Property purchase and mortgage loan can evoke lots of questions for many of us. Having the right answers could mean reducing both the stress and the cost. Find out the correct answers for 5 most common questions:
1. How much can I borrow?
This might be a burning question, because this affects the type of property that you can afford. This generally depends on your income, type of income; other loans you have and on the amount of money that you have saved. Remember that the purchase price is not the final price, but it is close to that. Other charges can grow just up to 20 000 CZK.
2. What documentation should I gather?
To apply for the mortgage prepare the following document. Sometimes you might be asked to submit additional documents.
- ID (in Czech Občanský průkaz) and passport or driving license
- Proof of your citizenship or permanent residence permit
- Proof of your income or tax reclamation (your income has to originate in Czech Republic)
- Personal details
- Property details
3. How long does it take to close a mortgage?
Even though there is no definitive answer to this question, the average time to close a mortgage for an apartment purchase is around 25 – 40 days. This period may be extended depending on current situation regarding the development of the pandemic. Many factors and your individual circumstances frame the total time needed. You can shorten this time by preparing all required documents.
4. What does loan to value mean with a mortgage?
The loan to value – or frequently called LTV –is the amount of money you borrow from the bank compared to the purchase price of the property and it is usually expressed as a percentage figure. The lower the LTV, the lower the mortgage interest rate tends to be. For example 80% LTV means that bank will lend you 80% of the purchase price of the property while the remaining 20% you will pay from your own savings. Maximum LTV allowed in the Czech Republic is 90% LTV.
5. How much should you save for a down payment?
This question is closely connected to the previous one. It is required to have at least 10% of the purchase price, but in most cases applicants have 20% or more. In most of the cases applicants have at least 20% down on a property and it is always required to have at least 10% of the purchase price.
If you have any other questions, don’t hesitate to contact us. Since we cooperate with many major Czech banks are services are for free and can save you both time and money. We have already help clients from more than 30 countries and have experience with solving many both usual and unusual situations.