Most third country nationals are blown away by the early repayment penalties that go with almost every Czech mortgage that is on offer.

In other countries, after you have had the mortgage for a certain amount of time the early repayment penalties will be waived but that is not the case with a Czech mortgage.

Early repayment penalties apply to all Czech mortgage providers

Early repayment penalties from the most common Czech mortgage providers

• Raiffeisen bank: 3000 CZK single payment + 10% of the outstanding amount of principal
• UniCredit bank: 5% of the outstanding amount of principal for each year remaining of the fixation
• Hypoteční banka: 5% of the outstanding amount of principal for each year remaining of the fixation
• GE Money bank: 25% of outstanding principal can be paid without penalty, 5% on the remaining amount for each year until the end of fixation
• ČSOB: 5% of the outstanding amount of principal for each year remaining of the fixation
• Komerční banka: equal to all the interest that would have been paid until the next fixation period
• Česká spořitelna: 10% of the outstanding amount of principal

Example penalties for early repayment of a 1,000,000 CZK Czech mortgage

Let’s say you had a mortgage on which 1,000,000 CZK was remaining in principal. It had been fixed for 5 years and you want to pay it out after 2.5 years. The mortgage interest rate was 3.5% and length 30 years. Below are the early repayment penalties based on the Czech mortgage provider:

• Raiffeisen bank: 103,000 CZK
• UniCredit bank: 150,000 CZK (3 years calculated because only 2 years were completed)
• Hypoteční banka: 150,000 CZK (see UniCredit note)
• GE Money bank: 112,500 CZK (see UniCredit note)
• ČSOB: 150,000 CZK (see UniCredit note)
• Komerční banka: approx. 85,000 CZK (this would depend on original amount of the Czech mortgage and time since the start)
• Česká spořitelna: 100,000 CZK

Relief from the EU in 2016?

Directive 2014/17/EU, which will be binding for all EU members as of March 21, 2016, is hoped to bring about some changes with regard to early repayment penalties. Here are some excerpts from Article 25 on early repayment (highlights mine):

1. Member States shall ensure that the consumer has a right to discharge fully or partially his obligations under a credit agreement prior to the expiry of that agreement. In such cases, the consumer shall be entitled to a reduction in the total cost of the credit to the consumer, such reduction consisting of the interest and the costs for the remaining duration of the contract.
…..
3. Member States may provide that the creditor is entitled to fair and objective compensation, where justified, for possible costs directly linked to the early repayment but shall not impose a sanction on the consumer. In that regard, the compensation shall not exceed the financial loss of the creditor.
….
5. Where the early repayment falls within a period for which the borrowing rate is fixed Member States may provide that the exercise of the right referred to in paragraph 1 is subject to the existence of a legitimate interest on the part of the consumer.

Like all new laws, how this will actually work out only time will tell.

Recently I was a participant at the CEDEM 2015 Real Estate Investment Summit and got to speak with Tomáš Procházka, head of the Real Estate Financing department of UniCredit bank. I asked him specifically about this directive. He said they are in discussion with the Czech National Bank as to how this would all be implemented.


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