Mortgage terms, made simple.
57 terms you'll meet when arranging a mortgage, explained with no legal jargon. Short, and stating what's actually required by law and what's just a bank's own practice.
Most searched terms
Terms starting with A
AML law
Act No. 253/2008 Coll. on combating money laundering. Banks must identify the client, verify the source of funds, and keep the documents for 10 years after the relationship ends.
Annuity repayment
A repayment made up of part principal and part interest, in a ratio that keeps the monthly repayment the same throughout the fixed-rate period. The most common repayment type in Czechia.
APRC (RPSN in Czech)
The annual percentage rate of charge includes the interest plus all mandatory fees. It's always higher than the borrowing rate, and the law requires it so you can fairly compare banks' offers.
Read moreApproval process
The bank assesses your creditworthiness, the property's value and the risk of the transaction. From complete documentation, count on a few weeks; for the self-employed and non-standard cases, it usually takes longer.
Terms starting with B
Bridging loan
A short-term loan for when there's no collateral yet: a new-build before occupancy approval, or a cooperative flat before it's transferred into personal ownership. Banks typically give it for around two years, after which it rolls into a mortgage. It costs more than a mortgage, and not every bank offers it.
Read moreBorrowing rate (p. a.)
The percentage the bank wants per year for the money it lends. On its own it doesn't tell you the total cost of the loan; that's what APRC is for. "p. a." stands for "per annum", meaning yearly.
Ban on incentive-based commissions
An intermediary may not accept a commission that would lead them to recommend a worse loan to you. That's why they're allowed to ask each bank how much it pays, and must tell you on request.
Terms starting with C
Creditworthiness
A client's ability to repay a loan properly. The bank assesses income, outgoings, liabilities, age, occupation and job stability. Creditworthiness decides both approval and the rate.
Czech National Bank (CNB)
The central bank and regulator of the financial sector. It sets the two-week repo rate and macroprudential rules, authorises independent intermediaries, and keeps the register of tied agents.
CNB 2-week repo rate
The Czech National Bank's key rate for managing inflation. It affects both interbank market rates and commercial loan rates. Currently 3.75% (as of 19 June 2026).
Consolidation
Merging several loans into one mortgage. It lowers the monthly repayment. It makes more sense the more expensive the loans you're merging are; if you simply extend the term, you'll pay more overall. Suitable for large unsecured loans.
Clawback commission
Repaying the intermediary's commission when the loan ends in its first years. It doesn't come from the law, but from the agreement between the bank and the network, and it's why an adviser cares whether your mortgage lasts.
Read moreComparing banks
Putting offers side by side on what matters to you: rate, APRC, fees, speed. An adviser does the comparison for you, because terms differ case by case and a price list doesn't tell you everything.
Charge over the property
The bank's right to be paid from the sale of the property if the client stops repaying. It's created by registration with the Land Registry, and the bank cancels it once the loan is repaid. It can't sell the property straight away though: for a mortgage, only six months after giving notice, and until then it can't stop you selling it yourself.
Read moreTerms starting with D
Drawdown of the loan
Transferring the money to the seller's account once the drawdown conditions are met, typically registration of the charge with the Land Registry and proof of property insurance.
DSTI
Debt Service to Income: the ratio of monthly repayments on all loans to net monthly income. The CNB doesn't set a blanket limit on this; each bank monitors it itself. It tells the bank how much you'll have left after your repayments.
Read more LTV & limitsDTI
Debt to Income: the ratio of total debt to annual net income. For your own home, the CNB sets no limit. For investment properties, since April 2026 it has recommended a multiple of seven, but that's a recommendation, not a binding cap.
Read moreTerms starting with E
Effective interest rate
The real annual interest rate once the interest period and compounding are factored in. For Czech mortgages it comes out a tenth to two tenths higher than the nominal rate, precisely because of monthly compounding. 4.84% works out at 4.95%.
ESIS
European Standardised Information Sheet. The bank hands it over with enough notice before signing. It covers the interest rate, APRC, the total amount, the repayments and the risks.
