Real Estate, Mortgage and Insurance Glossary

We have prepared a glossary of 50 less familiar terms worth knowing before purchasing an apartment, house or plot of land, applying for a loan or taking out an insurance policy.

Loans and Financing

LTV (Loan to Value) – the ratio between the loan amount and the value of the property used as collateral. For example, if a property is worth PLN 500,000 and the loan amounts to PLN 400,000, the LTV ratio is 80%.

Cross-selling – offering additional banking products together with the main product, such as a mortgage. These may include insurance, a personal bank account or a credit card.

Credit Scoring – a points-based assessment used by a bank to evaluate a customer's credit risk and estimate the likelihood of timely loan repayment.

BIK (Credit Information Bureau) – a Polish institution that collects information about customers' credit histories. Banks use this information when assessing loan applications.

WIBOR – a reference rate used in certain loan agreements in Poland, including when calculating variable interest rates. Changes in WIBOR may affect the amount of monthly loan repayments.

Temporarily Fixed Interest Rate – an interest rate that remains unchanged for a specified period, for example, five years. After this period, the bank offers new terms in accordance with the applicable rules.

Bridge Insurance (Interim Mortgage Insurance) – additional security used by a bank during the period between the loan disbursement and the registration of the bank's mortgage in the Land and Mortgage Register. Its application depends on the loan agreement and current regulations.

Loan Tranche – a portion of the approved loan paid out at a specified time or after certain conditions have been met. This is commonly used when purchasing property from a developer or financing house construction.

Loan Approval Letter (Promesa kredytowa) – a document confirming the bank's stated willingness to grant a loan once specified conditions have been met. It is not necessarily equivalent to a final credit decision.

Grace Period for Principal Repayment – a period during which the borrower pays only the interest on the loan, without repaying the principal. This does not mean that all loan repayments are suspended.

DTI Ratio (Debt-to-Income Ratio) – the ratio of a customer's financial obligations to their income. It helps assess what proportion of monthly income is used to repay debt.

Refinancing vs. Debt Consolidation – refinancing involves replacing an existing loan with a new one, usually from another bank. Debt consolidation involves combining several financial obligations into a single loan.

Real Estate and Legal Documentation

Easement of Land (Służebność gruntowa) – a legal right allowing the owner of one property to use another property to a specified extent. An example is the right of way across a neighbouring plot.

Utility Easement (Służebność przesyłu) – a legal right allowing a utility company to use someone else's property to maintain infrastructure such as power lines, gas pipelines or water supply networks.

Personal Easement (Służebność osobista) – a limited property right granted to a specific individual, allowing them to use someone else's property within a defined scope.

Lifetime Maintenance Agreement (Umowa dożywocia) – a legal arrangement under which ownership of a property is transferred in exchange for providing the former owner with lifetime maintenance and support, in accordance with the agreement.

Section III of the Land and Mortgage Register – the section containing information about rights, claims and restrictions affecting a property, excluding mortgages.

Section IV of the Land and Mortgage Register – the section in which mortgages registered against a property are recorded.

Public Faith of Land and Mortgage Registers – a legal principle that, in certain circumstances, protects a person who acquires property in reliance on the information recorded in the Land and Mortgage Register.

Claim for Transfer of Ownership – a right arising from a specific agreement that allows a party to demand the transfer of property ownership under agreed conditions. Such a claim may be recorded in the Land and Mortgage Register.

Share in Common Property – the ownership share in the common parts of a building and the land on which it stands, belonging to the owner of an individually owned apartment.

Share in a Private Access Road – co-ownership of a private access road shared by the owners of the plots that use it.

Commercial Premises – premises intended for non-residential purposes, such as an office, shop, medical practice or service business. Their legal status may affect financing and insurance.

Aparthotel – a property offering units primarily intended for short-term stays, often managed by a hotel operator. It is important to check whether the unit being purchased has residential or commercial legal status.

Occupancy Permit (Pozwolenie na użytkowanie) – an administrative decision that, in cases specified by law, allows a completed building to be used.

Energy Performance Certificate – a document specifying a building's or apartment's energy consumption, including energy required for heating, ventilation and hot water preparation.

Life and Property Insurance

General Terms and Conditions of Insurance (OWU) – a document setting out the detailed rules of an insurance policy, including its coverage, the obligations of both parties and circumstances in which the insurer may refuse to pay a claim.

