Mortgage lending in the Czech Republic in 2019: conditions, interest rate, banks and documents for registration

The Czech real estate market today is experiencing a rise in construction and sales. Even a citizen of a foreign state can get a mortgage loan on very favorable terms. Let us consider in detail how a mortgage is drawn up in the Czech Republic, what interest rate should be counted on, and what are the requirements for potential borrowers.

Czech

Mortgage conditions for Russians

Citizens of the Russian Federation can purchase Czech real estate using borrowed funds on conditions close to those offered to the local population. Key features of the mortgage in the Czech Republic:

  • Individual approach to each client;
  • collateral in the form of a pledge of purchased housing;
  • lack of compulsory insurance;
  • fierce competition among banks, which generates loyalty and low interest rates.

The loan can be taken to buy an apartment, studio, house, townhouse, etc.

We further analyze the requirements for banks for borrowers, the range of interest rates, the available mortgage terms and a list of banks offering mortgage products for foreigners.

Bank Requirements

The citizens of foreign countries, banks of the Czech Republic have the following requirements:

  • age limit – from 18 to 70 years;
  • availability of a residence permit for a country;
  • open client account in a Czech bank with a positive balance;
  • sufficient creditworthiness and stable employment in the Czech Republic;
  • the possibility of acquiring both finished real estate and housing at the construction stage;
  • a positive or neutral financial reputation of the borrower.

The ideal mortgage client for Czech banks is a Russian employed at a local company and receiving a high monthly income in the Czech Republic to his bank account.

Attention! An additional advantage would be the availability of a residence permit (EU blue card) or permanent residence status. Persons with such privileges are practically equal to Czech citizens and are entitled to mitigate the conditions of mortgage lending.

Resolution

Interest rate

The minimum interest rate on mortgages for non-residents in the Czech Republic is 4-5% per annum. The Czechs themselves are credited at 2-3% per year. In general, the difference is not very significant.

The final value of the loan rate depends on the loan amount, the period of repayment of the debt to the bank and the borrower’s category assigned. The last parameter implies the presence or absence of a residence permit, permanent residence and long-term residence permit in the country.

Also, Czech banks tend to fix the interest on a mortgage loan once every 3, 5, 7, 10, 15 years. The term of fixation is the period during which the borrower has the opportunity, without fines and commissions, to repay part of the debt or close the loan altogether, make changes to the mortgage agreement or change the fixing term itself.

The essence of fixation is as follows. For example, the Russian has received a mortgage with a term of fixation of 5 years. This means that after 5 years, he can repay the loan in full or in part of it, having previously warned the bank of his intentions (no later than a month). The interest in this case will be recalculated in favor of the client.

Low mortgage interest rates provide an opportunity to receive additional income in the form of income from the rental of purchased housing (it is recommended to do this only by entering into a formal lease agreement). The rent here is rather big and mostly covers monthly mortgage payments.

Minimum interest rate

Loan terms

In the Czech Republic, a foreigner will be able to take a mortgage for a period of 5 to 30 years. The optimal period of settlement with a credit institution depends on many factors, including the cost of the purchased housing, the solvency of the client and the amount of the down payment.

Practice shows that Russian citizens apply for mortgage loans for an average of 10-15 years. It is during this period that you can gradually repay the debt without damaging your usual standard of living.

An initial fee

Most Czech banks oblige clients to contribute at least 30–40% of the market price of the purchased housing. Local residents pay from 10%.

The need to pay the first installment is due to the tightening of credit policy in the financial institutions of the Czech Republic and minimization of possible risks. Since 2016, the country has been canceled 100% mortgage. This affected all borrowers: people with citizenship and foreigners.

House money

List of banks where you can contact

Before filing a loan application, the borrower should carefully examine the existing offers from local banks and representative offices of foreign credit institutions.

