Guide to Mortgages in the Czech Republic

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Czech Republic Overview

The Czech Republic is landlocked in Central Europe , bordering Poland , Slovakia , Germany and Austria . The largest city, Prague , has long been a major tourist destination. With a temperate, continental climate and a huge diversity of tourist attractions, the Czech Republic attracts many foreign property buyers. Political stability and membership of the EU also count in her favour.

Guide to mortgages in the Czech Republic

 Buying a house using a mortgage in the Czech Republic is becoming easier, although buyers should bear in mind that if a property is still being built, funds will not be available until the property is complete and legally registered.

Czech mortgages are available for both residential property purchase and re-mortgaging for home improvement. Depending on what you need a mortgage loan for, some Czech lenders are prepared to consider applications on a case-by-case basis. In order to purchase a property as a non-Czech national, it is necessary to buy through a Czech Limited Liability Company.

Czech Republic Mortgages are lent on a repayment basis only. There is no maximum loan, but the mortgage must not exceed 85 per cent of the valuation or purchase price, whichever is the lower. In order to secure a mortgage in the Czech Republic , borrowers require proof of income. It is up to the lender what they consider, and don’t consider, when determining the maximum loan available.

The minimum loan term for a Czech Republic Mortgage is five years, the maximum is 20 years, available up until age 70. Lenders provide mortgages at between 6.32 and 7.05 per cent, with a maximum of 3 years interest-only period. Applicants are allowed more than one mortgage with the same bank. All foreign mortgage borrowers must provide documents, including:

Certified copies of passports, proof of income, declaration of outgoings, p60/Tax return, Purchase contract for property, 3 recent bank statements, and a Bank reference letter.

Further Information about Czech Republic Mortgages

Czech Republic Mortgages are based on joint ‘take home’ pay, and calculated on an affordability basis. All liabilities are considered, and must not exceed 40 per cent of your monthly income when added to the repayment on your Czech Republic mortgage.

The lender will consider historical rental income and may take into consideration contracted future rental income from the property in the Czech Republic for Czech Republic mortgage purposes/repayments.

In order to complete the transaction, buyers need a full, clear title. The Surveyor’s Office needs to issue something called a Valid Occupancy Permit in order to certify the property as valuable.

Foreign buyers may not own property in the Czech Republic unless they have residency, which for EU nationals can be easy to obtain. Foreign nationals may use a Czech Republic company as a special purpose vehicle in order to buy Czech property. To accomplish this, a Czech republic lawyer is necessary.

Before signing any agreements about Czech Republic mortgages, take legal advice, as in any other country. Even when buying through a company, the lender will expect a guarantee from you – advice from a solicitor and confirmation of independent advice. Before taking legal advice establish the total cost.

Borrowers who do not speak the Czech language and are looking to personally attend to complete and sign documents may require a translator. Properties that are uninhabitable will not be lent against.

Before agreeing to purchase a property in the Czech Republic , it is usual practice to arrange a mortgage.