What can be used instead of your own resources in the mortgage?


When the buyer decides to apply for a mortgage loan in order to pay the purchase price, he/she must take into account that at least 20% of the property price ( or 10% if he/she is an applicant under the age of 36) will be paid from the applicant's own resources. According to the new legal regulation applicable from 1 April 2022, the bank can provide a loan in the maximum amount of 80% of the property value, or up to 90% if the applicant is under 36 years of age. What are the other options if the applicant does not wish to use own savings?

What happens if the value of the property is low and the applicant needs a higher loan to pay the purchase price? The provision of additional real estate as additional collateral seems to be a suitable solution. The additional pledge means another pledge value thus the loan amount can be up to 80%, or 90% of the provided pledge value. Maximum amount of the mortgage can be equal to the purchase price of the acquired property.

Real estate that is already subject to a lien can also be provided as an additional pledge, especially with regard to the sharp rise in real estate prices in recent years. Here again, the value of the property or the free ''unpledged'' value will be important. This is simply the value of the property minus the amount of the mortgage that was used to buy this property. A bank from the same banking group can make a second collateral on already mortgaged real estate.

Imagine a client who would like to buy a property with a purchase price of CZK 5,000,000. For simplicity, let's assume that the value of the property is also CZK 5,000,000. As the client is older than 36 years, the bank will provide him/her with a maximum mortgage of CZK 4,000,000, which is 80% of the property value. However, the client would like a higher loan so that he/she can use less of his/hers own resources. As the mortgage applicant owns another property with a free collateral value of 1,000,000, the sum of the collateral values is CZK 6,000,000 and the bank can provide the applicant with a loan of 80% of the collateral value, ie. CZK 4,800,000. The amount of a possible loan with the provision of additional collateral increased by CZK 800,000. The new mortgage amount will be provided under the condition that all expenditure parameters of the loan meet the parameters defined by law.