Among the banks of the Czech Republic engaged in mortgage lending to non-residents, it can be noted:

  • Hypoteční banka;
  • Raiffeisen Bank;
  • GE Money;
  • Fio Banka;
  • UniCredit Bank;
  • Lbbw

Sberbank of Russia has its own Czech representative office and offers very favorable credit conditions, both consumer and mortgage.

Mortgage from Sberbank in the Czech Republic is of particular interest to our fellow citizens because of low rates and soft requirements. Here you can get a loan in the amount of 500 thousand to 27 million Czech crowns for a period of 5-30 years with a rate of 4.99% per annum.

The financial consultant of each designated bank will announce detailed credit parameters, inform about the requirements and package of securities.

Raiffeisen Bank

Required package of documents

A potential borrower who is not a citizen of the Czech Republic will have to collect and prepare in advance a set of the following documents:

  1. International passport.
  2. Bank statement reflecting the state of the account on which the salary is received and personal savings are deposited.
  3. A document confirming the status of stay in the Czech Republic.
  4. Certificate of income for at least the last 6 months.
  5. Extract from the NBCH about the quality of the client’s credit history.
  6. Documents on the purchased property in the Czech Republic (independent evaluation of the object, a preliminary contract of sale, an extract from the inventory, etc.).
  7. Application form.

Important! Some banks may require the provision of an employment contract with the employer, which specifies the period of validity. It is better if it will be a period until the end of the mortgage loan payments or an indefinite period.

All documents should be translated into Czech and properly certified by a notary.

At the notary

Step by step mortgage

The process of obtaining a mortgage loan in a Czech bank is as follows:

  1. Search for property to buy.

In this matter, the client can contact the real estate agency, private intermediaries or examine the ads on special sites selling real estate. Banks are allowed to acquire with the help of borrowed funds as objects for commercial purposes, and for residential.

  1. Preparation of documents.

Documents need to be prepared at the stage of the analysis of real estate proposals, since this process can be significantly delayed.

  1. Studying and comparing programs in local banks.

You should study and calculate at least 5-7 offers from reliable credit organizations, compare them with each other and choose the most profitable one.

  1. Conclusion of a preliminary contract of sale.

Before signing such a document, the client must notify the seller of the calculation using borrowed funds and get his consent.

  1. Submission of a loan application to the selected bank.

Banks accept only personally completed questionnaire with a complete set of documents attached.

  1. Consideration of the application and evaluation of the property of banks.

Consideration of an application by the bank takes on average 5-14 business days. After a detailed analysis, the final decision is announced to the borrower. If a positive decision is made, the lender announces the conditions for further cooperation and the parameters of the mortgage.

  1. Conclusion of a mortgage agreement.

If the parties have reached an agreement and the borrower accepts the conditions offered by the bank, then the specific day and time is chosen for signing all the papers.

  1. Payment of the down payment.

The specific amount will be credited to the bank account. Any cash payments are prohibited.

  1. Registration of the transaction in the state cadastre.

To do this, submit the necessary documents and make an appropriate record of encumbrance.

  1. Final settlement with the seller.

Even in the preliminary contract of sale, it is recommended to prescribe the maximum period for the seller to receive the full amount of money for the sold property. In case of violation of the indicated terms, the buyer is threatened with penalties.

Mortgages in the Czech Republic for the Russians are attractive for their low interest rates, quick consideration of applications and loyal attitude to customers. Here you can apply for a loan for the purchase of finished or under construction housing, as well as commercial real estate objects at 4-5% per annum for 5-30 years. The main requirements are the status of long-term stay in the country, a high level of income and the possibility of paying a down payment of at least 30% of the price of real estate.

Also, you should be interested in mortgages in Germany and mortgages in Spain for the Russians .

We are waiting for your questions in the comments. Are you interested in mortgages in the Czech Republic and what difficulties did you encounter during registration?

Our mortgage lawyer is always in touch, who will provide all the necessary support in the preparation of documents for the purchase of real estate abroad. Just sign up for a free consultation on the site.

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