A mortgage allows you to obtain money from a bank for, among others for the purchase of the residential property. Can such a loan be obtained if the subject of the investment carried out by the borrower is a GFI flat?
It is good to know how banks view such lending purposes and whether investors will be able to take out a cash loan in such a situation.
What are social housing associations (GFI)?
GFIs have been created in Poland for over 20 years. This term refers to residential premises built by social housing associations – in short GFI. S tus tus usually has a municipal company operating on a nonprofit basis.
The construction and management of GFI-type apartments are not aimed at generating profit for these companies. Their primary goal remains to meet the housing needs of the society from the given commune.
The history of GFI begins around the second half of the 90s of the last century. Their creation was made possible by the Act on certain forms of support for housing construction of October 26, 1995.
According to the act and its art. 23 social housing associations can be created in the form of limited liability companies, joint-stock companies or cooperative legal entities.
Characteristic for GFIs is that they operate in the area specified in the contract or their statutes, and their income can not be allocated to partners or their members. The subject of GFI activities is the construction of residential houses and their operation on a lease basis.
Can I take a mortgage for an apartment in GFI?
People who do not own residential real estate and cannot afford to buy an apartment due to low income and insufficient creditworthiness, as well as those who cannot afford to rent on market terms, can take advantage of the offer of GFI apartments.
The Act on certain forms of support for housing construction defines the income criterion that must be met by persons applying for a GFI flat. The limit varies depending on:
- voivodship in which the GFI building is located;
- household size;
- the period in which the apartment was built, and whether participation was required.
In order to receive the keys to a GFI apartment, you have to pay considerable costs, including:
- a deposit of up to one year’s rent,
- participation, which can reach up to 30 percent apartment prices.
Many Poles interested in living in the GFI premises do not have the funds to finance such an investment. Can I take a mortgage on GFI? Will the mortgage cover the costs of participation and deposit?
Unfortunately, this is not possible because residential premises that were built as part of social housing associations cannot be secured by a mortgage.
All because the customers who buy them are not the legitimate owners of the property, but only tenants of the apartment. A loan for a GFI flat can be taken in a form other than a mortgage.
What credit can be used to participate in GFI?
The fact that you cannot take out a mortgage for participation in GFI does not mean that banks are not willing to finance their clients’ investment. What credit for GFI should be taken to get a chance to live in an apartment built by a social housing association?
Coverage of participation costs in GFI in the amount of up to 30 percent. we can secure real estate values by taking out a cash loan or mortgage. Banks grant cash loans for the implementation of any credit purposes by the customer. So he can spend money from a cash loan to cover the cost of participation.
The disadvantage of cash loans is their low amount and relatively short loan period. However, this loan can be taken from some banks even within 15 minutes of submitting the loan application.
The formalities that a potential borrower must complete are kept to a minimum. On the other hand, the mortgage loan will also cover the costs of participation in GFIs, but at the same time, it can be granted on more preferential terms, even for 30 years, which will reduce the amount of the principal and interest installment.
A mortgage loan may be granted in a fairly high amount, but it requires collateral in the form of a mortgage established on a residential property, which cannot be a GFI premise, but another property.