Balancing account - what is it and how does it work?

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A mortgage loan is the only way for many people to make their dreams of their own apartment or house come true. However, on the other hand, there is often a fear of the high costs of such financing and the need to stick to the repayment schedule. In this case, it is worth paying attention to the balancing account - a tool offered in some Polish banks that allows you to optimize the costs incurred on a mortgage loan.

Mortgage and interest

The borrower should be aware of the fact that when deciding to take out a loan, he will be obliged to pay the bank not only the amount borrowed, but also pay other costs - including, in particular, interest. Their value is calculated on the basis of the outstanding debt.

However, as mortgage loans are repaid over long periods of years, it is difficult to predict what the borrower's financial situation will be each year. There may be a raise, sale of a car, etc., which will result in an injection of cash. Is it worth overpaying the loan installment then, depriving yourself of the funds received, or putting them off for a rainy day, still meticulously regulating only as much as is necessary? The balancing account is the answer to this question, and in addition, the answer that allows you to choose the third option - no freezing of funds and a simultaneous reduction in the cost of the loan.

Rescue? Balancing account

How is this possible? A balancing account is a special account into which you can transfer your excess cash. It is not quite a repayment - the loan installments should still be paid normally, but its value is reduced, taken into account when calculating interest. The reduction is equal to the sum on the balancing account.

It is worth following an example. The borrower took out a mortgage loan of PLN 200,000. At the same time, however, he sold the car, and therefore received a relatively large amount of PLN 30,000 on a one-off basis. For fear of possible random events, he does not want to pay the money back as loan repayment - therefore he transfers it to the balancing account. From now on, interest will no longer be calculated on the amount of PLN 200,000, but on PLN 170,000. As the amount of funds in this account increases, the interest will continue to decrease. If, on the other hand, the borrower decides to withdraw, for example, PLN 10,000, then the interest will be calculated on the greater amount - from PLN 180,000.

As you can see, you can even pay off your mortgage completely without interest. It is not easy - it would be necessary to pay the entire sum of PLN 200,000 to the balancing account, and then repay only the loan amount. At the same time, the savings on the account would still be fully available.

So is having a balancing account paid for? Yes - in a situation where the taxpayer has certain savings or has received an injection of more cash, but does not want to freeze it irrevocably. You can pay the 30,000 PLN received from the sale of the car directly as a loan installment, but then in the event of unexpected events it is not possible to use this money. However, if they are on the balancing account, it will be possible to use them. What's more, transfers to a balancing account do not have to be spectacular - they can even be small monthly financial surpluses. Banks offer their clients the option of determining the limit of funds that must remain on the checking and savings account - the surpluses will be automatically transferred to the balancing account. Therefore, one of the conditions for using such a tool is to open a checking and savings account at the bank where the mortgage is taken out.

Balancing accounts in Poland

Outside Poland, balancing accounts are a really popular tool that allows banks to be more competitive in their mortgage loan offer.

However, currently in Poland balancing accounts are offered only by mBank, Multibank and PKO BP. This solution is most often charged with additional fees - mBank offers its clients this option in return for the payment of a commission of 2% of the loan value. Multibank requires a monthly fee of PLN 99. On the other hand, PKO BP does not impose fees for maintaining a balancing account, but increases the commission for the mortgage loan - by 0.5% for a period of three years.

The solution, which is the balancing account, is relatively hard to find in our country. It is worth thinking about it when you have - or assume that you will have - a surplus of funds high enough for the savings on interest to cover the cost of setting up such an account. It is also hoped that more banks will introduce the option of maintaining a balancing account in the future.