Getting your own apartment or house on a mortgage before you turn 30 has its advantages. The more time you have to pay off your mortgage, the lower your monthly payment will be. For example, for a three-million-dollar mortgage with a 30-year term, the monthly payment will come out to less than CZK 11,300 at current interest rates. If you have ten years less to repay the same mortgage, you will pay approximately CZK 4 100 more each month. In addition to an affordable monthly payment that won’t put too much strain on your budget, you’ll also appreciate the fact that you’re investing in your own home and appreciating your assets thanks to rising property prices.
TIP: By comparing mortgage offers from individual banks, you can save several thousand crowns a year on repayments. Compare mortgage offers in the online mortgage calculator hyponamiru.cz
Table: Mortgage with interest rate of 2.13% and monthly repayment amount at different maturity
|Mortgage 3 000 000 Kč
|11 285 Kč
|12 906 Kč
|15 362 Kč
Source: hypoteční kalkulačka hyponamiru.cz
Start saving for housing as soon as possible
At the beginning of their working careers, people usually have lower earnings and also less savings of their own. It is often the lack of their own finances that causes young people to put off buying their first property. One hundred per cent mortgages are now a thing of the past. Mortgage applicants must prepare money not only to make up the difference between the appraisal price of the property and the mortgage granted, but also to pay the real estate agent’s commission for arranging the purchase of the property.
The four per cent tax on the acquisition of real estate was abolished in 2020 and buyers will now save CZK 200,000 on a property worth CZK 5 million, for example. Ideally, people should have saved at least 10 to 15% of the purchase price of the property.
The benefits of taking out a mortgage in your thirties:
- You live in your own
- You can repay your mortgage over a very long period of time
- You don’t have to worry about rising rent prices
- You learn to manage your money
Building savings can help
If you cannot count on your parents’ financial support, you should start saving as soon as possible after you start your first job. With today’s low interest rates on savings accounts, it’s worth putting spare money into a building society account. In addition to interest, you are also entitled to a state allowance if you meet the conditions of the building society. A monthly deposit of CZK 1,700 is enough to get the maximum state support of CZK 2,000 per year. You can comfortably save approximately 135,000 crowns over six years. If necessary, you can also use a loan from the building savings fund, which can compensate for the lack of your own resources.
Discounted mortgages for young people
For younger mortgage applicants, choosing the “right” bank is very important. It’s no secret that each bank approaches this group of mortgage seekers a little differently. For example, in an effort to appeal to the younger generation, Česká spořitelna came up with a mortgage for the purchase of a first home in 2019.
So when looking for a mortgage, it is always worth contacting an independent mortgage specialist. An experienced professional will have an overview of the current market offerings, take your requirements into account when choosing a mortgage and prepare a tailored offer for you.
If you don’t feel like meeting a financial adviser in person at the bank, you can choose and arrange a mortgage online from the comfort of your own home. Our mortgage calculator will help you find the best mortgages on the market.
State mortgage for the young
Since 2018, the state has been providing housing loans for young people. Last year, young people up to the age of 36 could use a loan programme from the State Housing Development Fund. This so-called state mortgage for young people was intended for the purchase of a flat, the purchase or construction of a family house or for housing upgrades. The loan was open to married couples, people living in a registered partnership or a single person under the age of 36 caring for a child under the age of 15.
A loan of a maximum of CZK 2 million was available for the purchase of a family home. In the case of the purchase of an apartment, it was possible to obtain up to CZK 1.2 million. Young people planning to modernise their homes could also benefit from the programme. The amount of the loan ranged from CZK 30 000 to CZK 300 000. For 2019, CZK 950 million was allocated in the programme.
Current programme of the State Investment Promotion Fund
This year, the State Investment Support Fund launched a new loan programme called Own Housing. Spouses or registered partners up to 40 years of age (note, or also individuals up to 40 years of age caring for a child up to 15 years of age) can obtain a loan for the construction of a new family home, the purchase of an apartment or a family home, the purchase of a cooperative share in a housing cooperative with the right to rent a cooperative apartment, or the modernization of a dwelling.
A maximum of CZK 2 million can be obtained for the purchase of a flat or a cooperative share (note, however, that the maximum is 90 % of the agreed price) and up to CZK 2,4 million for the purchase of a family house by construction (note, again, that the maximum is 90 % of the construction costs or the agreed price).In the case of the modernisation of a dwelling, it is possible to obtain a sum of between CZK 50 000 and CZK 600 000. The current interest rate is 1 %.
ČNB may favour mortgages for the young
In March this year, the House of Commons approved an amendment giving the central bank the power to favour young mortgage applicants up to the age of 36. It can set a higher threshold of credit indicators for these mortgage applicants – in the case of the LTV indicator by 10 percentage points. Thus, if the general market LTV limit was, for example, 80 per cent, young applicants up to the age of 36 could obtain a mortgage of up to 90 per cent.
It can also adjust the limits for the DTI and DSTI indicators (note that the CNB does not currently set these limits). They can raise the limit by a one-year multiple of net income for the former and five percentage points for the latter.