In addition to the classic special-purpose mortgage, Czech banks also offer an American mortgage. This is a non-purpose loan, which means that you can use the funds from the bank for practically anything. With the help of an American mortgage, you can buy, for example, a property that cannot be financed with a classic mortgage (e.g. a garden, a field, a forest), finance the purchase of a boat or the study of children abroad. To get an American mortgage, you need to own the property you pledge to the bank.
Benefits of an American mortgage
Even though a US mortgage has a higher interest rate than a conventional mortgage, it is still very favourable compared to consumer loans. Another advantage is the very long repayment period. The standard US mortgage today has a repayment period of 20 years (note that some banks offer up to 25 years). As with a conventional mortgage, the choice of your preferred interest rate fixation period is yours alone. The American mortgage is for those with very good creditworthiness. You will not succeed in applying for a mortgage if you cannot prove your income or have a negative record.
You can borrow several million crowns
If you offer the bank a quality property as collateral and you have no creditworthiness problems, you can borrow several million crowns. The specific upper limit of the loan depends on the value of the property. For example, the bank may grant you a loan of up to 70 per cent of the value of the mortgaged property. The percentage limit is set individually by each bank and also depends on the type of property being mortgaged (e.g. flat, holiday home, commercial unit).