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Credit Holidays – in detail, difficult questions and answers

Piotr Kłodziński|
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In the light of constantly and often rising interest rates, borrowers bound by mortgage loan agreements were faced with the obligation to pay installments higher by 100%, or even more, compared to the payment amounts from a year ago. However, this time the State came to the rescue of the borrowers. How to take advantage of credit holidays?
We explain this in the article below.

New act, new opportunities to help borrowers

Provisions introducing the so-called loan holidays refer to the concepts and the Act of March 23, 2017 on mortgage loans and on the supervision of mortgage intermediaries and agents (hereinafter: the Mortgage Loan Act). However, the legislator introduced several conditions that must be met in order to use the introduced right. There will also be some minor issues that are certainly important to borrowers but may not necessarily be well publicized. The most important information related to credit holidays and the procedure for taking advantage of them will be discussed in turn.

What type of loan agreement entitles you to take advantage of credit holidays?

First of all, it is worth determining to which mortgage loan agreements the introduced regulation applies. Pursuant to Art. 3 section 1 of the Mortgage Loan Act, a mortgage loan agreement is understood as: an agreement under which the lender grants a loan to the consumer or promises to grant a loan secured by a mortgage or other right related to residential real estate or intended to finance the acquisition or maintenance of an acquisition or maintenance not related to business activity or running a farm:

1. ownership rights to a residential building or residential premises constituting a separate property, as well as their construction or reconstruction within the meaning of art. 3 point 6 and 7a Act of July 7, 1994 - Construction Law (Journal of Laws of 2019, item 1186, as amended);

2. cooperative ownership right to the premises;

3. ownership rights to land or part thereof;

4. share in co-ownership of a residential building or residential premises constituting a separate property or share in land property.

The second paragraph of this provision states that a mortgage loan agreement shall mean in particular an agreement:
1) loans; 

2) loan (in accordance with the wording of Article 69(1) of the Banking Law); 

3) to postpone the deadline for the consumer to fulfill the monetary benefit; 

4) for a loan, in which the lender enters into an obligation towards a third party and the consumer undertakes to return the service provided to the lender;

5) for a revolving loan.

It is very important to remember this catalog, because there may be doubts whether the concluded contract titled, for example, "mortgage loan" makes us entitled to take advantage of mortgage holidays - so we answer: YES. As long as the purpose of financing can be defined as housing, and it was not, for example, business activity. Moreover, the phrase "in particular" means that not only such agreements are included in the term "mortgage loan". Therefore, the preceding article is important here, as it specifies to which contracts the Mortgage Loan Act, and therefore the provisions on credit holidays, certainly do not apply:

1) a mortgage loan agreement granted by the employer to employees as part of his additional activities, provided that the loan is interest-free or bears interest at an actual annual interest rate lower than that generally applicable on the market and is not offered to the general public;

2) a mortgage loan agreement in which the loan is granted without interest or fees, with the exception of fees intended to cover costs directly related to securing the loan;

3) a mortgage loan agreement on a savings and checking account, which must be repaid within a month;

4) a mortgage loan agreement resulting from a court settlement and a settlement resulting from proceedings for out-of-court resolution of consumer disputes

5) a mortgage loan agreement concerning the deferred repayment - free of charge - of an existing debt, with the exception of a mortgage loan agreement under which the lender grants a mortgage loan to the consumer or gives him a promise to grant a mortgage loan secured by a mortgage or other right related to residential real estate;

6) reverse mortgage loan agreements 

7) loan agreements not secured by a mortgage intended for the renovation of residential real estate.

Another important criterion is that the mortgage loan must have been granted in Polish currency. If a mortgage loan has been taken out that is indexed or denominated to a currency other than the Polish currency, the provisions on credit holidays will not apply in this case, as stated in Art. 73 section 1 of the Crowdfunding Act.

I have signed a mortgage loan agreement, which allows me to take advantage of loan holidays - what conditions do I still have to meet?

