According to Polish law, we achieve full legal capacity after the age of 18. Then we can fully enjoy our rights, also on the financial market, including loans. Most banks theoretically grant housing loans to even 18-year-olds, but reality shows that the practice in this area varies.
Two institutions explicitly reserve a higher age in their procedures, and the other banks apply other restrictions to limit the availability of loans for very young people. At Bank E-Money, the borrower’s minimum age is 20, and at Good Finance Polbank is 21 – younger people will receive a negative decision to grant a loan.
The 18-year-old loan application will be accepted
But we must remember that the borrower will be subject to scoring as always. What is the assessment like and why do young people fall worse in this verification? Based on the individual features of the borrower, points are awarded and a customer credibility assessment is created.
Important features affecting scoring include, but are not limited to, the borrower’s age, education, form of employment, professional experience or credit history. For obvious reasons, a person who has just turned 18 will not get too many points and their scoring may not be enough to get a loan. In practice, therefore, banks thus prevent people under the age of 21 from getting a housing loan.
People aged 25-35 have a much easier time. This group of borrowers is already characterized by relative professional and family stability, which is a feature very desirable for banks. These people can get a loan more easily than those just starting their adult life.
The maximum age of the borrower – 65? 70? 80?
Already people over 50 may have trouble getting a loan. Although such borrowers can do great in scoring, the creditworthiness resulting from the maximum repayment period may be a problem. The standard that operates on the market is to shorten the loan period so that the repayment date falls before the age of 70 by the oldest borrower.
For this reason, a 50-year-old will get a loan for a maximum of 20 years, which limits the amount available. Limiting the repayment period to 70 years is most common in banks, but several institutions use different solutions.
This can be a costly solution given the amount of the insurance premium for the elderly. In this case, the monthly premium may be up to several hundred zlotys, which raises the total costs associated with the loan.
The other end of the lending policy
We will find banks that shorten the lending period to the age of reaching retirement rights. At ING, the maximum repayment period is 60 years for women and 65 years for men. Also mBank and Pekao BH set the maximum loan repayment age up to the borrower’s age of 67.
It is worth noting, however, that even in banks that allow you to pay back loans in retirement, your creditworthiness will be calculated differently. Banks must take into account the decrease in income after reaching retirement age, which has tangible effects in calculating the maximum amount available.
“Young” and “old” borrower
A common situation is the joint application of credit for 20-year-old people together with their parents, i.e. people around 50 years old. This happens in situations where younger people are not independently creditworthy and need to support their parents’ additional income.