Mortgage rates when applying for a loan for an individual will average 2.8-3.5% per year, and for a legal entity – 3.5-5.5%.
The term of mortgage fixation, when it is impossible to change the terms of lending either by the bank or by the borrower, is usually one year, three years or five years and can reach up to 10 years. The amount of the interest rate also depends on this period. With a fixing period of up to one year, interest rates will be 2.8-3.1%, for three years – 4.2-4.6%, for five years – 5.5-6.5%, up to ten years – 5.5%.
In addition, the size of the rates will depend on the size of the down payment and the mortgage repayment period.
Obtaining a mortgage in the Czech Republic takes place in two stages – making a decision by the bank on granting a loan and transferring money to the account of the buyer of the property. It takes about two to three weeks to get a loan directly, without taking into account the preparation of documents.
General requirements of banks
The minimum amount of a mortgage loan for individuals is 12,000 euros, and for legal entities – 40,000 euros.
Foreigners can be provided with a mortgage loan in the amount of up to 50-70% of the estimated value of the purchased property, which is usually below the market. A mortgage, as a rule, is given for a period of 5 to 30 years with the condition that it will be paid before the age of seventy of the borrower.
The decision to grant a loan is also influenced by the bank's assessment of the facility's liquidity. For example, the chances of getting a mortgage increase when buying real estate in Prague, Karlovy Vary or Brno.
Required package of documents
The bank needs to receive documents from the borrower confirming its reliability and solvency. First you need to find out the requirements of the banks, and then start collecting documents.
In case of registration of a mortgage on a foreign individual:
- a foreign passport and another document confirming the identity of the borrower, for example, an internal passport, a birth certificate or a driver's license;
- a document confirming a permanent residence permit in the country;
- documents confirming the solvency of the borrower (salary certificate form 2NDFL, real estate lease agreement, etc.) Income can be from different sources. The borrower's solvency is assessed on the basis of income that can be received outside the Czech Republic.
- a bank account statement for three months, which shows the regular receipt of funds. The monthly amount of receipts must cover mortgage payments for the month and the subsistence minimum established in the Czech Republic.
Some banks may require foreigners to provide an extract from the register of debtors, from bank registers and a certificate from the tax service on the absence of debt.
If the mortgage loan is issued to a company registered in the Czech Republic, then it is necessary to provide:
- an extract of the company's registration from the trade register;
- registration sheet (extract from the Commercial Court on the legal entity in which the foreign citizen is the founder);
- a foreign passport of the founder and another document confirming the identity of the borrower;
- certificate from the tax service on the absence of debts of a legal entity;
- a so-called targeted mortgage loan can also be issued, which is issued for a new, newly created company, without proof of income, when buying an apartment building or a hotel.
Additional costs
In addition to covering interest and paying off the loan body, mortgage registration in the Czech Republic is accompanied by additional costs. Among them:
- the evaluation of an apartment or house will cost from 100-200 euros;
- insurance of a real estate object is mandatory when taking out a mortgage loan. The annual insurance of the property will cost about 20 to 100 euros and up to 3000 euros per hotel. Making insurance for the borrower is an optional, but desirable condition.
- payment for services provided by the bank will be from 0.2% to 1% of the amount of the requested loan for legal entities, for individuals – about 80 euros (depending on the current prices of banks).
- certification of documents and their copies by a notary;
- translation of documents (approximately 10 euros per page);
- the opening of the company costs about 2000 euros. A legal entity must be registered as a limited liability company (S.R.O.)
Mortgage payment
Mortgage payments in the Czech Republic must be made in accordance with the loan agreement: monthly or quarterly from an account opened in a Czech bank until the loan is fully repaid. After the end of the mortgage fixing period, the borrower can reissue the loan in another bank with more favorable mortgage rates or transfer it from a legal entity to an individual. The property will be secured by the bank until the mortgage is paid in full.
The loan can be fully repaid ahead of time, and no penalty will be charged if it is agreed in advance in the loan agreement.
HomesOverseas.ru Thanks Anton Titov from Svoboda Williams, Evgeny Rusnak from Prosto Real s.r.o., Victoria Kostebelova from Sun Power EU s.r.o. and Olga Goryachkina from Rentsale for participating in the preparation of the material.
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