In addition to the first requirement mentioned above, the act introduces two more:

  1. the mortgage loan agreement has been concluded before July 1, 2022;
  2. the end date of the loan period specified in this agreement falls after 6 months from this date, i.e after January 1, 2023.

And previously mentioned:

  1. the loan agreement granted is included in the catalog of agreements referred to as "mortgage loan" within the meaning of the Mortgage Loan Act
  2. this loan has been granted in Polish currency

Can I take a loan holiday for the apartment I rent?

The legislator introduced the obligation to include in the application for suspension of loan repayment a statement that the application concerns a mortgage loan agreement concluded in order to meet one's own housing needs. What if the loan agreement actually indicates such a purpose of the loan, but the borrower, after several years of repaying the loan, decided to rent such a property and does not use it himself? Is it possible to suspend a mortgage loan taken out for an apartment that is currently rented? ANSWER: It all depends on the purpose for which the loan was originally taken.
The provision states:

Art. 73, paragraph 4 The consumer is entitled to suspension of loan repayment only in relation to one contract concluded to meet his or her own housing needs.

When decoding the meaning of a legal norm, various types of interpretation are permissible - and this study gives ambiguous results depending on the interpretation used. However, we are dealing with a norm containing a sanction of a criminal law nature, and if so, we must absolutely recognize the primacy of linguistic interpretation. We cannot establish that the average citizen has the skills to decode this legal norm in a different way. Since the legislator only requires us to confirm the fact that the loan agreement was concluded for one purpose and no other - and the legislator has clearly established that it concerns "an agreement concluded to meet one's own housing needs", we must assume that the current purpose of the property is not is important here - what is important here is the provision of the contract or the information contained in the application and the original actual purpose of concluding the contract.

It is worth noting, however, that if the apartment was purchased "for rent" from the beginning and has never been inhabited by us - we cannot take advantage of credit holidays, and submitting a false declaration may result in criminal liability.

Therefore, it should be assumed that this is the fifth condition for taking advantage of credit holidays:

  1. An application for a loan holiday may only apply to a mortgage loan agreement the goal was to meet their own housing needs.

THERE ARE NO MORE CONDITIONS FOR HAPPINESS.
ARE CREDIT HOLIDAYS FOR EVERYONE? NO, BUT YOU MUST HONESTLY ADMIT THAT THE LIST OF EXCLUSIONS IS VERY LIBERAL.

For what period can loan repayment be suspended?

This issue is clearly explained in paragraph 2 of Article 73 of the Act:

The consumer is entitled to suspension of loan repayment during the period:

1) from August 1, 2022 to September 30, 2022 - for two months;

2) from October 1, 2022 to December 31, 2022 - for two months;

3) from January 1, 2023 to December 31, 2023 - per month in each quarter.

Therefore, this is not a solution enabling the suspension of repayment for any period - the maximum period of suspension of repayment in the period from August 1, 2022 to December 31, 2023 is 8 months. The Act specifies precisely when suspension can be used and for what duration. The first option is a two-month suspension when the installment repayment date falls from August 1, 2022 to September 30 - therefore, for the repayment of both the so-called "August" and "September" installments. Of course, you do not have to apply for suspension in both months - you can use it for one month, although probably few people will not take advantage of the two-month "holiday" option.

The next period extends from October 1, 2022 to December 31, 2022 - here the legislator allows you to take advantage of the exemption of two months in three. Therefore, you can apply for exemption, for example, in the months of November and December, or another of the other two combinations, because the Act does not specify whether the exemption is to take place in consecutive months. As with the previous period, you can also apply for dismissal within one month instead of two.

The last of the planned periods, i.e. from January 1, 2023 to December 31, 2023, provides for the possibility of suspending the loan repayment for one month in each quarter. Therefore, an example suspension could take place, for example, in February, April, August and December. 

Importantly, we do not have to use the exemption in each of the specified periods - the Act creates the possibility, not the obligation, to use each of them.

