Buying a flat and the 500 plus benefit

The Polish government's flagship social programme, 500+, certainly improves the financial situation of families. Thanks to this support they can carry out many of their plans. But the question arises: does the 500 plus benefit make buying a flat easier? How does it help the applicant, and does it increase their creditworthiness? We answer these and other questions in this article.

Buying a flat and the 500 plus benefit

People who use online forums about the government support programme ask many questions. A large share of them concern the issue of whether buying a flat becomes easier thanks to the extra 500 PLN paid into the household budget every month. To answer this question, it helps first to explain what creditworthiness is. It is the borrower's ability to repay a liability they have taken on. It applies to repaying both loans and bank credit. Financial institutions need these calculations to know whether a given client will be able to pay back the borrowed amount. They are based mainly on information about the applicant's income and monthly costs. The difference between these two values shows how much money can be set aside for repaying the debt. So is 500 plus of any help in this respect?

A lot depends on the bank

It turns out there is no clear-cut answer to the question about creditworthiness for people receiving 500+. Since the programme was introduced, individual banks have made different decisions. One considered the benefit helpful, another not necessarily. Today even large banks are not inclined to look more favourably on recipients of the government programme. This means that people receiving the extra cash are not seen by banks as more reliable borrowers when it comes to a long-term mortgage.

READ ALSO – WAYS OF FINANCING A PROPERTY PURCHASE

500 plus – does it help in getting a mortgage?

It should be kept in mind that the 500+ benefit is paid only until the child comes of age. This means that receiving it is limited in time, while a mortgage is, as we know, a long-term commitment (lasting up to 30 years). In this case the social benefit may be an insufficient bargaining chip. It turns out, then, that 500 plus helps with a consumer loan, but not with a mortgage. A survey conducted by one of the specialist portals showed that in 2016 there was only one bank on the market that treated the benefit as increasing creditworthiness. Today there are practically no such banks. It is worth remembering, however, that some are still willing to increase the creditworthiness of an applicant seeking a consumer loan for a shorter period.

As we can see, benefits received under the 500+ programme are not helpful when applying for a mortgage. This means that families who receive them are not given preferential treatment. For details on this subject you can ask the specialists at REMAX Gold, who will advise on how to finance the purchase of a flat or house in the most favourable way.