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The Most Frequent Questions of Clients
- What conditions do I have to fulfill in order to qualify for a mortgage loan?
- How quickly will the financial funds be available?
- Do I have to have any own money?
- Is it possible to deduct the interest paid from the tax base?
- Is it possible to use a mortgage loan to finance something else than just a house or an apartment?
- I would like to get a mortgage loan for a construction (reconstruction) of a family house. Is it possible to carry out some of the activities by means of self-help?
- Is it possible to postpone or interrupt payments?
- Can somebody else, e.g. parents, help out with paying off the loan?
- Do I have to have an insurance coverage arranged with the mortgage loan?
- I have a capital life insurance arranged. Is it possible to use the funds for pay-offs?
- Is it possible to finance a purchase of a piece of land by means of a mortgage loan?
- Is it possible to get a mortgage loan for a cooperative apartment?
- Can just one spouse of the married couple apply for a mortgage loan?
- Can a mortgage loan be granted to a foreign national?
- I have a mortgage loan, which I used to purchase an apartment. Is it possible to sell the apartment, even though it is used as collateral? What is going to happen to the mortgage loan?
- Do I have to use the real-estate which I am purchasing/building as collateral for the mortgage loan?
- What is the validity/period of fixation of the interest rate?
- What is the difference between the individual periods of fixation of interest rates (1, 5 and 10... years)?
- What is going to happen after the expiration of the fixation period of the interest rate?
- What fees will I have to pay?
- What can I use to secure the loan?
- How does an appraisal of the real-estate proceed?
- What options do I have in case I have no real-estate suitable for security?
What conditions do I have to fulfill in order to qualify for a mortgage loan?
You must prove sufficient income for the repayment of the requested loan; you must offer a suitable security by a real-estate of a sufficient value and present the required materials resulting from the relevant purpose of the loan (e.g. contract of purchase, building approval, a contract with a supplier, composition of the budget costs, a letter of ownership of the real-estate, etc.). One of the conditions of getting a mortgage loan is opening a CZK current account.
How quickly will the financial funds be available?
It all depends on how long it will take to fulfill all the specific conditions set by a contract. Usually the following conditions have to be fulfilled:
- Registration of the right of lien for the real-estate
- Insurance of the real-estate including a blockage of payment of the indemnification in favour of KB
- Presenting a signed contract of purchase, etc...
KB enables drawing of the mortgage loan even on the basis of a submitted proposal of the registration of the right of lien. You will be charged a fee for this service in accordance with the KB Tariffs (currently CZK 1 500,-). If you decide to take an advantage of this option, you may be able to draw the mortgage loan very shortly after the signature of the contract concerning a loan (e.g. the following day).
Do I have to have any own money?
No. If you prove to have sufficient income and that the pledged real estate has sufficient value, it is not really necessary to have any own financial funds. If you, however, do not have such collateral or you do not fulfill the income criteria, you must prove your own financial funds – at the minimum amount corresponding to the difference between the total sum of your real-estate investment and the amount of the loan.
Is it possible to deduct the interest paid from the tax base?
Yes. In accordance with the Law on income tax, it is possible to reduce the tax base by an amount corresponding to the mortgage loan interest paid during the relevant tax period. The amount of the interest must be reduced by an eventual government financial support received.
In order to qualify for the interest deduction, it is necessary to fulfill conditions of the Law on income tax no. 586/1992 Coll., as amended from time to time, (such as the fact, that the mortgage loan is used to finance housing needs and the object is used for a permanent living of the client or his/her closest relatives).
Is it possible to use a mortgage loan to finance something else than just a house or an apartment?
Yes. It is possible to use a mortgage loan to finance any real-estate, e.g. a garage, a cottage, or a weekend house. We offer the same conditions as in case of a purchase of an apartment or a house.
I would like to get a mortgage loan for a construction (reconstruction) of a family house. Is it possible to carry out some of the activities by means of self-help?
