Facilitated by Milo Dvorak
9. 9. 2024
Published by ct24.cz on 2 September 2024
The rules for mortgages are changing, with banks charging their clients a fee of up to one per cent of the outstanding debt for early repayment of the loan. Interest in taking out a mortgage to purchase a home has been increasing in recent months, though.
Clients will now have to pay a fee to the bank, calculated based on the remaining debt, amounting to a quarter of a per cent of the early paid-back amount for each year remaining until the end of the fixed-rate period. However, the total charge cannot exceed one per cent. The new rules will only apply to clients who repay their mortgage early during the fixed-rate period, provided the fixed-rate agreement was made after 1 September 2024.
“There are also legal reasons where no fee for necessary costs is charged. (...) In such cases, the client must provide proper documentation,” added Miroslav Zetek, a board member of Hypoteční Bank.
Exceptions include the end of the fixed-rate period, divorce, the sale of a mortgaged property, or the death of a partner with whom the client was repaying the loan.
Thousands of Czechs are considering early repayment, though. Meanwhile, the number of new mortgage applicants has been rising again in recent months. In July alone, nearly 6,500 mortgage contracts were signed by Czechs. More than a thousand clients switched banks to benefit from better conditions.
The fee for early repayment is intended to curb so-called mortgage tourism. The amount is meant to compensate banks for additional administrative costs. Initially, banks proposed a fee of up to two per cent, so the agreed one per cent is a compromise.