Mortgages in the Czech Republic

If you’re considering a mortgage, definitely check Mortgages.cz where you can get the very best rates in the Czech Republic for mortgages.

Buying property in the Czech Republic, whether you are going to live in it or rent it out, is without doubt an excellent long-term investment. Property prices have steadily risen over the last 10+ years and the increases are not stopping.

Getting a mortgage in the Czech Republic is not dissimilar to any other European Country but most Expats don´t know where to start and more importantly where to get help. Like most things in CR though, the process is very bureaucratic and can be time consuming.

The main lenders are in fact the Banks in the Czech Republic of which there are many to choose from.

Banks have many different lending criteria and rates, so using an Independent Mortgage Broker is useful.

The job of a mortgage broker is to find you the most suitable and most competitive deal in the market place. Therefore using one can not only save you time and trouble but also money!

There is a “chicken and egg” situation with getting a mortgage and buying a property since the bank will not definitely agree to lend you the money until you have found the property. But then most people will not find a property until they know they can get a mortgage.

Speaking to someone with experience is of help here since they know how the banks think and can assess your situation before you start property hunting and let you know not only the likelihood of getting the loan but also approximately how much you will be able to borrow.

This means you can go out house/flat hunting with the sound knowledge of how much money is in your pocket. It also puts you in a stronger position when negotiating with vendors since if they know your financing has been “pre arranged”, they know that you will be able to complete the purchase quickly. This puts you in a competitive position to those that don´t have financing arranged.

The mortgage can be arranged for a period of up to 30 years. “Fixed Rate” mortgages are available for pre set periods of, for example, 1, 3 or 5 years. These are useful if interest rates are likely to rise over the similar period and it helps you budget since you know exactly what the repayments will be over a fixed period of time.

Minimum loans are normally Kc 200,000 and there is no upper limit, it just depends on your ability to repay the loan.

Some banks, but not all, require life assurance to be set up for them to grant the mortgage. Beware of the banks that try to sell you life assurance since they may not be offering the most competitive rates. You can always set up your life assurance independently and if necessary assign the policy to the bank should they require it.

Requirements
As the law stands if you are not a Czech national you will need to own the property through a company. A single purpose company can be set up to do this or you can buy an “off-the-shelf company” . This will cost around Kc 30-40,000.

You will usually need to have a deposit or “down-payment” the minimum is usually around 10% of the property price. There are some banks who offer a loan of 100%, but read on

.be aware that the bank will lend up to a certain percentage (e.g. 90%) of the value of the property, as they see it, not necessarily what you are paying for it ! Don´t therefore always assume that if banks advertise 90% or even 100% mortgages that is actually 90% or 100% of your purchase price !

The bank will make a decision on your ability to repay the loan so you need to have an “income” from employment or other activity.

Having said that, it is possible (although not so easy) to obtain a loan if your intention is to Let the property and the potential rental income can be used in assessing your ability to repay the mortgage.

What next?
So how do you proceed? We advise that you speak to a mortgage broker to discuss your situation and requirements. They will then contact the lending sources to find who is interested and who is offering the best deal. But this can take time so the sooner you start the better.

Documents
You will need to produce the following:

• Passport
• Letter from employer confirming position, duration and income
• Bank statements showing income being paid in
• Bank statement showing deposit monies
• Confirmation of other income if applicable (e.g. from letting other property)
• Details of property to be purchased
• Residency permit or company documents if buying through an S.R.O. Application

And finally.
Don´t be put off by this article it is perfectly feasible to arrange a mortgage in the Czech Republic but is much easier if you do use a broker.

Not surprisingly a decent mortgage broker charges a fee for arranging the mortgage but this should be only once the mortgage has been granted and when you have bought the property. Therefore if the mortgage is not taken up it costs you nothing to use the service. And it is possible they will be able to save you money on your repayments by finding you a “better deal” so the fee can be money well spent.

If you’re considering a mortgage, definitely check Mortgages.cz where you can get the very best rates in the Czech Republic for mortgages.