Yes. It is possible to refund advance invoices for the purchased material or partial construction works from the mortgage loan. The total amount of such drawn amount is not restricted in any way. The total drawn amount of the loan must not exceed 70% or 100% (based on the type of a mortgage loan) of the current standard price of the mortgaged (constructed/reconstructed) real-estate.
A combination of a pre-mortgage loan with a mortgage loan is an appropriate solution. The advantage is the possibility to draw a pre-mortgage loan no matter what the current standard price of the mortgaged real-estate is. It is necessary to build, or reconstruct, the real-estate within 2 years from the signing date of the contract concerning a pre-mortgage loan. During the period of construction/reconstruction the client only pays the interest, the principle is then paid off from the subsequent mortgage loan upon fulfilling of all the conditions stated in the Contract concerning the loan.
Is it possible to postpone or interrupt payments?
Yes. It is possible to use the interruption of payments (postponement of the principal payments or whole annuity payments) in exceptional cases (such as a loss of a job, an illness) provided that the client applies for the postponement of payments during a period, in which the loan is not defaulted, he/she cooperates with the bank and he/she is willing to resolve the situation.
It is possible to permit the postponement of payments for the maximum period of 6 months. After the postponement, the postponed amount is paid off:
- By a one-time payment,
or
- The amount is gradually included in the future installments. This will lead to a substantial extension of the loan maturity.
Please note that interest charges are not suspended during this period.
Can somebody else, e.g. parents, help out with paying off the loan?
Yes. In case your income is not sufficient for repayment, it is possible for other persons, such as parents or relatives, to participate in the mortgage loan payments. We enable to add the incomes of up to four persons, but of two households maximum.
Do I have to have an insurance coverage arranged with the mortgage loan?
Yes. The insurance coverage of the mortgaged real-estate (excluding the land) is always required. A blockage of payment in favour of the bank is also required in case of a mortgaged real-estate.
The conclusion of a life insurance is not generally required; however, we highly recommend it, because it protects you and your family from eventual risk events, such as death and permanent disability. It also has a positive effect on the interest rate. We recommend that you conclude a risk life insurance with Komerční pojišťovna.
I have a capital life insurance arranged. Is it possible to use the funds for pay-offs?
Yes. KB offers a so-called bridging mortgage loan, which uses your financial funds saved as part of capital life insurance at your chosen insurance company.
For the period of repayment of this loan, you only pay interest; the principal is paid as a lump-sum from the capital life insurance policy. The amount of the policy has to correspond to the loan amount; the maturity of the loan has to correspond to the insurance period. The indemnity is blocked in favor of KB.
You can use building savings with Modrá pyramida in the same way. The mortgage loan is paid off as a lump-sum from the target amount/target amounts of the building savings.
Is it possible to finance a purchase of a piece of land by means of a mortgage loan?
Yes. It is possible to finance the purchase of a piece of land by means of a mortgage loan – the same conditions apply as for financing an apartment of a house.
Is it possible to get a mortgage loan for a cooperative apartment?
Yes. However, it is necessary to secure the loan with a different, privately owned piece of real-estate that is suitable.
If you already know in advance that a cooperative flat will be transferred into your ownership within 1 year, it is possible to utilise a pre-mortgage loan secured by a guarantor or a term-deposit at KB.
After the flat is transferred into your ownership, the loan is paid off through a mortgage loan.
Can just one spouse of the married couple apply for a mortgage loan?
In case you have a constricted joint ownership of spouses or the undivided co-ownership of spouses has been cancelled, it is possible that only one spouse applies for a mortgage loan. However, this fact has to be documented by an “Agreement concerning constricting the joint ownership of spouses” or by an “Agreement concerning a cancellation of the undivided co-ownership of spouses”.
Both spouses apply for the mortgage loan together in other cases.
Can a mortgage loan be granted to a foreign national?