Early repayment
Repaying part or all of a mortgage before the end of the fixed-rate period. Once a year you can repay up to 25% of the original loan amount free of charge, but only in the month before the anniversary of signing the contract. Outside those windows, the bank may ask for the costs it actually incurred, which the law caps.
Early repayment charges
Repaying is free at the end of the fixed-rate period, up to 25% of the principal in the month before the contract's anniversary, within three months of being notified of a new rate, when selling the property after two years, and on death, long-term illness or disability. Otherwise the bank may only charge what the repayment actually cost it, capped by three competing limits: 0.25% for each year or part-year remaining until the end of the fixed-rate period, no more than 1% of the amount repaid, and no more than the interest it loses out on. Whichever is lowest applies.
Exception for people under 36
The CNB allows LTV of up to 90% for applicants under 36 buying their own home (not an investment property). 10% of your own funds is enough, but only for a primary home.
Terms starting with F
Financial Arbitrator of the Czech Republic
The body for resolving disputes between a consumer and a financial institution out of court. Proceedings are free, and the final decision is binding on the bank.
Fixed-rate period
The period during which the interest rate doesn't change. Typically 1, 3, 5, 7 or 10 years. Once it ends, the bank proposes a new rate based on current market conditions.
Read moreTerms starting with G
GDPR and your mortgage
Personal data protection under EU Regulation 2016/679. Processing is based on the contract and a statutory duty. Data can be kept for 10 years under the AML law.
Terms starting with H
Hypoindex
An index of the average rate offered on new mortgages in Czechia. Swiss Life publishes the Hypoindex figures every month. It serves as a benchmark for clients and advisers alike.
Terms starting with I
Immovable property tax
An annual tax paid to the municipality. The rate varies by location and property type. Due by 31 May, with a tax return required only when ownership changes.
Investment mortgage
A loan for a property intended for rent or resale. Since April 2026 the CNB has recommended an LTV of 70% and a DTI of 7 for these. It's a recommendation, not a binding cap. Banks require higher creditworthiness and often state the mortgage's purpose.
Intermediary's commission
The fee the bank pays the intermediary, out of the drawn-down loan, not for a meeting. It's calculated from the loan amount and varies between banks. The client doesn't pay it separately. You can ask for the exact amount, and the law requires the intermediary to tell you.
Read more Arranging & adviceIndependent intermediary
An entity with its own authorisation from the CNB that signs agreements with banks itself and offers loans from more than one of them. It's liable for its own activity and must carry insurance against harm caused to a client at all times. The bank pays the commission. HypoGO falls into this category.
Read moreInsurance assignment
Insurance assignment (vinkulace) in favour of the bank. If the property is damaged, the insurer settles the bank first, and the client receives the remainder.
Terms starting with J
JERRS
The lists of regulated and registered financial market entities. The CNB's public register, where you'll find banks, insurers, independent intermediaries and tied agents alike. Check a licence at jerrs.cnb.cz.
Terms starting with L
Land Registry (Cadastre)
The public register kept by the Czech Office for Surveying, Mapping and Cadastre (CUZK), holding data on properties, owners and charges. The bank requires an extract to verify ownership and any encumbrances.
LTV
Loan to Value: the ratio of the mortgage amount to the property's market price. The binding cap is 80%, rising to 90% for applicants under 36 buying their own home. For investment mortgages, the CNB has recommended 70% since April 2026.
Read moreTerms starting with M
Mortgage adviser
A certified professional registered with the CNB. They assess your situation, compare banks' offers, and guide you through the process from application to drawdown.
Mortgage for foreign nationals
Both EU citizens and people from outside the EU can get a mortgage. You don't need permanent residency for it. Each bank decides for itself which residence permit and length of stay it will accept.
Mortgage for the self-employed
A loan for self-employed people. Banks usually want tax returns for the last two periods; for smaller loans, one is sometimes enough. What matters is whether they calculate from your tax base or from turnover.
Macroprudential rules
The CNB's tool for managing risk in the banking sector. Of the three limits, LTV, DTI and DSTI, only LTV is actively applied across the board today; the CNB has switched the other two off for people's own homes.
Mortgage interest tax relief
A tax allowance under the income tax act. A maximum of CZK 150,000 a year for contracts signed from 1 January 2021, and up to CZK 300,000 for older ones. Your own home is required.
