Both rent and mortgage repayment have their advantages and disadvantages the amount of the rent will not be affected as it depends on the landlord. On the other hand, you won’t have to worry about so many things. With your own home loan, you set the installments according to your needs – just combine the total repayment period with the fixation period.
When financing your own housing you will eventually live on your own. When renting the apartment will still belong to the landlord.
Prefer a mortgage or rent?
This is just one more thing – in your own housing you set the rules yourself and no one can tell you what you can or cannot do. A mortgage is one of the ways you can achieve this.
Because prices of good properties have been rising in the long term, a mortgage can be a wise investment for you. At the moment you can compare offers of 13 mortgage providers. Mortgage or rental in response to the real estate market. Whether to take a mortgage or to stay in the lease also determines the state of the real estate market. It regularly undergoes a rise in prices and subsequent realization.
Realization means that real estate prices have come under the influence of investor speculation and have created an investment bubble. In other words, it has happened that prices do not correspond to reality, but are artificially increased. If the market is in this state, it is likely that sooner or later a correction will take place. The correction will contribute to price realization and can be expected to decrease. This is the perfect time to buy a property.
What are the conditions?
Following the changes in December 2016, the Good Finance Directive, which came into force in October 2018, was further strengthened.
- The recommendation regarding the minimum savings amount has been in force since 2017, but with the new Good Finance recommendation, it has again gained importance. In order for a bank to provide a mortgage, the applicant must have saved at least 10%, some banking houses require at least 20% of the value of the acquired property.
- The amount of the applicant’s debt should not exceed nine times its annual net income. In other words, banks have been advised not to grant mortgages in excess of 108 times your net monthly income.
- As of 1 October, the applicant should simultaneously spend a maximum of 45% of his monthly net income on the debt repayment.
You can read more about the changes in this special, which is about the changes from October 2018 in detail.
The changes in October 2018 respond to the overheating of the real estate market and the amount of mortgages provided. This step of the Good Finance will ultimately reduce the risks for us, our clients.
Ideally, your total housing costs, including energy, will not exceed 30 percent of your family budget. In order not to get in trouble, the mortgage payments should be acceptable for the family and at the same time need to be able to create a financial reserve for unexpected situations. Thus, 30 percent of income is a relatively good threshold.
The conditions and characteristics of mortgages are basically quite clear – how much you can borrow and at what interest will, therefore, affect your current financial situation, your previous repayment history and the selected property itself.
A mortgage loan achieves low-interest rates precisely because the loan is secured from the beginning by real estate. It may be just a house you are buying or being built, but you can also put the property in the possession of another person.
- For the Czech Republic, the mortgaged property must be on the Czech territory.
- Loans are starting from USD 300,000, the maximum amount depends on the value of the property and income
- Assessment and approval of a mortgage ideally take about a week.
- Once a year, you have the option to repay up to 25 percent of the loan amount free of charge.
- You can set the repayment period to 20 or 30 years, if possible.
A mortgage, or mortgage loan, is like a kind of loan always tied to some real estate. The bank can lend you most of the value of the purchased land or construction – most often it is 80 percent of its total value.
So-called 100% mortgages can no longer be provided by banks. Each year they can provide clients with a certain amount of mortgages, which make up about 90 percent of the value of the property, while others have to limit it to 85 or 80 percent.
So you need to prove the rest of your money from your own resources – of course, it is best to have them saved. Normally, however, a building savings loan is used to pay for the remainder.
What is the fixation period for mortgages?
Of course, the less you need to borrow, the better your bank will be able to offer you interest. However, because interest rates on the market are variable, banks offer different fixation periods for their mortgages – that is, for how long they can guarantee fixed interest.
Most often it is one, three, five or ten years. During this time, you are sure of the signed interest. Once this period is over, you can either have it refixed – that is, ‘re-lock’ interest for another period, or refinance your mortgage with another bank. However, the new level of interest will still correspond to normal market conditions.