To get mortgage you need these 3 things:
Updated: Mar 21, 2020
For expats, applying for a mortgage in the Czech Republic can be confusing and intimidating. Our goal is to guide you through the process, making it easier for you to achieve your property ownership goals.
To get a mortgage in the Czech Republic you need these three things:
Purpose – buy, renovate, refinance...
Security – a property
Profile – income, residency, citizenship, expenses...
We’ll start with the easy one: purpose of the mortgage. You need to tell the bank what you will use the money for and stick to that purpose! You can finance any of the following:
purchase – buying or recently bought property
refinancing – moving your mortgage from one bank to another
renovation – fixing up your property
building – building a whole house
paying off – to get a “cooperative share”, pay someone else off or the tax
Don’t have a purpose but still need money for a mortgage? It’s still possible. The “Non-purpose” mortgage is a subtype of mortgage where you can skip this phase for a higher interest rate (usually 1–2% higher).
According to the definition of ‘mortgage’ – a loan secured by a property – the bank must have a security/pledge/lien on a property in order to protect their interests in case the client doesn’t fulfil the obligations of the contract. We say a property because the security and the purpose of the mortgage do not need to match. It’s important to mention that if one bank has security on a property, they don’t let anyone else touch it without their consent. Another important part of the property is its valuation – a property being sold for 5,000,000 CZK might have a value of only 4,500,000 CZK in the bank’s eyes, and that needs to be considered.
Have you heard of releasing equity? This is a great way to still get 100% financing these days. What’s the trick? You need to have at least one property to start with! More info on demand.
In 90 percent of cases, the two points above are the same – buying new property which you will also use as a security. Now let’s have a look at the last part: your personal profile. Unlike for Czechs, where mainly it’s just necessary to prove you have a nice income and that’s it, when it comes to expat home buying there are more factors to consider. We will need to know about your:
Income and expenses – How much you earn, what is the source and regularity, what is your history in this field, and how much liabilities you already have.
Residency – We keep hearing people say, “As non-EU citizen, I need to have permanent residency”. This is NOT true! Or we hear, “I need to have some kind of residency here as an EU citizen to get financing”.
Citizenship – Some banks do have vastly different conditions for EU and non-EU citizens, and some do not. It’s another reason to choose us, as we know exactly which banks are good for you and which ones you shouldn’t even bother asking.
Other details about education, when you moved to Czech Republic, tax residency, etc.
We have a great track record of success helping expats obtain mortgages on properties in Czech Republic. These are some of the special combinations we’ve made possible for our clients:
non-EU citizen with long-term residency on 90% LTV (2019)
EU + non-EU married couple with income both from CR and abroad (2019)
EU citizen financed non-purpose mortgage with income purely from Airbnb (2019)
EU citizen paying 100% of purchase price using free equity on his current property (2018)
EU married couple without any residency getting 100% LTV mortgage just 3 months after they moved into Czech Republic (2016)
and other scenarios...
Buying property in the Czech Republic can be complicated and frustrating for expats, but it doesn’t have to be. We’ve helped many clients successfully get mortgages, and have the knowledge and expertise to make your home ownership goals a reality. Contact us to discuss your situation today at firstname.lastname@example.org or call +420 777 877 849.