Let me start with something I tell every new client who walks into my office. Buying real estate in Prague is probably the most expensive transaction you’ll ever make, besides raising kids. I learned this one the hard way – I have two children now, and trust me, the mortgage was actually the easier part. My name is Robin Petrásek, and I’ve been helping foreigners get financing and navigate the mortgage process in the Czech Republic since 2014. Over these years, I’ve guided hundreds of expat families through what can initially seem like an impossibly complicated system. The good news? It’s actually not that complicated once you understand how it works. The better news? You don’t have to figure it all out on your own.
What I want to do in this article is walk you through exactly how mortgages work in the Czech Republic, from the initial planning stages all the way to getting the keys to your new property. I’m going to share the process we follow with our clients, the common mistakes I see people make, and the practical tips that can save you time, money, and considerable frustration.
Before we dive into the specifics, let me clarify what we’re actually talking about when we discuss mortgages in the Czech Republic. The main purpose of a mortgage is to make buying real estate more affordable by spreading the cost over time, typically twenty to thirty years, and usually until you reach age seventy.
Here’s something important that confuses many expats – mortgages in the Czech Republic are specifically designed for buying residential properties. If you’re looking at commercial properties, that’s a completely different type of loan following different laws and regulations. We’re not going to discuss commercial financing in this article because that’s its own complex topic. The interest you pay on your mortgage is one of the main costs you’ll encounter when buying property. This cost is spread over the entire duration of the mortgage, which is why understanding how interest rates and fixation periods work becomes crucial. But I’m getting ahead of myself. Let me take you through this step by step, the way I explain it to clients in our meetings.
One of the first questions every potential buyer asks me is how much money they need to have saved before they can even consider buying property. In the Czech Republic, the down payment requirement is ten to twenty percent of the property value, and here’s where it gets interesting – your age determines which category you fall into. The magic number is thirty-six years old. If you’re thirty-five or younger, you can get financing for up to ninety percent of the property value, meaning you only need ten percent as a down payment. If you’re thirty-six or older, the standard requirement jumps to twenty percent. This age threshold catches a lot of people by surprise, particularly those who are used to mortgage systems in other countries where age doesn’t play such a direct role in financing terms.
Now, before you panic if you’re thirty-seven and thought you could get away with ten percent, let me add some nuance. Exceptions are possible. Banks have some flexibility, particularly for clients with strong income profiles or other favorable circumstances. I’ve successfully secured ninety percent financing for clients over thirty-six, but it requires navigating specific bank policies and sometimes getting formal exceptions approved. It’s not the default, but it’s not impossible either. There’s another important aspect of the down payment that many people don’t fully grasp until they’re in the middle of the buying process. The down payment isn’t calculated on the asking price of the property. It’s calculated on the bank’s valuation of the property. This distinction becomes critically important, and I’ll explain exactly why when we get to the valuation section.
Here’s where things get real. Let’s say your monthly net income is 100,000 Czech crowns. Different banks will calculate your maximum borrowing capacity differently, but generally speaking, banks might be willing to lend you enough to create monthly repayments of 50,000 or even 60,000 crowns per month. I need to stress something important here. Just because a bank is willing to lend you money doesn’t mean you should borrow the maximum amount. I’m a mortgage advisor, not a financial planner. If you want to get the highest mortgage possible, I can help you do that. But you need to make an honest assessment of whether those repayments are sustainable and healthy for your family’s financial future.
I’ve had conversations with clients where they’re excited because they can borrow more than they expected, and then I ask them to think through their actual monthly expenses. Not just rent or mortgage, but everything – groceries, utilities, insurance, occasional travel, emergency savings, children’s activities if they have kids. When you map out a realistic monthly budget, sometimes that maximum borrowing capacity starts to look less appealing. The calculation of how much you can borrow depends on several factors. Your nationality matters. Your residency status matters. Your current expenses and existing loans matter. How long you’ve been in the Czech Republic can matter. These aren’t arbitrary restrictions – banks are trying to assess risk, and your profile either fits their criteria or it doesn’t.
