How much does a mortgage really cost you?
February 2018 /
Would you like to own your own home, have you already saved for a downpayment and wonder how much such a mortgage will cost? It's not just about a regular repayment, you have to prepare for other fees.
If you thought that everything you will have to pay for the mortgage loan will be only regular repayments, then you are unfortunately wrong. The world without fees simply does not exist and even no longer when it comes to loans. So what costs are included in every mortgage?
Look at the RPSN
RPSN is the abbreviation for the annual percentage rate of costs. As a rule, it is expressed in percentage, and simply shows all included expenses with the mortgage. Not only interest but also all fees and other costs. In practice, RPSN is a much clearer indicator of whether a given product is beneficial to us compared to interest rate. RPSN for specific mortgages can be compared in mortgage calculators.
Minimum Amount Saved
To get the loan, you must save at least 10% of the property price, which is definitely not a little, especially if you buy a house for 5 million CZK or even more. Not every bank offers 90% mortgage. It is therefore ideal to have at least 80% saved so you can choose on the financial market. Of course, the more you have the better.
Property survey Fee
If you want to get a mortgage, the property you are buying must be evaluated on your costs. This fee will be paid to a property surveyor not to the bank. This fee may vary. In some cases it can be processed without the property personal viewing by the surveyor and price starts at 1500 CZK. In some cases the property viewing is necessary and then the price could be up to 6000 CZK per flat or house.
Reservation agreement and commissions of a real estate agency
If you do not buy a house or flat on your own and you decide to take advantage of real estate assistance, then you may be probably surprised. You will be required to sign a so-called reservation agreement. Thanks to it, you basically keep the property out of sale until you sign the sales contract. This exclusivity is fine, but the reservation fee is not so fine. It can climb up to 10% of the property price, most frequently around 5%, however.
A real estate agent may want either a booking fee or commission on a real estate agency (roughly 4-6%), but not both fees at the same time. However, in both cases you pay for the fact that the property will no longer be on sale to anyone else. The real estate charge is usually presented excluding VAT so you will also need to add VAT, which is 21%.
In addition, some realtors also require so-called escrow account. It costs around CZK 6,000, and the principle of it consists in the fact that the client´s money first arrives to a special bank account and it is not released to the seller until contractual terms are met.
Bank mortgage fees
They are basically charged by banks for processing your application. In this case, you can usually count between 3,000 - 4,000 CZK. This is a non-recurring fee. Unlike mortgage account fee which is recurring every month. This is usually around 150-400 CZK monthly. Sometimes banks do not charge any of these fees, especially when launching promotion campaigns.
Cadastral stamps and fees
Other payments will also be awaiting us on the land register, especially for:
• ownership registration - CZK 1,000
• bank lien registration - CZK 1,000
Property Insurance and Insolvency insurance
Property insurance is organized before the mortgage is disbursed and is required by the bank. The annual premium usually does not exceed 1 per mille of the purchase price. On the other hand, insolvency insurance is not required but it may be good to organize it. Not only due to possible unexpected events, but you can also get a discount on interest rate.