The average time taken to process a mortgage application has been systematically shortening for several months. At the beginning of this year (in January and February), clients had to wait about 40 days to process their housing loan application.
However, with each passing month the situation improved and in June customers signing loan agreements had to wait for the analysis of the application and finalization of the contract on average 34 days. And what does the right bank do when it examines a housing loan application?
The long waiting period for the bank’s decision at the beginning of the year was primarily the result of a large number of applications submitted at the end of 2011.
Allowed some banks
Many clients wanted to avoid changes resulting from the entry into force at the beginning of this year of the SII Recommendation of the Polish Financial Supervision Authority, which significantly reduced creditworthiness. Submitting the application in the old year allowed some banks to avoid restrictive rules.
In addition, the extended waiting times were affected by the large number of non-working days during Christmas and early January. For these reasons, clients who finalized contracts in January and February 2012 had to wait a bit longer for their applications to be considered.
Currently, due to the holiday season, we should also take into account the extended time for analyzing mortgage applications.
Time to start the loan – here the customer decides
The next stage after signing the contract is to launch the loan. However, this time depends mainly on the client, to a lesser extent on the crediting bank. Depending on the type of transaction (secondary, primary market, construction of the house), customers can run their loans within a few, several or even several dozen days.
Payments on the secondary market are made only after the notarial deed, the date of its conclusion depends not only on the borrower, but also on the seller. The disbursement of funds on the primary market is determined by the provisions of the agreement with the developer and is not directly dependent on the provisions of the loan agreement. Therefore, the time when the loan is paid out is decided by the customer.
Therefore, the time of processing the application is also another element of the loan offer that should be taken into account when choosing a bank. You should not limit yourself to comparing the margin, interest rate and commission for granting the loan. An important issue is the time we will have as clients to wait for our application to be processed. Unfortunately, banks do not undertake bindingly to issue a decision within a specified time. The times given are only declarations, without the possibility of enforcing them in a situation where the analysis time is extended.
Why is it so long to get a mortgage?
If we compare the real average review time of the loan application with the time presented in the side ads, we can see a discrepancy at first glance.
Banks advertising their offers often inform that the customer is able to get a credit decision within 2 days. However, it should be remembered that most often this means that during this time the customer will be verified in BIK, BIG and other registers and the creditworthiness of the potential borrower will be checked. Therefore, after two days, we can receive information whether we have successfully passed the first stage of bank verification.
And to make a full decision on granting a mortgage, the bank still needs to verify the property. This procedure takes a bit longer because the appraiser must go and view the property being purchased. Even in a situation where the customer provides the quote itself, its content must also be verified and this takes some time. Therefore, a complete examination of the application must take at least a few days.
In addition, issuing a credit decision by a bank is not the same as granting a loan. The bank may ask for additional documents (account statements, tax returns), which also take some time to verify. Even issuing a credit decision without any additional conditions does not equal the credit granted. Only signing the loan agreement guarantees the granting of the loan. But even this process requires several days in some banks.
Due to the complexity of the process, the period from submitting the application to signing the loan agreement must take a minimum of several days. The situation, of course, is significantly improved by submitting a complete application, as per the bank’s list of documents. Only after completing all necessary documents is it possible to fully analyze the application. Advertised quick credit decisions are very often limited to issuing non-binding information on the maximum creditworthiness for the bank.
Withdrawal of funds
After signing the loan agreement, the next stage is starting the loan. The procedure is different on the primary market than when buying a used property. The basic condition for the withdrawal of funds on the secondary market is the signing of a notarial deed and submission of an application for entry of a mortgage to the bank.
These are activities on the side of the client, not the bank, hence the borrower decides about the time of payment. Of course, the bank reserves a minimum time to verify the submitted documents (notarial deed), but usually it does not exceed 3 business days.
The procedure for launching a loan on the primary market is similar, but instead of the notarial deed, we must provide the developer signed contract for the transfer of receivables from the preliminary contract signed. Funds are also paid out after a maximum of 3 days has elapsed since delivery of the complete set of documents.