When arranging a new mortgage or refinancing an existing mortgage, you must choose the interest rate fixing period. Banks most often offer mortgages with a fixation period of 1, 3, 5 or 10 years. However, you can also find longer fixations, for example 15 years. During the fixation period, neither the agreed interest rate nor the monthly mortgage payment amount changes. The mortgage fixation period chosen and the amount of the regular monthly payment are always specified in the contract.
When is a longer fixation period worthwhile?
According to statistics, Czechs most often choose a five-year mortgage fixation. However, in a period of very low interest rates, interest in longer fixations is growing. People want to secure favourable conditions for financing their own home for as long as possible. If you expect mortgage interest rates to rise in the next few years, fix your interest rate for a longer period.
When is a short fixation period worthwhile?
A shorter mortgage term is more advantageous in a period of falling interest rates. With more frequent interest rate adjustments, you can save significantly on your mortgage payments. People who want to sell their property in the next few years are also much more likely to opt for a shorter fixing period.