#LifeInCzechia Securing a mortgage as a foreigner in the Czech Republic can be challenging but it is possible. This guide provides essential steps, from understanding eligibility requirements and navigating local banking options to preparing necessary documentation, helping you successfully finance your dream property in the Czech Republic. Keep reading!
What is creditworthiness?
Requirements
Type of residence
As a foreigner interested in buying a property in the Czech Republic, it is crucial to be a resident here. When considering a mortgage in the Czech Republic, foreign nationals are assessed differently based on their residency status and country of origin. Below is a detailed guide for both EU and non-EU citizens, addressing the criteria for temporary and permanent residence >>
EU Citizens
Permanent Residence:
- EU citizens with permanent residence are considered less risky by banks.
- They enjoy more favorable terms and less stringent evaluations compared to those without permanent residence.
Temporary Residence:
- EU citizens with temporary residence face stricter scrutiny.
- Banks evaluate each case individually, so it is advisable to apply to multiple banks to find the best terms.
Generally, banks view EU citizens more favorably than those from outside Europe.
Non-EU Citizens
Permanent Residence:
- Non-EU citizens with permanent residence are seen as less risky, similar to EU citizens with permanent residence.
- They are more likely to receive favorable mortgage terms.
Long-term Residence:
- Non-EU citizens with temporary residence face the most stringent evaluations.
- Each bank assesses applications on a case-by-case basis, so it’s beneficial to try multiple institutions.
- Non-EU citizens, especially those from “risk countries,” are considered more risky and thus face greater challenges in securing a mortgage.
Did you know?
If you have Czech citizenship, we have some great news! As a citizen, Czech banks consider you the same way as Czech nationals and the country of your origin plays no role.
Age
To obtain a mortgage, you need to be of legal age – a minimum of 18 years old. Note that there is also a maximum age limit that varies from bank to bank. In general, you can’t get a mortgage after you retire.
Credit Score
Creditworthiness is very important in this process. It is a lender’s assessment of a potential borrower’s ability and willingness to repay debts. The score is based on:
- Income
- Type of employment
- Current loans/credit cards
- Repayment period
- Amount requested
Note that any late payments, debts, or the length of your work contract can cause a lower credit score that impacts the amount or even the possibility of getting a mortgage.
Funds
Did you know that you can’t get a mortgage that equals 100% of the property value? Depending on your creditworthiness, you can get from 70-85% of the property value, in special cases up to 90%. Make sure you have enough savings to cover the rest of the listing price.
Documentation
Firstly, you need to prepare documents proving your identity, such as an ID card/residence card, passport and alternatively driving license.
Then you need documents related to your work and income – employment contract, proof of income, tax return (if you are an entrepreneur).
Lastly, prepare paperwork regarding any other loans, leasings, but also savings accounts, or insurance.
It is also important to have a clean criminal record and not be in any debtor registry.
Let us help you and book a mortgage consultation today!
If you want to feel at home, check out our categories of “Expat” and “Practical tips for expats” where you will find interesting information about the Czech Republic and recommendations how to make your life here easier.
Sources: irsczech, infocizinci
Image sources: pexels