In case a foreign national is a holder of a “Verification of a permission of a residency for an EU member” or he/she has a permission of a permanent residency in the Czech Republic, he/she can, in accordance to the foreign exchange law, acquire real-estate in the Czech Republic and, therefore, apply for a mortgage loan.
I have a mortgage loan, which I used to purchase an apartment. Is it possible to sell the apartment, even though it is used as collateral? What is going to happen to the mortgage loan?
Yes, even an apartment, which is burdened by a lien right of a bank, can be sold. The bank offers you two solutions for this case:
- You can settle the balance of the mortgage loan before maturity using proceeds from the sale. It is, however, understood, that in case the premature settlement occurs outside of the term of the interest rate validity termination, the bank will charge a fee for the premature settlement. The bank gives up the lien right following the settlement of the mortgage loan.
- The second option is the so-called takeover of a debt. This means, that the future buyer takes over your debt with the bank and he/she carries on with the repayment of the mortgage loan under all the conditions arranged. The apartment sold will still serve as collateral.
Do I have to use the real-estate which I am purchasing/building as collateral for the mortgage loan?
No. Komerční banka accepts as collateral even a different real-estate (different from the object of the loan). Anybody can be an owner of this real-estate – e.g. parents, relatives or other not related person. It is important that this person agrees with the creation of a lien right.
What is the validity/period of fixation of the interest rate?
KB offers a validity/fixation period of the interest rate for the following periods: 1 – 10 years, or 15 years.
What is the difference between the individual periods of fixation of interest rates (1, 5 and 10... years)?
The selected fixation period of the interest rate affects the interest rate and hence the monthly installment. In general, it can be said that the longer the fixation period of the interest rate, the higher the interest rate.
The premature settlement of the loan is also connected to the selected fixation period – it can only be carried out at the moment of the termination of the interest rate fixation period.
With regard to the current level of interest rates, it is more convenient to select longer fixation period of the interest rate.
What is going to happen after the expiration of the fixation period of the interest rate?
At the earliest two months and at the latest one month prior to the termination of the interest rate fixation period, you can choose to fix the interest rate period for another 1-10 years or for 15 years, based on a proposal that we will send you by mail. The amount of the interest rate will correspond to interest rates valid at the moment of the conclusion of the Addendum. You will then choose the best option, sign the Addendum, and then send the Addendum back to the bank.
If other conditions of the contract remain unchanged, the appendix is processed free of charge.
What fees will I have to pay?
Fees for the processing and administration of the loan are published at the KB Price list.
What can I use to secure the loan?
A mortgage loan must by law always be secured by a lien right to a real-estate, which is neither burdened by a previous lien right of a third party (with the exception of a lien right in favour of a building society or a lien right due to a granted loan for a cooperative housing), nor by a restriction of transfer of the real-estate. The mortgaged real-estate must be located in the Czech Republic.
How does an appraisal of the real-estate proceed?
The appraisal of the real-estate intended for collateral will be provided by the bank during the processing of the loan (it will select the most suitable offer by a contractual partner of KB). You are obliged to ensure an entry to the real-estate. The appraisal is not public and it remains a property of the bank.
What options do I have in case I have no real-estate suitable for security?
In case you do not have any real-estate suitable for securing the mortgage loan at the moment of applying for the loan (even owned by a third party); it is possible to use a combination of a pre-mortgage and mortgage loan. The pre-mortgage loan must be secured, e.g. guarantee by a third party, lien right to a receivable – to a term account with KB, or in some cases even a combination of a lien right to a piece of land and a guarantee of a third party. The pre-mortgage loan is paid off by a lump-sum from the subsequently granted mortgage loan – within 1 year of signing the Contract concerning the loan (in case of financing the construction of a real-estate by means of a self-help, the deadline is 2 years following the signing the Contract concerning the loan); you pay the interest rate from the drawn amount on monthly basis during the period the loan is drawn.
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