This is actually where working with a mortgage advisor becomes valuable, because we know which banks are more flexible with which types of profiles. Not all banks treat expat applications the same way. Some are significantly more accommodating to foreign buyers, while others have stricter requirements.
Let me explain something about how mortgage advisors work in the Czech Republic, because the system is different from some other countries and people sometimes don’t understand why we’re offering free services.
Mortgage advisors like myself are paid by the banks. We receive the same commission from all banks, and we’re only paid after delivering a signed mortgage contract. We’re working half for you and half for the banks, which creates an interesting dynamic. The bank wants to make a loan, you want to get the best possible terms, and I’m in the middle trying to match the right client with the right bank. I like to explain it this way – speaking to a mortgage advisor is like speaking to all the banks at once. Instead of you having to visit five or six different banks, explain your situation to each one, wait for their responses, and then try to compare offers yourself, we do that market research and present you with the best options.
When we meet with clients, we ask questions about income, nationality, residency status, expenses, how long you’ve been in the Czech Republic, and various other factors. Based on these answers, we can suggest which banks are most likely to approve your application, what interest rates you might expect, and what the overall process will look like. The selection is ultimately up to you, but we provide the information you need to make an informed decision. The alternative is doing it yourself. You absolutely can do that. Some people prefer handling everything directly with their own bank. But here’s what I’ve observed over the years – people who go directly to their home bank often don’t realize that bank might not actually offer the best terms. They also don’t realize their home bank might have restrictions that other banks don’t have. Loyalty in banking is rarely rewarded with better mortgage terms.
When we’re helping clients select a mortgage, the process starts with market analysis. We check what all the banks are offering and which ones have the cheapest rates. But here’s where it gets more nuanced than just picking the lowest number.
Life insurance often comes into play with mortgage offers. Sometimes you’ll get an offer from a bank that seems really attractive on the interest rate, but buried in the conditions is a requirement for life insurance. Life insurance will make the interest rate go a bit lower, but it costs quite a lot of money in monthly payments. The rate might be lower, but your overall monthly costs actually increase.
I always make sure clients understand this distinction. We look at something called RPSN in Czech, which is similar to APR in other countries. This figure accounts for all the costs associated with the mortgage, not just the interest rate. Sometimes an apparently cheaper rate ends up being more expensive when you factor in insurance requirements and other fees. Fixation is another critical topic we discuss with every client. Fixation means how long your interest rate remains the same. You might fix the rate for two, three, five, seven, or even ten years. The strategy here depends on where interest rates are currently and where they’re expected to go. When rates are relatively high – four or five percent – people typically choose shorter fixation periods of two or three years. The thinking is that rates will come down, and you don’t want to be locked into a high rate for a decade. Conversely, when rates are low, longer fixation makes more sense. The lowest rate I ever secured for a client was 1.49 percent, and I don’t even remember how many years ago that was – maybe seven years. That client fixed for ten years, and they’re probably still benefiting from that rate today.
Beyond interest rates and fixation, there are other factors to consider. The speed of the bank matters. Some banks process applications much faster than others. The size and stability of the bank might matter to you. How English-friendly their processes are can make a huge difference in your experience. How digital their systems are affects how much bureaucracy you’ll need to deal with.
Once we’ve identified the best mortgage options and you’ve decided which bank to work with, we move into document preparation. I like to tell clients this phase requires about thirty to sixty minutes of your time investment, though I’ll admit it’s probably the most bureaucratic part of the process. We need to satisfy the bank’s checklist requirements, and banks are very particular about their documentation. The basic documents we need are your passport and residency card if you have one. For EU citizens, it’s possible to have been living in the Czech Republic for ten years without a residency card, and that’s fine. For non-EU citizens, you should have an employee card, long-term residency, or permanent residency. Permanent residency makes things easier, but it’s not absolutely necessary.
