another bank.
But why do it?
The simplest scenario:
You have a mortgage that you took out with a 10% down payment. With regular property price increases, it’s very likely that — thanks to those increases and your regular repayments — even after one year the loan-to-value ratio (LTV) will drop below 80%, which may qualify you for better offers from other banks.
Another scenario:
You took out a mortgage when bank margins were higher. Lower margins usually appear when interest rates are high, so it may be worth refinancing your loan to lock in a lower margin while rates remain elevated.
Fixed-rate opportunity:
Refinancing can also allow you to switch to a fixed interest rate, often under better conditions than in your current bank.
It’s also possible to apply for a fixed rate within your existing bank, but make sure to ask about the terms and potential fees, as some banks charge an extra commission for such a change.
How does it work, and what are the costs?
You’ll need to set aside some time — refinancing involves applying for a new loan.
The process is usually less paperwork-heavy than when taking out the original loan, as you won’t need to sign new notarial deeds or provide construction cost details. However, you will still need some documents, such as:
- a property appraisal,
- a certificate from your employer, or
- income documentation (for self-employed borrowers).
Typical refinancing costs:
- Property valuation (if the previous one is over a year old):
- PLN 400–500 for an apartment
- PLN 800–1000 for a house
- Fee for registering the new bank in section IV of the Land and Mortgage Register: PLN 200
Is refinancing worth it?
Refinancing is not as simple as it might seem. That’s why working with a reliable financial expert can be extremely valuable — someone who will look at all aspects of your situation, not just margins or ancillary costs.
Remember: in the early years of a mortgage, most of your payments go toward interest, which gradually decreases over time. This is an important consideration — even if the new offer looks better “on paper”, refinancing might not make financial sense in practice.
