Booking a flat vs. a loan - what to do if the bank refuses to finance?

Reserving a flat before obtaining a bank decision is standard practice when buying a property for a mortgage. It allows you to „hold” the offer and gain time to go through the financing procedure, but does not guarantee a positive credit decision. Buying a flat for a mortgage is a multi-stage process that requires both a positive decision by the bank, as well as appropriate security for the reservation agreement.

Sometimes, despite a correctly submitted application, the bank will refuse financing, which raises questions about the reservation fee and next steps. In such a situation, it is crucial to both prepare the agreement properly and to act quickly, often with the support of an experienced real estate offices in Gdańsk, which coordinates the entire purchasing process.

Booking a flat on credit - what a booking agreement provides and what it does not provide

The reservation agreement allows the flat to be temporarily withdrawn from the offer and guarantees the buyer a fixed price and a deadline for obtaining a mortgage. The document usually specifies the time of reservation, the amount of the reservation fee and the terms of the subsequent transaction. However, it is worth remembering that reservation does not mean certainty of financing, as the bank independently assesses creditworthiness and the property. It is therefore crucial to adequately safeguard your interests already at this stage.

Key provisions to have in place for your loan

The most important element is the introduction of provisions that protect the buyer in the event of a mortgage refusal. Particularly relevant are:

• a condition for obtaining bank financing,
• the deadline for obtaining a credit decision,
• clear rules for the refund of the booking fee,
• list of required documents and withdrawal procedure.

Bank refused mortgage. The most common reasons and how to diagnose them quickly

The refusal of a mortgage is most often due to specific factors that the bank assesses during the analysis of the application. The most common reasons include:

• insufficient creditworthiness - too low an income in relation to the amount of the loan or high monthly liabilities,
• negative or limited history at BIK - late repayments, high limit utilisation or lack of credit history,
• form of employment - a short length of service, a civil law contract or a business run for too short a period,
• too low an own contribution - failure to meet the bank's requirements for a minimum proportion of own funds,
• property-related factors - e.g. a lower valuation of the flat or an outstanding legal status.

Determining the exact cause allows you to take appropriate action, such as improving your creditworthiness or applying to another bank. A real estate agent helps to coordinate the process of buying a home on a mortgage and to reduce the risks associated with the refusal of financing.

What to do after a funding refusal? Possible scenarios of action

A mortgage refusal does not have to mean the end of your home purchase, as long as you take the right action quickly. Getting the process right and securing a property booking in parallel is key. The best way to do this is to follow a proven pattern:

1. Check the exact reason for refusal
   Contact your bank or adviser to establish whether the problem is one of creditworthiness, documents or the property itself.
2. Apply at another bank
   Each bank applies different criteria, so a negative decision at one institution does not derail your chances of funding.
3. Improve your creditworthiness, if necessary
   Reducing credit limits, paying down liabilities or increasing your own contribution may help.
4. Talk to the seller about extending your booking
   In many cases, it is possible to sign an addendum, especially if the buyer is actively pursuing the loan process.

Many people in this situation ask themselves: what to do if the bank refuses a mortgage to buy a flat? However, appropriate action makes it possible in many cases to bring the transaction to a conclusion.

Real Estate Bureau Radomski provides full support and allows these activities to be coordinated, increasing the chance of a secure transaction being completed.

Rafał Radomski, owner of Radomski Nieruchomości

Reservation fee, down payment and deposit - what happens when a bank refuses a loan

The deposit when booking a flat can take different forms, and each carries different consequences in the event of a mortgage refusal. The name of the deposit and the provisions of the contract are crucial, as they determine the possibility of recovering the money. We have prepared a table that shows the most important differences from a practical buyer's point of view:

Form of payment	Transaction stage	Refund when credit is denied	Legal basis	What decides in practice
Booking fee	reservation agreement	depends on the contract	no separate regulation explicitly in the Civil Code	provisions of the reservation agreement
Advance payment	preliminary or reservation agreement	is, in principle, refundable	general provisions of the Civil Code (undue payment, Article 410 of the Civil Code)	name of the payment and content of the contract
Deposit	preliminary agreement	may be lost	Article 394 KC	whether the agreement provides for repayment upon refusal of credit
No payment	verbal / marketing reservation	no deposit = no financial risk	not applicable	findings of the parties

• Deposit is regulated in the Civil Code (art. 394). If the buyer does not perform the contract, the deposit is forfeited. If the contract is not performed by the seller, the seller must return the deposit in double amount. Repayment upon refusal of credit is only possible if the contract provides for this.

• Advance payment is the portion of the price paid in advance of the transaction. It has no collateral function and is generally refundable if the contract is not concluded, for whatever reason.

• Booking fee There is no statutory definition. Its reimbursement depends solely on the provisions of the reservation agreement. It is therefore crucial that the contract clearly sets out the rules for repayment in the event of a mortgage refusal.

How to reduce risk before signing a reservation contract

In practice, it is useful to apply a few simple rules:

1. Check your creditworthiness beforehand
   An initial analysis with an adviser helps to determine a realistic budget and reduces the risk of mortgage refusal.
2. Obtain a preliminary decision or a credit promise
   The credit promise confirms that the bank is ready to provide financing, which significantly reduces the risk of refusal once the reservation agreement is signed.
3. Enter a credit condition in the contract
   The record should make it clear that the reservation fee is refundable in the event of a negative decision by the bank.
4. Set a suitable booking time
   The standard credit procedure takes between three and six weeks, so too short a timeframe increases the risk of problems.
5. Benefit from the support of specialists
   Experienced real estate office Gdańsk helps to prepare the documents, negotiate the contract provisions and safely go through the entire financing process.

Such preparation significantly increases the chances of a smooth purchase of the flat and minimises the financial risk for the buyer.

FAQ - the most common questions when booking a flat on credit

1. is the reservation fee always refundable if the bank refuses the loan?

No. The refund depends solely on the provisions of the reservation contract. If the contract provides for a refund in the event of a mortgage refusal, the buyer can recover the money.

2. how long does it take to make a credit decision and what is a safe booking period?

According to the law, the bank has a maximum of 21 days to issue a decision from the submission of a complete application, but in practice the whole process usually takes between three and six weeks. Therefore, the reservation agreement should allow for an adequate reserve of time.

3. is it possible to apply to another bank after a loan refusal?

Yes. A refusal at one bank does not preclude you from obtaining a loan at another, as banks use different criteria to assess creditworthiness.

4. is the deposit forfeited if the bank refuses the mortgage?

Yes, it can be forfeited, because according to Civil Code Article 394, the deposit is a security for the performance of the contract. It can only be returned if the contract contains a corresponding provision.

5. can the Radomski estate agency help in such a situation?

Yes. Our real estate office in Gdansk helps to prepare secure contract provisions, coordinates the loan process and works with a financial advisor, which reduces the risk of financing problems.

6 What to do if the bank refuses a mortgage to buy a flat?

A mortgage refusal does not rule out the possibility of buying a property. The most important thing is to find out the reason for the decision and to re-examine your creditworthiness. In many cases, it is possible to apply to another bank, improve the financing parameters or complete the documents. A properly prepared housing reservation contract and the support of a real estate agent significantly increase the security of the entire transaction.