Selling an Apartment with a Mortgage – Is It Possible?

Yes. Polish law provides for no obstacles or restrictions that would prevent the sale of property with a mortgage. This is because repayment of the obligation is secured by an entry in the land and mortgage register in favor of the bank, while ownership remains with the borrower at all times.

Just a few years ago, selling apartments encumbered by a mortgage was not very common. According to real estate market experts working at obido.pl, this was due to property owners’ lack of awareness that such an option existed at all, as well as buyers’ distrust. Much has changed in this area, and an increasing number of transactions involving mortgaged apartments are now being completed.

Apartment with a Mortgage – Settling the Sale with the Tax Office

When selling an apartment encumbered by a mortgage, remember to fulfill your obligations toward the Tax Office. If you sell an apartment and five years have not yet passed since the date of purchase, you must pay tax amounting to 19% of the income. 

In the case of apartments on the secondary market, civil law transactions tax (PCC for short) also applies. It currently amounts to 2% of the property’s value, but as the seller, you do not need to worry about it. The obligation to pay the tax rests with the buyer. 

Selling an Apartment with a Mortgage: How to Do It Step by Step

The procedure for selling an apartment with a mortgage differs slightly from the standard procedure. This is because, in addition to the buyer and seller, the bank with which you have your loan also becomes involved in the process. So how do you sell an apartment with a mortgage step by step?

  1. Find a buyer – this can be done in several ways, either independently or with the help of a real estate agency. It is very important that the listing states that the property is mortgaged.
  2. Ask the bank for a promise of release – this is a bank statement in which it agrees to remove the mortgage after the loan has been repaid. It is usually valid for only 30 days.
  3. Draw up a preliminary agreement containing all the arrangements – the preliminary agreement must specify how the proceeds from the sale of the apartment will be divided. For example, if you sell the property for PLN 300,000 and the remaining loan balance is PLN 50,000, PLN 250,000 will be transferred to your account, while the remaining amount will be transferred to the bank with which you have the loan.
  4. Go together to a notary to draw up the agreement in the form of a notarial deed 
  5. Submit an application to the court to amend the land and mortgage register – in most cases, the notary will handle this obligation on your behalf.
  6. Ask the bank for a document confirming the release of the mortgage – the bank issues a statement confirming that the loan has been repaid and that the mortgage may be removed.

Summary

As you can see, the procedure for selling an apartment with a mortgage is not particularly complicated. However, if you still do not know how to carry out such a transaction, seek help from a lawyer or real estate agent.