Documents about your income depend mainly on your employment type. If you’re an employee, we need an income certificate from your HR department. Banks provide specific forms for this. You send the form to your HR, they fill it out and send it back. Sometimes they’ll also need your employment contract, but the income certificate is the main document. Self-employed people need at least one, ideally two years of tax returns from previous years. This is where self-employment gets a bit more complicated in terms of documentation, but it’s certainly not impossible. I’ve worked with plenty of self-employed clients. For business owners, the process becomes more complex. Banks require your company’s tax returns and documentation of however you’re paying yourself income. I’m a business owner myself, so I know this struggle personally. It’s complicated enough that I can’t fully explain all the nuances in this article – it really requires individual consultation.
We also need to show the bank three to six months of bank statements in PDF format. Here’s a common mistake – people download their transaction history instead of actual bank statements. You really need to download the official monthly statements, month by month, in PDF format. This detail seems minor, but submitting the wrong type of document can delay your application. If your income is paid into a Revolut account or a bank in another country, that’s also possible. Just get a similar version of what Czech bank statements would look like. Banks can work with foreign documentation, they just need to be able to clearly see your income and expenses.
These documents allow the bank to understand your profile, verify that you have stable income, and conduct due diligence to make sure there are no ongoing debts or defaults in the debt registry. One interesting difference between the Czech system and countries like the UK or US – there’s no such thing as a credit score or credit history in the way those countries have it. Having credit cards or other loans doesn’t help you get a mortgage. It actually works the opposite way. Whatever monthly repayments you have on existing loans reduces the maximum mortgage you can get.
With these personal documents submitted, we can get you pre-approved for a mortgage. This is what I consider one of the smartest strategies in the entire buying process, though many people don’t realize they can do this.
Pre-approval means the bank checks your personal profile, income, and debt registry before you’ve found a property. They confirm there are no problems with your application and give you a clear picture of how much you can borrow. This pre-approval is valid for three months, and if you don’t find a property during that time, no worries – the application automatically expires and you can reapply. There are no fees connected with this process. The benefit of pre-approval is enormous. When you do find a property you want to buy, you already know the bank is okay with you as a borrower. You’re not rushing to submit documents and hoping the bank approves you while the seller is waiting. You can negotiate with confidence because you know exactly what financing you have secured.
I’ve seen too many situations where buyers fall in love with a property, sign a reservation contract, pay the reservation deposit, and then discover the bank has issues with their profile. Maybe their income isn’t quite high enough. Maybe their residency status doesn’t work for that particular bank. Maybe there’s some historical debt they’d forgotten about. At that point, they’re in a terrible negotiating position.
If you’ve already found a property before approaching us, or once you find one after getting pre-approved, we need specific documents related to that property. At this point, we contact the real estate agency or seller and request documents such as the deed of ownership confirming who owns the property, and a draft of the reservation contract.
Here’s something absolutely critical – don’t sign your reservation contract before getting the bank’s feedback. I cannot stress this enough. We’ll get to exactly why this matters so much when we discuss the three golden rules, but for now, just trust me on this one. We also need to confirm if there’s any mortgage currently on the seller’s property. If there is, that’s usually fine as long as it’s a regular mortgage or regular loan. However, if there’s an execution, which indicates the seller is in default, or if there’s insolvency, that’s extremely problematic for getting financing. Make sure you or your broker or your lawyer understands what types of limitations exist on the property you want to buy. Special attention is needed if you’re buying a family house, cottage, or basically anything that’s not a flat. One of the most common problems we encounter is that the real property doesn’t correspond with the legal state on the land registry. There might be a building physically standing there, but it’s not properly registered in the cadastral records. Banks won’t finance properties with these kinds of legal discrepancies.
The bank valuation is absolutely crucial, and I want to explain exactly why with a concrete example. Let’s say you’re buying a property for ten million crowns. We arrange an online valuation, which typically takes one or two days. In the best case scenario, the online valuation confirms ten million crowns. Perfect. We can proceed to the next stage.
But maybe the online valuation comes back at nine million crowns. This is where not having signed the reservation contract yet becomes incredibly valuable. You can use this valuation as a negotiating tool. You can go to the seller and say, “Look, the bank values this property at nine million, not ten million. Can we adjust the price?” Will this always work? No, probably not. But you’re in a much stronger position to negotiate. The next step might be sending the bank’s valuer to assess the property in person. This takes about a week. They might increase the valuation from nine to ten million, or they might come back and say it’s more like 9.7 million, and that’s their final answer.
