Mortgages
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Mortgage is the best option for buying a property or if you need to borrow some money. Czech mortgage market is full of various offers and we know how complicated it can be to understand them. Basic necessary conditions for getting a mortgage are:
1. Confirmation of your income from the employer / the last one or two tax returns if you are self employed
2. Temporary / long term / permanent residency
3. Two personal identification cards – passport, permanent / long term / temporary residency
4. A bank always checks the debt registry
5. Czech ID – rodné číslo (if you have it)
6. Employment contract for an indefinite time period
7. The property that you pawn must be approved by a bank assessor. It is not frequent, but if you buy a property which is overpriced there can be a difference between the property price and the real value due to estimation.
Conditions for EU residents are very similar to those for Czechs. As for non-EU citizens, it depends on which country they are from and how long they have lived in the Czech Republic. Getting a mortgage is always a very individual process.
LTV – the most imortant factor
LTV stands for loan to value. It is a difference between the real property value (according to the bank estimate) and the amount which a client wants to borrow. A lower LTV means a better interest rate. For example: The value of the property is 3 000 000 CZK, client wants to borrow 2 600 000 CZK, LTV is 80 %. At this time you can borrow a maximum of 90 % LTV.
Differences in the market
Most people apply for a mortgage in the bank where they have a bank account. It is not true, though, that as clients of the bank they get better conditions. There are over 10 banks on the market offering mortgages. It is a good idea to compare more bank offers – or hire a well experienced financial advisor to do it for you.
How important is an interest rate
Some banks offer a lower interest rate than others. But it may be dependent on getting additional products such as bank insurance, credit cards etc. You pay extra money for these so in the end such offers can be very expensive!
A mortgage and taxes
You can save on taxes and reduce your annual tax base by the portion of the interest rate you’ve already paid off!