 

Several mortgage loan agreements – can I apply for suspension of repayment of each of them?

The Act provides that the consumer is entitled to suspension of loan repayment only in relation to one contract concluded for the purpose of purchasing real estate intended to meet one's own housing needs. Therefore, if a given borrower has, for example, two mortgage loans, the loan holiday is only possible for one of them. 

However, the popular fact presented below may be problematic:

Mr. Wojciech took out a mortgage for 20 years as a bachelor and bought a studio apartment. In a few years, he created a happy marriage with Mrs. Magdalena - the spouses decided to take out a mortgage loan for 15 years to buy a house together, where both are parties to the loan agreement. After a short time, the couple unfortunately divorces, Mrs. Magdalena can barely make ends meet, repaying the loan with alimony. Is she entitled to credit holidays?

In the light of the provisions of the Act, it could be stated that it is impossible for Mrs. Magdalena, who is in a difficult financial situation, to take advantage of the credit holidays if her former husband had previously used the suspension of repayment of a loan taken out by him while he was still single. However, in the light of the pro-consumer interpretation of the provisions adopted in the EU directives applicable to Poland, as well as due to the wording of Art. 76 of the Constitution of the Republic of Poland (Public authorities protect consumers, users and tenants against activities that threaten their health, privacy and safety and against unfair market practices.) it should be assumed that such an interpretation is unacceptable. It would exclude the possibility of taking advantage of such a benefit as credit holidays for a very large number of consumers through no fault of their own, which would make the norm resulting from this provision incomplete and unfair. In fact, this provision is incomplete and incorrectly implemented in legal transactions; if it were to be in force longer, it would certainly be corrected. As justified in the judgment of the Constitutional Tribunal of September 13, 2005 (reference number K 38/04), "Normative acts containing standards intended to protect consumers are subject to assessment from the point of view of the legislator's use of an adequate (proportionate) measure leading to the intended protective purpose, while the implementation of the protection indicated in Art. 76 of the Constitution, constituting the obligation of the relevant authorities (state organs), cannot abstract from the principles and requirements of European law.” Also, according to the Constitutional Tribunal, "protective obligations incumbent on public authorities include the need to provide specific, minimum statutory guarantees to all entities, in particular natural persons, who, although their relations are shaped on the basis of autonomy of will, nevertheless occupy a weaker position, primarily, although not exclusively, economic as part of their relations with professional participants of the market game.

Moreover, the purpose of adopting the provisions regarding the suspension of loan repayment should be taken into account. They were certainly intended to allow Poles to benefit from temporary financial relief, and not to prevent such undertakings. Also from the point of view of functional interpretation, such a narrow interpretation of the provision prevents it from achieving the most favorable results, and on the contrary - it will lead to very negative solutions for the consumer, sometimes leading to extremely difficult life situations due to financial shortages. 

Therefore, it should be assumed that in the case of the facts mentioned above, as well as any similar situation, each consumer may apply for suspension of the obligation to repay one loan, which may ultimately lead to the consumer being released from the obligation to repay more than one loan. This is due to the purpose and functional assumptions of the entire regulation regarding credit holidays. A different - restrictive interpretation of this statutory norm would clearly harm some consumers who are the weaker party in relations with the bank, so such an interpretation remains unacceptable in the light of the rules of interpretation - in case of doubt, in favor of the consumer (the weaker party of the legal relationship).

How to apply for a credit holiday?

Borrowers can submit an application for suspension of loan repayment in paper or electronic form, including via the electronic banking system (i.e. via the Internet). The Act also specifies minimal the content of such an application, i.e.:

  1. consumer designation;
  2. lender's designation;
  3. designation of the loan agreement;
  4. indication of the requested period or periods of suspension of loan repayment;
  5. a statement that the application concerns real estate intended to meet your own housing needs.

If the bank prepares such an application itself, ready to be completed (and this will probably be the case), it may include requests to provide more data regarding the borrower, the contract or the property itself. 

