Mortgages on Prague properties now easier for expat professionals

Mortgages on Prague properties now easier for expat professionals

Mortgages on Prague properties now easier for expat professionals

As expat interest in Prague properties moves from the city’s central areas to the less expensive suburbs, Czech banks are easing their mortgage conditions.

For a good while, the Czech Republic and especially its capital Prague have been a popular destination for expatriate tech professionals looking to become entrepreneurs in this important sector. As with other destinations across Europe, the arrival of large numbers of expats has had an effect on the local property market, forcing prices up and creating a high demand leading to a lack of supply. The arrival of social distancing as a way of post-pandemic life is now popularising suburban life away from the crowded heart of the city.

As the virus slows down, real estate professionals are attempting to calculate the local fallout from the pandemic. Many believe property prices will stay stable, at least for the foreseeable future, and the movement away from central city life is being debated as a good move. The Czech National Bank is now easing a number of its mortgage conditions, thus making it easier for expats to purchase homes as a commitment to staying in the city. As a result, banks are now offering 90 per cent mortgages without the rider that total loans should not be greater that nine times the annual net income of the borrower.

Interest rates have now fallen, giving both expats and locals interested in buying a property a good place to start. The application process itself is now free of charge and, although getting an expat mortgage can be tricky, it’s now not impossible even although each bank seems to list different criteria. Applications are now being accepted from expats who’ve permanent residency, although a few banks are accepting applications from those with temporary permission to stay. Applicants should have an income sourced in the state, but foreign income as an employee can also meet the financial requirements. A rental address in the country is essential as is a Czech ID card, although a few banks will void this requirement, and establishing financial standing is essential.

Monthly instalments shouldn’t top 50 per cent of the applicant’s salary, and the total loan value shouldn’t exceed nine times the annual net income. Banks will also evaluate applicants’ job and wage for stability, as well as the size of the down payment. 10 per cent is a must, with 20 per cent the preferable amount as it attracts lower interest rates and a better chance of getting approval for the loan. Paperwork provides the usual bureaucratic hassles and includes a property appraisal as well as a purchasing contract.

Foreign applicants must also provide private information such as marital status, actual citizenship and the reliability as well as the source of income. The process from start to finish will take around three months, dependent on processing, paperwork and the usual interviews and appraisals. Taking into account all the above, it’s a fact that many expatriates prefer to use a bilingual mortgage broker!

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