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Office of Competition and Consumer Protection

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Repayment of a mortgage loan - statement of the President of UOKiK

< previous | next > 12.05.2022

Repayment of a mortgage loan - statement of the President of UOKiK
  • If you are paying off in full or overpaying a mortgage taken out after 21 July 2017, the bank must settle with you the fees related to the conclusion of the agreement. For more detail, see the recent statement of the President of UOKiK.
  • The President of UOKiK initiated preliminary investigations involving 17 banks to check whether they are correctly settling their accounts with consumers.

- WIBOR 3M and 6M interest rates, on which interest rates on mortgage loans in PLN depend, are rising, which also means an increase in mortgage instalments paid by consumers. If you have a suitable amount of savings, consider overpaying your mortgage with reducing the term or paying it off early in full. In such a situation, the bank should settle accounts with the borrower and reimburse any fees charged as the total cost of the loan on a pro rata basis. This should be done according to the simplest and fairest linear approach, as is the case with consumer credits on which banks have complied with the CJEU judgment and the guidelines of the President of UOKiK. This time we are verifying in investigations how 17 banks settle accounts with people who overpay their mortgage or pay it off completely, says Tomasz Chróstny, President of UOKiK.

The possibility of early repayment or overpayment of a mortgage loan is provided for in Art. 38 of the Mortgage Loan and Supervision of Mortgage Loan Intermediaries and Agents Act (hereinafter the Mortgage Loan Act or MLA), and the obligation to settle with the consumer is provided for in Article 39 of the same Act. Please note that this rule only applies to agreements entered into after 21 July 2017. In the case of mortgages taken out earlier, the issue of early repayment is regulated by loan agreements. 

Statement of the President of the Office of Competition and Consumer Protection

The bank should automatically settle with you when you repay the mortgage in full or in part and the term of the loan is accordingly reduced. Pursuant to Art. 39 of the MLA, "Where the mortgage credit is repaid in full before the date specified in the mortgage loan agreement, the total cost of the mortgage loan shall be reduced by the interest and other costs of the mortgage loan falling due for the period by which that agreement is shortened, even if the consumer has incurred them before that repayment." If this does not happen, lodge a complaint with your bank. The procedure for early repayment should be described in the loan agreement. You can invoke the statement of the President of UOKiK – download it from finanse.uokik.gov.pl. In it, we explain why you should be entitled to a pro rata refund of fees, what regulations this comes from and how the bank should calculate this.

According to the statement of the President of the Office for Competition and Consumer Protection, the bank should settle with you on a linear basis for, among other things, the fee charged, the margin, and the costs of intermediation or drafting of the agreement. This is the simplest method that consumers understand the most that is at the same time transparent and fair. It is also easy for banks to apply. It is based on the financial institution dividing all costs by the number of days the agreement was to be in force. The result is then multiplied by the number of days by which the term has been reduced – this sum should be returned to the consumer. This is how banks already settle accounts with those who repay their consumer credit early. They have therefore complied with the provisions of the Consumer Loan Act, the EU Directive, CJEU judgment in case C-383/18 (Lexitor) and the guidance in the position paper of the authority. The Mortgage Loan Act defines the obligations of the bank in the same way, therefore, in the opinion of the President of the Office, the same rules should apply to mortgage loan holders.

Preliminary investigations

The President of the Office for Competition and Consumer Protection (UOKiK) initiated preliminary investigations concerning practices and provisions in this respect set out in model agreements applicable in 17 banks. They are aimed to examine whether and how these banks settle with consumers who repay in full early or overpay their mortgages. The activities of the Office concern the following banks:

  1. BNP Paribas Bank Polska S.A.
  2. ING Bank Śląski S.A.
  3. Alior Bank S.A.
  4. Bank Millennium S.A.
  5. Powszechna Kasa Oszczędności Bank Polski S.A.
  6. Bank Polska Kasa Opieki S.A.
  7. Credit Agricole Bank Polska S.A.
  8. mBank S.A.
  9. Santander Bank Polska S.A.
  10. Bank Ochrony Środowiska S.A.
  11. Bank Pocztowy S.A.
  12. Bank Handlowy w Warszawie S.A.
  13. PKO Bank Hipoteczny S.A.
  14. Pekao Bank Hipoteczny S.A.
  15. mBank Hipoteczny S.A.
  16. ING Bank Hipoteczny S.A.
  17. Millennium Bank Hipoteczny S.A.

The President of the Office of Competition and Consumer Protection will also check whether there are situations where banks unjustifiably refuse to reimburse fees on account of early repayment of mortgage loans, even though at the same time, in such a situation, they demand early repayment charges.

Early repayment charge

A mortgage can be overpaid or paid off in full at any time. However, consult your agreement to see if the bank charges a penalty for this.

  • The provision allowing the bank to charge for early repayment by the consumer should be included in the loan agreement.
  • For agreements entered into after 21 July 2017 The right to collect this charge is laid down in Art. 40 of the Mortgage Loan Act:
    • In the case of a variable-rate mortgage, the bank can reserve this right and collect this charge if the loan is repaid or overpaid in the period of up to 36 months from the date of the agreement. Once this time has elapsed, the bank cannot impose this charge on you.
    • If you have taken out a mortgage with a fixed or periodically fixed interest rate – the bank can reserve this right for the entire period that the interest rate is fixed or periodically fixed.
  • Remember that if in the agreement the bank has not provided for the right to collect an early repayment charge – it cannot do so.

If you paid off your mortgage early, remember:

  • You are entitled to a pro rata refund of fees when you overpay part of the loan and choose to shorten the loan term.
  • The bank refused to account for fees and charges in connection with the early repayment of a loan? Report it to the UOKiK, write to us at [SCODE]dW9raWtAdW9raWsuZ292LnBs[ECODE]. You can also consult the Financial Ombudsman free of charge.

Financial calculator

We've put together a financial calculator with which you can check how the amount of your loan instalment will change when interest rates go up. You will also be able to see whether it would be better for you to reduce the instalment or shorten the term of the loan if you overpay. You can find the calculator at finanse.uokik.gov.pl.

Consumer support:

Tel. 801 440 220 or 22 290 89 16 – consumer helpline
 Email: [SCODE]cG9yYWR5QGRsYWtvbnN1bWVudG93LnBs[ECODE]
Financial Ombudsman – if a complaint is rejected by a financial institution
Consumer Ombudsmen – in your town or district

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL

Attached files

 

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