Here’s the critical part that many buyers don’t understand. The bank lends you eighty or ninety percent based on their valuation, not the purchase price. If the bank values the property at 9.7 million and you’re getting ninety percent financing, the bank will lend you 8.73 million crowns. The difference between that amount and the purchase price comes from your own funds. This is why valuation is so important to know before signing the reservation contract. You need to know exactly how much of your own funds you’ll need to invest in the purchase. I’ve seen buyers who thought they needed 10 percent down payment on a ten million crown purchase, so they prepared one million crowns. Then the valuation came in at nine million, and suddenly they needed 1.73 million crowns. That’s a significant difference, especially if you’ve already committed to buying the property. For family houses, the bank also sets conditions under which the property is acceptable as security. Very often this involves access to the property. In the majority of cases, this isn’t a problem if you’re accessing your house from a public road. But sometimes you need to cross someone else’s property, and there needs to be a legal easement on that plot of land. If this isn’t properly documented, the bank will flag it as a condition that must be resolved before they’ll finance the purchase.
Let me share a recent example that illustrates why these details matter. We had a client buying a flat in Prague, maybe 120 square meters. The flat had a gas boiler, but the boiler wasn’t actually inside the flat. It was in a small locker room in the hallway that technically belonged to a different flat. The bank discovered this during their assessment and said they wouldn’t finance the purchase unless the boiler was moved back into the flat itself. This is very important information to know before signing a reservation contract. In this case, the client backed out from the deal because resolving the boiler situation was too complicated.
After explaining the mortgage process to hundreds of clients, I’ve distilled the most important lessons into three golden rules. These aren’t suggestions or nice-to-haves. These are critical steps that should almost always be completed before you sign a reservation contract. Small exceptions might apply in specific circumstances, but for the vast majority of buyers, these rules will save you from serious problems.
Rule number one – get pre-approved by the bank. Make sure the banker has seen your documents, checked your debt registry, verified your income and residency status, and confirmed there won’t be any problems after you sign the reservation contract. Finding out the bank has issues with your application after you’ve already committed to buying the property is too late. You’ve paid a reservation deposit, you’re legally obligated to proceed, and you’re in a terrible negotiating position if you need to back out.
Rule number two – get the valuation done. Especially if you need eighty or ninety percent financing from the bank, it’s crucial to know that the bank agrees with the value of the property and the price you’re paying for it. This isn’t just about negotiating power, though that’s certainly part of it. This is about knowing how much money you actually need to have ready for the purchase.
Rule number three – get a lawyer. Have a lawyer review all the documents to make sure you understand the reservation contract and there’s nothing hidden in the terms. The liabilities should be similar for you as the buyer and for the seller. Most commonly, there’s a penalty for you if you cancel the purchase, but there’s no penalty for the seller if they change their mind. This is one of the first things we add in legal revision – making sure the contract is fair to both parties.
I cannot emphasize enough how important these three rules are. Please don’t rely on ChatGPT to understand your reservation contract or to do legal revisions. I’ve seen people try this. It doesn’t work, and there’s definitely no liability if things go wrong. Always hire a lawyer for the transaction to protect your best interests. Yes, if there’s a real estate agency involved, they’ll provide legal support and draft all the contracts. But it’s their lawyer. If things go south, you can guess whose interests they’re going to protect. When you’re buying a property worth millions of crowns, invest a bit of money into having your own lawyer. Typically, legal fees for covering the whole real estate transaction run about 15,000 to 25,000 crowns. We offer this service to our clients for a fixed price of 15,000 crowns if you want our legal support.