Mortgage application
A formal request for a loan at a bank. The bank requires proof of income, a bank statement, the purchase contract or a preliminary agreement, and details of the property.
Terms starting with N
Non-purpose mortgage
A loan secured by a property without the bank tracking its purpose, sometimes called an "American" mortgage. The rate is higher than for a purpose-tied loan, and LTV is usually capped at 70%. Suitable for business use or larger expenses.
New Green Savings programme
A State Environmental Fund grant programme for insulation, boiler replacement, solar panels or heat recovery. It can be combined with a mortgage. Paid out once the work is documented.
Terms starting with O
Online mortgage arrangement
The whole process from the calculator to signing, without having to visit a branch. Identification through Bank ID, signatures done electronically. Standard practice since 2024.
Own home vs. investment property
Banks and the CNB both distinguish a mortgage's purpose. For your own home, the bank will lend a larger share of the price (80%, or 90% if you're under 36); for an investment property, the CNB recommends only 70%. Interest tax relief applies to your own home too. For an investment property, the CNB has recommended stricter figures since April 2026, and banks charge a higher rate for it.
Terms starting with P
Property insurance
Compulsory for as long as the mortgage runs. It covers fire, flood, theft and other hazards. The bank requires the policy to be assigned in its favour, so the payout goes toward the loan first.
Payment protection insurance
Voluntary insurance against death, disability, job loss or incapacity to work. Banks often offer a discount on the rate in exchange for taking it out.
Pre-contractual information
A summary of the loan's terms that you receive with enough notice before signing to go through it properly. For a mortgage, it takes the form of the ESIS document. Basic information about the loan must also be permanently available to anyone interested.
Purpose-tied mortgage
A mortgage used solely to buy, build, renovate or refinance a property. The bank checks what the money is used for and requires invoices or the purchase contract as proof.
Terms starting with R
Real estate transfer tax
A 4% tax on the purchase price, abolished as of 26 September 2020. Buyers no longer pay it. Only VAT on new-builds still applies.
Rate watch
A service that monitors the market after your mortgage is signed. It alerts you if a better offer appears. The bank won't do this for you. HypoGO offers it free of charge.
Refinancing
Moving the remaining part of a mortgage to another bank with better terms, usually once the fixed-rate period ends. It can save money, depending on how far your rate is from today's offers. For fixed-rate periods ending this year that started in 2021, the repayment will actually go up.
Rate renewal
Agreeing a new interest rate with the same bank once the fixed-rate period ends. It's free, but often the worst offer available, because the bank has no incentive to lower the price.
Representative example
A model calculation that must accompany any advertisement quoting a figure, whether it's a rate, a repayment or APRC. It shows the loan amount, the term, APRC and the total amount to be repaid, so offers can be compared.
Terms starting with T
Tied agent
An intermediary who works under a single principal's licence, and whose mistakes that principal is liable for. The principal is sometimes a bank, but far more often an independent intermediary; in that case they offer the banks their network has agreements with, not just one. It's the most common status on the market.
Read moreTerms starting with V
Valuation report
A valuation carried out for the bank by its own surveyor or a contracted assessor from its list. The bank uses it to set the market value for calculating LTV. For a mortgage, you pay the bank for it, usually up to a few thousand crowns, and some banks provide it free.
Terms starting with Y
Your own funds
The part of the purchase price you cover yourself: at least 20% for a standard mortgage, 10% for applicants under 36. It can come from savings, a gift, or the sale of another property.
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Terms are one thing, your numbers are another
Enter the property price and your own funds. You'll see your repayment and how much you can get.
Mortgage of CZK 4,000,000, fixed borrowing rate 4.99% a year, term 30 years (360 months), fixed-rate period 3 years. Monthly payment CZK 21,448, APRC 5.11%, total amount payable CZK 7,721,433.
Calculated with the rate valid on 1. 11. 2026. Your actual rate depends on your creditworthiness, the LTV and the market. A mortgage is a loan secured by a charge over the property, and failing to repay can lead to its sale. We will tell you the commission we receive from banks on request.