A new law limiting early repayment penalties on Czech mortgages was approved by MPs. It now goes to the Senate for approval.

Czech parliament passed law governing early repayment penalties on Czech mortgages

This law has been passed in response to EU directive 2014/17/EU dealing with credit agreements to consumers.

Early repayment penalties on mortgages

A consumer would allowed to repay 25% of their mortgage annually on the anniversary of their contract without any early repayment penalties.

In the case of complete early repayment of a mortgage the lending bank can only charge a penalty based on the actual additional expenses they incur.

In case that the property is being sold the fee charged could not exceed 1% of the amount repaid. The maximum amount of the penalty would be 50,000 CZK.

At present most banks charge ridiculous penalties to pay your mortgage off early. For example, Raiffeisen bank charges a flat 3,000 CZK plus 10% of the total amount being repaid. Unicredit bank, Hypoteční banka and ČSOB all charge 5% of the outstanding amount for each remaining year left on fixation.

In the case of early repayment because of a disability, long-term illness or death, under the new law there will be no fee at all.

These changes will only apply to those mortgages which have been taken out or have fixation periods renewed after the new law comes into effect. This is expected to be October or November of this year.

Other changes

Other welcome changes include that banks will need to clearly display the total actual interest rate to consumers applying for mortgages. So this would include monthly bank account fees or other charges. This makes comparing mortgage offers by consumers a much more straightforward process.


Are you wanting to refinance or buy an investment property with a mortgage in Czech Republic? Drop me an email at: [email protected] and let’s get started!