Insurance Waiting Period – a period from the start of insurance coverage during which certain events are not yet covered. Its duration depends on the type of policy and coverage selected.

Deductible (Franszyza redukcyjna) – a specified amount deducted from the compensation paid by the insurer.

Excess (Franszyza integralna) – a minimum claim amount below which the insurer does not pay compensation. If the loss exceeds this threshold, compensation may be paid in full, subject to the policy terms.

Underinsurance – a situation in which the insured amount is lower than the actual value of the insured property. This may result in insufficient compensation in the event of a claim.

Reinstatement Value – the cost of restoring or rebuilding insured property to its previous condition, subject to the terms of the insurance policy.

Actual Cash Value – the value of property taking into account its wear and tear. When calculating compensation, this may mean deducting depreciation from the reinstatement value.

Third-Party Liability Insurance (OC) – insurance that may cover financial consequences of damage caused to third parties, for example, accidentally flooding a neighbour's apartment.

Premium Indexation – a mechanism involving periodic adjustments to the insurance premium, for example, to account for inflation or changes in the scope of coverage.

Medical Questionnaire – a form containing questions about the health condition and medical history of a person applying for life insurance. The insurer uses this information to assess the risk.

MSWiA Permits and Property Purchases by Foreigners

Acquisition of Real Estate by a Foreigner – obtaining ownership or certain rights to real estate by an individual or entity classified as a foreigner under Polish law.

MSWiA Promise (Promesa MSWiA) – a formal commitment by the Polish Ministry of the Interior and Administration to issue a permit for a foreigner's acquisition of real estate. It is valid for a specified period and does not replace the final permit.

Border Zone – an area located near the state border where special rules apply to the acquisition of real estate by foreigners.

Indirect Acquisition of Real Estate – obtaining control over a property through another entity, for example, by acquiring shares or stock in a company that owns the property.

Company Controlled by a Foreigner – a company over which a foreigner exercises control within the meaning of Polish regulations on the acquisition of real estate by foreigners. In certain circumstances, its acquisition of property may require an MSWiA permit.

Separate Ownership of Premises – legal ownership of a specific, legally separated apartment or commercial unit, independent of ownership of other units in the building.

Developed Land (Nieruchomość gruntowa zabudowana) – a plot of land on which a building is located, such as a detached house. When a foreigner purchases such property, both the legal status of the land and the nature of the building are important.

EEA Citizenship – citizenship of a country belonging to the European Economic Area. Citizens of EEA countries and Switzerland are generally exempt from the requirement to obtain an MSWiA permit when acquiring real estate in Poland.

Additional Terms Related to Property Purchases and Mortgages

Escrow Account (Rachunek powierniczy) – a special bank account into which buyers deposit funds for property purchased from a developer. The bank releases the funds to the developer in accordance with the rules applicable to the specific type of escrow account.

Developer Guarantee Fund (DFG) – a fund providing additional protection to buyers of apartments and houses purchased from developers in certain circumstances, including the developer's bankruptcy or the bankruptcy of the bank operating the escrow account.

Deposit vs. Advance Payment (Zadatek a zaliczka) – a contractual deposit (zadatek) serves as security for the performance of an agreement and may be retained or returned in double the amount in circumstances specified by law. An advance payment (zaliczka) is part of the future purchase price and is generally refundable if the agreement is not completed.

Land Subdivision (Podział geodezyjny nieruchomości) – a procedure involving the division of one plot of land into two or more separate plots. It may be necessary, for example, when purchasing part of a larger property.

Certificate of Independent Premises (Zaświadczenie o samodzielności lokalu) – a document confirming that a unit meets the requirements to be recognised as an independent residential or commercial unit and to have separate ownership established.

Assignment of Rights under a Developer Agreement – the transfer of rights and obligations arising from a developer agreement to another person, subject to the terms of the agreement and applicable law.

Understanding the basic terms related to real estate, loans and insurance makes it easier to make informed financial decisions. It is worth remembering that every transaction and credit situation may involve different requirements and formalities.

If you are planning to buy an apartment, house or plot of land in Poland, need financing or would like to learn more about insurance, it is worth consulting a relevant specialist.