I have a property in Golden Brook - Brno, Czech, and am being told that it is best to lock in a mortgage now even though it doesnt complete until mid next year.

What are other folks out there planning to do? I am reluctant to lock into a mortgage now at current rates given they are likely to fall - although I am hearing from the brokers rates may go up and 100% LTV deals will disappear !

I'd be interested to hear what others think .........

Apply now. If deals get better, don' t take up the deal you were offered.

The problem is there seems to be a hefty "bank lending fee" which you then lose if you go elsewhere !

That is the downside, the fees are usually 1% - capped at 25,000 CZK( for most banks). However, if there is a better LTV offered later, it may be worth the cost.
Don't forget that you will need a valuation too ( circa 5,000 CZK).
Additionally, you will need a power of attorney in order for someone to sign the mortage contract if you are not here in person.

You're saying 100% LTV is still available? Where? I'd be inclined to wait as things are likely to ease into next year but only I would suggest at 75% LTV or less.
Huw

I would agree with Huw, main rates in Czech are trending down, if you have several months, it is hard to imagine that lending conditions would tighten up any more than currently.

The choice is to apply now, with mortgage conditions that are known, or apply later and hope that things have got better. If people leave it to next year, and conditions are worse, then there is no fallback position. 100% for foreigners is not an option at the moment.
One bank has waived the admin fee, so it is not too expensive to apply now albeit with a lower LTV than previously on offer.

thanks all for the advice.

I have been told by czech finance and Younique that 100% mortgages are still available to foreigners. There are bank fees to pay, but I think I may go for it. I'm a bit sceptical about whether they actually come through with firm offers at 100% - if they do I will sign up, else wait until later next year to see if things improve!

Good morning everybody,

I hope I am not too late adding a few comments to the topic above.

In my opinion one cannot go wrong with applying for the mortgage early. There are banks in the Czech Market who do not charge any mortgage processing fee while still offering 75% to 85% to 100% LTV.

It is indeed very difficult to predict the future. What needs to be mentioned however is the fact that the financial crisis and the tightening lending criteria only entered the Czech Republic in 3Q/2008 unlike in the world where one could experience big turmoil in the banking industry for the last 14 months.

Does this mean that the local financial institutions stayed away from investing into Lehman Brothers bonds or financial instruments issued in Iceland?

No - todays financial market is indeed global and even relatively small Czech banks significant lost money this year (I hope I am correct calculating CSOB - part of KBC Group - has written off 43% of its profit this year due to investments in Iceland).

Will the financial crisis really only touch the Czech Republic slightly? Why should it? Is it really worth the bet given the situation mentioned in my first paragraph? i am not sure.

Please feel free to call me (mobile: 00420 776 348 606) or e-mail me (j.malir@scfinance.cz) should you have any specific questions. I will be happy to go into more detail with this discussion.

my best regards to everyone.

Josef
Managing Partner at Star Capital Finance.