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Once you have decided to establish your roots in the Czech Republic, it can be a natural step to buy a home. According to Tomáš Jedlička, senior advisor to Fincentrum financial consultants, both EU- and non-EU citizens are eligible for mortgages. apartments for sale
"Most banks require temporary residence for EU citizens and the Czech rodné číslo—no additional provisions generally apply and EU country incomes are accepted. Permanent residence and working history in the Czech Republic are required for non-EU citizens."
The less-good news? Recent mortgage loan caps and rising real-estate prices present the borrower with challenges for the first time. Jedlička offers these points before taking the plunge into consideration:
1. Historically, property prices in Prague and the Czech Republic are high.
The economy in Czech Republic is stable and growing. At the same time, the price of residential property continues to rise. Housing shortages, especially in the case of the lack of houses in Prague, are causing high demand, pushing prices up and the situation is not expected to change significantly in the near future according to Jedlička. The Czech National Bank also tightened loan conditions to make cheap loans less affordable. This works to protect the housing market from a price bubble.
2. The terms they change.
New regulations issued on 1 October 2018 by the Czech National Bank (CNB) states that all loans cannot exceed nine times the annual net profit and the monthly loan installment shall not exceed 45% of monthly net revenues. In addition, the value loan (LTV) should not exceed 80%, although banks usually offer 90% LTV at a higher rate. Jedlička gives an example:
"Suppose the customer has no other loans and chooses to purchase an apartment in Prague for 6 million CZK. The value of the loan (80% LTV) is CZK 4.8 million. The annual net income of the customer in this case must exceed CZK 534,000 (4.8 million/9). A monthly payment with an interest rate of 2,9 percent and a payment period of 30 years would amount to around CZK 20,000 per month."
That means you will need at least CZK 45,000 a month to buy this type of property in Prague.
Ready to purchase a Czech home? See Mortgages.cz independent mortgage broker to get a free quote for English speakers.
3. Flexibility is an obligation.
Because of record high property prices, particularly in Prague, more and more foreigners are buying houses outside the Czech capital from satellite communities that allow easy access to the center either by car or by public transport, says Jedlička.
Cities such as Kolín, Neratovice and Kladno offer proximity and relatively low property prices (less than 40 minutes to Wenceslas Square). Beroun, Slaný and Šeničany are also popular expatriate commuter communities. For those who are practical, subsidies should also be paid if you build a low-energy house or reduce the energy consumption of an existing family house.
Read more about these initiatives, which cover up to 50% of the costs of furnaces, window substitutions or solar panels, for "Nová zelená úsporám."
4. Could help mortgage brokers.
A mortgage broker is an intermediary who works with several lenders and the lenders pay a referral fee. Mortgages brokers such as Mortgages.cz are one-stop shop, providing both foreign individuals or property investors complete real estate financing and legal guidance. Working with them is a popular choice for borrowers, because many banks offer mortgage brokers that bring them business discounted rates. Mortgage agents can also assist you in securing the mortgage approval if you do not usually get it from a bank. And for those who do not speak Czech, it's no brainer to have one on your side.
But let them not speak to you about additional services that do not make financial sense to you when it comes to the mortgage brokers (on the other hand, brokers can help you acquire the building insurance that is required by the bank).
5. Are you not qualifying?
If all that sounds a little disheartening, don't give up: you could still become a property owner in the Czech Republic with some time and financial planning, says Jedlička. "Even if the customer does not have enough trackable income, certain banks will grant mortgages based on your accounts transaction volume." He recommends that you buy your savings as quickly as possible, by means of rental accommodation, and checking the housing market in a year or two.
Other options include asking a family member to pledge collateral on your behalf or setting up a stavební spořeni (building savings) account with state contributions; while it doesn’t provide the best interest on the market establishing such an account could entitle you to a better offer with less strict conditions than regular banks after two years saving. Jedlička can help customers who speak English to browse these options.