According to the data of the Ministry of Development, the number of self-employed is nearly 2.5 million. How do banks approach customers who have their own business and want to take out a mortgage during the COVID-19 pandemic?
Pursuant to the recommendations of the Polish Financial Supervision Authority, banks are required to check the creditworthiness of customers applying for mortgage loans. It is about the ability to repay the mortgage liability along with interest and other fees on the dates specified in the contract and installment schedule. If a client wants to be considered creditworthy, he must prove that he is earning a stable, sufficiently high income.
Depending on the bank, other sources of income may be accepted for approval. The minimum period of running the company is 6 months if it provides services to the former employer with whom the given person had a previous employment contract, or 12-24 months in other cases. Twelve-month activity is sufficient to grant an entrepreneur a mortgage on this basis, inter alia, in such banks as: Alior Bank, Bank Millennium, Bank Pekao, ING Bank Śląski.
Twice as long market experience is required at Credit Agricole, mBank, Bank Pocztowy and Citi Handlowy.
During the COVID-19 pandemic, some banks introduced certain restrictions on mortgage lending to entrepreneurs operating in the so-called high-risk industries, such as: transport, construction services, gastronomy, hotel industry.
The COVID-19 pandemic has also made banks more restrictive about income stability, which can be a problem when doing business. When analyzing creditworthiness, the income from the previous tax year is taken into account. If 2021 started well for the entrepreneur, but in 2020 it showed a large loss, then the bank analyst, when estimating the income, will take into account the lower amount, i.e. from 2020, which will result in the creditworthiness being too low. In some banks, advisers check income not only year on year, but also two years back.