“My fixation ended in the fall. The bank offered a three- or five-year fixation, which would increase my payment by about 4,400 crowns, or a one-year fixation with an interest rate of 7.2 percent with a monthly payment increase of 5,800 crowns. Because I expect rates to drop next year, I wanted a one-year fix, but not so high,” Karel Malý from Prague told Práv.
All he had to do was ask for a quote from a competitor, and his bank immediately reduced his annual rate by more than a percent without any problems. “The monthly installment is 1,200 crowns less,” described the client.
In some cases, you can even get a rate that is a percentage lower than the initial offer
It usually pays to have competitive offers drawn up by other banks directly or through an intermediary company. The bank is usually willing to reduce the rate by three tenths to half a percent.
“In some cases, you can even get a rate that is a percentage lower than the initial offer,” Swiss Life Select specialist Jiří Sýkora confirmed.
This works for both new and older contracts, while some banks allow you to negotiate a new fixed rate even a year and a half before the end of the fixed period.
Paying off your mortgage early can soon become more expensive
Thanks to this, some far-sighted clients recently avoided huge jumps from less than two percent rates to the current six to seven percent and kept two to four percent rates for the next fixation period.
Banks offer the most favorable rates for five-year fixations.
The interest rate can also be reduced, for example, by better securing the property being purchased. This means that the bank not only guarantees the selected apartment, but also the cottage.
Beware of old debts or overdrafts
As for the amount of installments, it is wise for young applicants to first calculate them for 25 years. If at some point during the process it stops working, the repayment can be reduced by extending the total maturity to thirty years.
You just need to be careful that the maturity is until the age of 70, only exceptionally 72 years. If the maturity should be until an older age, it will be necessary to add a younger co-borrower to the contract.
When refinancing to another bank and negotiating a better rate, be prepared for the fact that you have to prove your creditworthiness, that is, the ratio of income and liabilities. With some conservative banks and for higher amounts, the credit rating may be impaired by the payment of alimony.
The payment history of the applicant is also important. For example, an entry in the Solus register of non-payers, even though it is older and the debt has been paid, significantly worsens the credit rating. Likewise, frequent overdrafts or difficulties with repayment of, for example, leasing.
Banks see the applicants’ financial background in detail in the Banking and Non-Banking Register of Client Information operated by CRIF.