If the borrower decides to prepare such an application himself, the data provided for in the Act and listed above are sufficient. The fifth point is very important - it is a declaration made under penalty of criminal liability that the agreement for which we request suspension of loan repayment was concluded for the purpose of purchasing real estate intended to meet one's own housing needs. The letter must then contain the following – threatening-sounding sentence:

I am aware of criminal liability for submitting a false statement.

I have submitted an application for suspension of loan repayments - when will I know that it is effective and I do not have to pay another installment?

Accordance with the law, With date of delivery lender of the application, loan repayment is suspended for the period indicated therein. Therefore, it should be stated that the effect of "credit holidays" occurs from the moment of delivery of such an application. When such an application is submitted in paper form at the Bank's headquarters, suspension takes place after submitting such an application to a bank employee. However, if it is submitted electronically, for example via the electronic banking system, such an effect will occur after the application has been successfully sent according to the procedure provided in the system.

However, the Act provides for the possibility of confirming receipt of such an application by the borrower. Within 21 days from the date of delivery, the lender shall provide such confirmation. Lack of confirmation does not affect the commencement of loan repayment suspension. Such confirmation should be provided on a durable medium, i.e. on a material or device used to store and read information provided to the consumer in connection with the mortgage loan agreement, for a period appropriate to the purposes for which this information is served, and allowing the reproduction of this information in an unchanged form. . Such confirmation may take the form of, for example, a PDF file sent by e-mail, a CD or simply a traditional sheet of paper.

The content of such a document includes confirmation of the period for which loan repayment has been suspended and (not in every case) one more element referred to in the next answer.

Am I exempt from repaying all loan costs during the loan holidays?

In this case, the legislator has prepared a certain "catch" for some borrowers - if they take advantage of the loan repayment suspension, the consumer is not obliged to make payments under the contract, except for insurance charges related to this contract. Therefore, if a given bank granted a loan only with its insurance or the borrower agreed to such insurance, he will have to pay it during the loan holidays. Together with the lender's confirmation of receipt of the application and the length of the repayment suspension, it is also determined here amount of insurance fees. 

A problem may arise when the lender provides such confirmation within the statutory deadline, but after the installment repayment date, which, despite the suspension, must be paid in the amount of the insurance costs. However, it cannot be stated that any delay would result in interest being charged - in accordance with the Act, during the loan repayment suspension period no interest is charged or fees other than insurance fees are charged. Therefore, the only solution is to wait for the borrower's confirmation and make any payment.

What happens to the loan period when you take advantage of loan repayment suspension? Are these suspended installments and the corresponding amounts distributed and added to the remaining installments?  

The legislator decided to make an easier move here - the period for which we suspend loan repayment is added to the loan period. This is expressly stated in paragraph 10 of Art. 73 of the Crowdfunding Act:

The loan repayment suspension period is not treated as a loan period. The loan period and all deadlines provided for in the contract are extended by the period of suspension of loan repayment.

It is worth presenting this mechanism in the following example:

The loan period specified in the mortgage loan agreement taken out by Mr. Tomasz ends on May 15, 2040. He took advantage of the credit holidays to the maximum extent, i.e. for 8 months. Therefore, the loan period will not end on May 15, 2040, but on January 15, 2041. Until this point, Mr. Tomasz will have to repay his loan due to the lack of repayments in specific months selected when submitting the loan holiday application.

I have a mortgage - but the mortgage is on a property that is owned by my parents. Do they have to agree to change the loan period? If I take advantage of the loan holidays, their property will be mortgaged even longer.

No - the Act explicitly provides that changing the loan period as a result of suspension of loan repayment does not require the consent of the persons who provided security for the loan or its disclosure in the content of the mortgage constituting security for loan repayment. 

DO YOU HAVE ADDITIONAL QUESTIONS? YOU NEED LEGAL ASSISTANCE?
WELCOME TO CONTACT OUR AUTHORS LAW OFFICE BY BIURO@KLODZINSKIKANCELARIA.PL

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