Mortgage lending is one of the main ways to buy real estate. Only wealthy buyers of an apartment, private house, office and other real estate are able to pay for the object with one amount of their own funds and at the conclusion of the transaction.
Most ordinary buyers buy apartments and private houses with borrowed money. The system of mortgage lending has existed for many decades and has shown its effectiveness in the development of the economy and social sphere of developed countries. The essence of the mortgage is that the applicant for real estate pays only part of the cost. The remaining money is paid by the bank in accordance with the loan agreement. The purchased real estate object is used as collateral. The buyer uses the apartment while paying off the loan. If during the term of the loan it turns out that the bank's client has lost the financial ability to repay the borrowed money, the property can be returned to the real owner - the bank to repay the debt.
When buying on credit, it is important to forecast your solvency for many years to come in order to repay the loan during this period. With a steady income and a positive credit history, buying a mortgage apartment in the Czech Republic is a real and common phenomenon in the lives of Czech citizens. The interest rate for the use of a mortgage depends on the general state of the economy at the moment, the decisions of the national bank on the loan rate for commercial banks in the country. In the Czech Republic, the mortgage rate is relatively high. Today it is about 3%. Only in three EU countries are mortgages more expensive - in Poland, Hungary and Romania. These countries are not part of the euro currency area, so they independently determine the terms of domestic lending. And in other EU countries the loan rate is less than 2% per year.In the Czech Republic, a mortgaged apartment can be profitably rented out. The revenue for such commercial use is greater than the interest that must be paid to the bank. Owners of free capital buy apartments on a mortgage to rent to repay interest. Buying a mortgage apartment in the Czech Republic is available to all solvent citizens and foreigners, but lending conditions are likely to become more difficult to curb demand and rising real estate prices.