Mortgage – a word that can have a different meaning for everyone. Indebtedness of real estate can mean for someone a way to seeming freedom, building a family fireplace, satisfying the desire for their own property.
For another, it is a commitment that cannot be accepted. It can also be a way to a good investment. Whether you belong to the category of mortgage loan supporters or not, we have decided to summarize for you the possibilities that we have in the Czech mortgage market.
The types of mortgage loans are abundant – on the following lines, you will read everything that might interest you – from the conditions of mortgage lending to the types of mortgage loans that can be obtained. When is it worthwhile to refinance your existing mortgage loan? Read it!
Before you decide on a mortgage
Before you decide to search for your own property for housing or investment, think through everything! It sounds like a cliché, but it’s important to be able to calculate everything well.
If you want to get into debt for several decades, let’s calculate the amount of repayment and do not forget other fees related to housing – spending on services, energy, garden maintenance, necessary repairs, and renovations… calculate everything and try at least 3 months with a budget that will be the result of the subsequent purchase of property and the need to repay the mortgage loan. You didn’t have a budget problem? Congratulations, financially you can plunge into the mortgage.
If you are planning to buy a property and keep it as an investment, it is good to remember that this is not the best time to buy a property for that purpose. Prices in larger cities are very much priced and mortgage rates are starting to rise slowly. This does not necessarily mean that buying a property is disadvantageous.
It is particularly advantageous for investors who plan to rent real estate for commercial purposes (not for traditional permanent housing, where a mortgage financing purchase may not be profitable), or for investors who want to save their own funds in “permanent values”.
For many years now, real estate has been a barometer of economic health and a store of value. Nowadays, when you get no more than 0.5% pa in interest on savings accounts with larger amounts, the investment with a yield of about 3.14% pa (average yield of an apartment in Prague according to Global Property Guide statistics) may seem advantageous.
Indeed, we have already written about the profitability of real estate and rentals in our previous article “How to Rent an Apartment”. Do not forget, however, that renting an apartment is not only yield but also a concern. You may come across non-solid tenants, or your property may be the target of a natural disaster. And of course, you will have to take care of the property as a landlord or arrange for someone to do it for you.
And where do I actually want to live?
Decide what type of property you prefer. In large cities, the most popular smaller apartments with 2 + kk. But such an apartment may not be enough if you are planning (even hypothetically) a family. In addition, one room can mean a lot and many worries in a few years.
Do you prefer a family house? If you do not have experience with construction, will you choose a turnkey house, or buy an existing property, or will you build yourself?
How much do you want and can you invest in the real estate so that you can even save money to repay the mortgage loan? Do I want to buy the property myself or include my partner/family?
You must have a clear answer to all these questions before searching for a property.
Where to find your options
If you have weighed all the pros and cons and still have decided to go to the mortgage, then it is good to visit the bank, or banks before you even get the property. First of all, it is good to find out the conditions in individual institutions (they may differ in the number of interest rates and fees, but also the requirements for the client’s creditworthiness and the offer of mortgage options) and especially to check how much the bank actually lends you.
However, bank offers may have different “hooks”, so we recommend choosing a capable financial adviser who has experience, all “but” will explain, can negotiate better conditions than they give you at the branch and save you a lot of your precious time! If you do not know anyone like this, we will be happy to recommend one of our proven advisors.
Moreover, since last year, higher demands have been placed on the creditworthiness of clients than before, thanks to new CNB recommendations. These are called DTI and DTSI.