Czech Republic: Mortgages

Czech Republic lending criteria

Do I qualify for a Czech Republic mortgage?

To qualify for a mortgage in the Czech Republic, a calculation is used to establish whether you can afford to maintain the mortgage repayments. This will automatically happen when you complete the application form, and Conti won’t charge you for this service.

How much can I borrow?

• Calculation based on the valuation or purchase price, whichever is the lower

• Up to 85% of LTV available for house purchase, remortgage or home improvements

• Based on joint net “take home” pay, where joint income is applicable

• Existing liabilities, e.g. mortgage or rental payments, loans, credit card payments and maintenance are taken into account, together with the proposed Czech Republic mortgage payments. All this must not exceed 40% of your monthly net income. Note that the lender will consider historical rental income, and may take into consideration contracted future rental income into account


What evidence of income do I need?

If you are employed:
• Your last three month’s payslips
• Your latest P60 or Employers Reference
• Your last six month’s personal bank statements

If you are self-employed:
• Your last two year’s audited accounts
• Your last six month’s business statements
• Your last six month’s personal bank statements.

Example mortgage payments

If, for example, your net joint monthly income is £2,500, 40% of this equates to £1000. If your only liability is your mortgage payment, of say £300, this would leave a balance of £700 for your Czech Republic mortgage repayment

What types of Czech Republic mortgages are available?

For our latest rates and to see the different types of Czech Republic mortgages on offer, please visit our website or speak to one of our advisers.

• Loans are available up to 85% of the property’s value, in Czech Crowns only
• The minimum term of the loan is five years, with a maximum term of 20 years or age 70, whichever is the least
• Repayment mortgages are available
• The minimum loan you can take out is Czk 800,000

Essential information for buying properties in the Czech Republic

Buying property abroad is not necessarily the same as buying in the UK, there is other essential information you need to be aware of both before and during your property purchase.

• It is of paramount importance to seek independent advice from an overseas solicitor. A list of Czech lawyers is available from Conti Financial Services.

• Ensure that you have full clear title to the property on completion and that the appropriate documents are available for the lender. Finance will be granted only for completed properties where the Surveyor’s Office (Stavební úřad) has issued a valid Occupancy Permit (Kolaudační Rozhodnutí) certifying it as habitable. Lenders will not advance funds to purchase or renovate properties that are currently uninhabitable.

• In the Czech Republic, although a Czech legal entity (Ltd, joint stock company, s.r.o. etc) is entitled to own titles of property, a foreign national is not unless they have residency permission. However, a foreign national may form a Czech company to buy property.

• If applying for a loan to a Czech Company of which you are the beneficial owner, you will be required to guarantee the loan. The lender will expect you to receive independent legal advice from a solicitor in the UK concerning the guarantee and confirmation from the solicitors that they have advised you independently (both documents incorporated within the Guarantee).

• You should check with the estate agent and/or your lawyer that you are aware of the costs charged by legal and Government authorities for buying a Czech property. The solicitor may be incorporating costs for assigning the mortgage within his charges, along with the title deeds to t he land registry. You should establish the actual cost of these before proceeding with a loan application. The lender will also have their own legal costs for assigning the loan, the cost of which they will normally advise you when they issue the mortgage offer. These associated fees/taxes are typically between 10% - 15% of the properties purchase price.

• It is common practice in the Czech Republic for borrowers to deal with the lending bank without using a solicitor. Foreign borrowers can choose to grant power of attorney to a Czech solicitor, who can then sign documents on the borrower’s behalf and dealt with by the notary,

• Bear in mind that if you are intending to be present at the completion to sign all the relevant documents yourself and you do not understand the Czech language, a translator will be required to respond to the notary.

• All loans will be in Czech Crowns

© Conti Financial Services Limited 2008

This article is reproduced with the kind permission of Conti Financial Services Limited.

For information and advice on overseas mortgages and residential finance in over 30 countries, contact Conti Financial Services Ltd on www.mortgagesoverseas.com