Once the mortgage is approved and your lawyer has reviewed the contracts, it’s time for the actual signing. We try to get everything done in one session. First, we meet in our office to sign the mortgage documentation, and then we continue to meet the seller at the lawyer’s office to sign the purchase and escrow contracts. The purchase contract specifies all the details about transferring ownership from the old owner to you as the new owner. The escrow contract establishes a middleman’s account, typically with a lawyer, though sometimes with a bank or notary. This account holds all the money until the transaction is complete and you’re the legal owner. This protects both parties – the seller knows they’ll get paid once ownership transfers, and you know your money is safe until you actually own the property.
When you receive the mortgage documentation, it’s all in Czech, unfortunately. It’s the job of your mortgage advisor or, frankly, Google Translate to explain everything so you understand what’s happening and what’s in the mortgage contract. The most important parts are the interest rate, repayment amounts, duration of the mortgage, and something called draw down conditions. Draw down is the process when the bank physically sends the money from their account to the escrow or to the seller. It’s like a massive payment order where you’re sending millions of crowns to another party. The bank wants to make absolutely sure the money is going to the right place and that all conditions are met before they release such a large amount. They create a checklist of draw down conditions that must be fulfilled.
Most commonly, draw down conditions include signing the purchase contract, signing the escrow contract, paying your portion of the money, arranging insurance for the property, and signing the pledge contract. The pledge contract, by the way, is the bank’s security over the property. If you default on the mortgage, they have rights toward that property. Once you’ve fulfilled all the draw down conditions, the bank is ready to finally send the money.
After the signing meeting, the next step is typically for you to send your portion of the money to the escrow account. Let me walk through an example to make this concrete. The purchase price is ten million crowns. You’ve secured eighty percent financing from the bank. You already paid 300,000 crowns as a reservation deposit. At this point, you need to pay 1.7 million crowns from your own account to complete your portion of the purchase price. When that payment is confirmed, we provide the bank with proof that you’ve fulfilled that draw down condition. We also give them the signed copies of the purchase and escrow contracts, confirmation that the property is insured, and any other draw down conditions specific to your situation.
When the draw down happens and the bank sends the money to the escrow account, the change of ownership process begins. This takes about twenty to twenty-five days. This is the last major waiting period in the entire process. Once it’s complete, you’ll organize a handover with the agent or owner to get the keys to your property. Once the transfer of ownership is officially finished and registered in the land registry, the escrow agent releases the money to the seller, and you get the keys at pretty much the same time. If you need to have the keys sooner, mention this before signing the reservation contract. If the property is empty, you might be able to get early access before the ownership change is fully complete. It doesn’t hurt to ask if this would help your situation.
With the keys in hand and your name in the land registry, you’ve become a property owner. Your mortgage repayments start immediately because the bank begins charging interest from the moment they release the money to the escrow. This means the first month you might need to pay both the mortgage interest and possibly your current rent if you’re still in your old place. Budget for that first month being more expensive, but from the second month onward, you’ll have the consistent repayments specified in your mortgage contract.
This is most of the important information about how mortgages work in the Czech Republic. I understand that buying real estate in another country where you might not speak the local language fluently can sound very daunting. The process involves multiple parties, various contracts, bureaucratic requirements, and significant financial commitments. This is exactly why we exist as a service. Mortgage advisory is free for clients because we’re paid by the banks. The lawyer costs a bit, but when you’re buying real estate worth millions of crowns, don’t try to save money on legal protection. If you plan to do the purchase entirely on your own, at least take one thing away from this article – always get a lawyer on your side.
Over the past decade, I’ve helped hundreds of foreign families buy real estate in Prague and throughout the Czech Republic. The process becomes much more manageable when you have experienced guidance, someone who knows which banks work well with expats, someone who can explain Czech documents in English, someone who’s dealt with every type of complication that can arise.
If you have any questions about buying property in the Czech Republic or securing mortgage financing, don’t hesitate to reach out. You can contact me at robin@expatsfinance.cz or call +420 777 877 849. Whether you’re just starting to think about buying, you’re actively house hunting, or you’ve found a property and need financing quickly, I’m here to help make the process as smooth as possible.
Robin Petrásek Founder, Expats Finance Helping foreigners buy real estate in the Czech Republic since 2014.
