December 2, 2016 @ 5:59PM
Ridiculous penalties on early repayment of Czech mortgages had become the norm.
Fortunately this has all come to an end as a new consumer loan law is passed in Czech Republic. This law has been passed in response to EU directive 2014/17/EU.
There are many aspects covered under the new law but we will discuss here those affecting Czech mortgages pertaining to property.
Early repayment penalties on Czech mortgages
Early repayment penalties for mortgages obtained after December 1, 2016 or for existing Czech mortgages where fixation is renewed after this date are now limited.
Consumers are allowed to repay up to 25% of the total mortgage amount yearly, in the month proceeding fixation, with no penalty. In case the property is being sold, banks can charge only those actual costs incurred to a maximum of 1% of the amount of the mortgage.
Renewal offers on fixed length mortgages
Banks are now obliged to inform their clients 3 months before the fixation ends. This is instead of the 6 weeks which became the norm. This allows the consumer more time to look at other Czech mortgages on offer.
APR (annual percentage rate) or total cost of Czech mortgages
The banks must also show the client the total cost of the mortgage or APR (annual percentage rate). This rate includes all costs associated with the mortgage. It includes fees for valuation of property, loan processing, account management, loan management, life insurance and/or property insurance. It will give the consumer the opportunity to compare offers between banks. They can be looking at the total actual costs rather than just the headline interest rate.
Czech mortgages increase in response
In response to these changes in consumer laws most of the major banks have increased their mortgage interest rates by 0.5%. Below is a graph of current actual interest rates with the rates in red showing where there have been increases and the rates in green showing decreases. Read the full article (only in Czech) on current interest rates on Czech mortgages.
How we can help
Are you looking at renewing your Czech mortgage or want to obtain one for a purchase? Drop me an email: email@example.com for a free, no obligation mortgage assessment.
December 2, 2016,