Mortgage Frequently Asked Questions!

 

If you're thinking about getting a mortgage, go to Mortgages.cz to find the best mortgage rates in the Czech Republic.

Is it better to buy an old or new apartment or house?

What is more advantageous, safer, or faster is a difficult question to answer because each choice has its own set of advantages and disadvantages. The buyer's requirements and capabilities will ultimately determine the decision. When purchasing an ancient flat or house, there is a certain amount of risk involved, and such a purchase will necessitate a number of inquiries, such as the condition of the entire real estate (not just the unit), the roof, the elevator, windows, and other shared spaces. Will there be any additional costs that aren't included in the purchase price?مواضيع نقاش

In comparison, a new flat or house will last approximately 2-3 years.

All potential difficulties and investments are covered by the guarantee.

However, the cost of purchasing a new flat or house will be higher, and you may not have a choice in some cases (e.g. in the city center).

PROPERTIES OF AGENCY

What should I know before taking out a mortgage loan to buy a flat or a house?

You must have your own capital (this part of the purchase price, that you will finance with your own money of at least between 25 percent and 35 percent ). These percentages are based on the property's appraised value. If the appraisal is lower than the purchase price, you must make up the difference with your own money.

You must have an independent source of income, which you must demonstrate. The monthly payment should not exceed 30 percent of your net revenue. You don't need to explore alternative revenue sources if the property is already rented and the rental income is roughly 120 percent of the monthly installments. Is the property always required to be used as security when obtaining a mortgage loan?

It is required by law that the collateral for a mortgage loan be real estate, although not necessarily the property to be funded. Another piece of real estate can be used as collateral if it is large enough to pay the loan amount. What is the maximum term (duration) of a mortgage loan?

A mortgage might last anywhere from 5 to 25 years. Shorter loans can save you a lot of money in interest payments over the life of the loan, but they will increase your monthly payments. Which stage of life / maturity should you choose?

The annuity payments, which include interest and amortization, are directly affected by the maturity.

The cheaper the monthly payments are and the more accessible the loan is, the longer the maturity. If you can't afford greater monthly payments, you should choose for a longer term. Keep in mind, however, that a longer maturity comes with greater total interest costs. When picking the 20-year maturity in the example above, the monthly payments will be CZK 5,541 for a CZK 1 million loan. After 20 years, the total interest charges will be around CZK 1.33 million.

When choosing the 15-year option, the monthly payments will be CZK 6,901 and the total interest would be CZK 242,000, which is significantly cheaper than the 20-year loan option.

The final maturity you choose for your situation should be a compromise between the amount of interest you're willing to pay the bank and the monthly repayment rate you can afford.

Is a down payment required when applying for a mortgage loan?

The minimum deposit amount is equal to 25% of the overall investment costs. This means that the maximum mortgage loan amount is 75 percent of the property's value. However, this can vary from instance to situation.

Is there any form of consequence if the loan is repaid earlier than expected?

If the interest rate is fixed for 5 years and the loan is paid off after that time, you will not be charged a penalty for early repayment. You will have to pay a penalty fee if you make a premature repayment within those 5 years. Limited options for all foreigners without a Czech residency (only feasible through a Czech Single Purpose Firm, or S.R.O. — a company set up specifically for the purpose of purchasing real estate)

Are you a little perplexed? Don't worry; if you want to talk about your individual circumstances and options, go to the ExpatCenter of eská spoitelna, whose consultants specialize in assisting foreigners living in the Czech Republic and property investment. They will gladly assist you in finding your unique solution!

How long does it take to obtain a mortgage?

If you have all of the requisite paperwork, the application and bank approval will take roughly 2 weeks, with the contracts taking another 5 business days.

If you want to examine your own position ahead of time, you may enter your personal information into the mortgage calculator, which will give you an idea of what it would look like in your circumstance.

However, keep in mind that a mortgage loan is a very personal product, and a face-to-face meeting is always beneficial – we would be delighted to assist you with your housing or investment needs!