The mortgage season is heading to the top and the action offers are growing like mushrooms after the rain. What does the current offer of preferential mortgages look like, where can you save and how to orientate in mortgage prices?
Discount mortgages or even bonuses
The mortgage season usually has two peaks. One in the spring and the other in the fall, when people return from their vacations and once again deal with housing. At the same time, banks already know how they compare to annual plans and competition, and autumn is the last opportunity to do something about results or market share developments. Therefore, in September, a number of campaigns are launched every year, thanks to which clients can save money on mortgages.
While interest rate events prevailed last year, banks are focusing more on fees this year, owing to a sharp rise in resource prices. Commercial Bank offers free processing and evaluation of a loan application (CZK 2,900 is a standard charge) and processing of property valuation is free (the price ranges from CZK 1,000 to CZK 4,500).
Good Bank also does not charge clients for the estimate of the property (as a standard, the price ranges from CZK 1,900 to CZK 4,900) and at the same time, it offers a free electronic transfer of the pledge service to which is charged CZK 300 according to the Price List. In addition to the forgiveness of this event, clients do not pay an administrative fee of CZK 1,000.
The third bank that has decided to make its offer more attractive through its special offer. It offers clients a bonus of CZK 6,000 for closing a mortgage. The condition for obtaining the bonus is to arrange a loan with a fixation for more than 3 years and to set up a current account within 15 days of signing the contract.
Equal Bank also announced an extension of the special offer, which does not charge clients a fee for credit processing (CZK 2,800 by default) and a bonus of CZK 5,000 for a mortgage with fixation of 3 or 5 years. In the campaign, it offers lower rates on non-specific mortgages.
How to judge if an offer is advantageous?
The discount or action itself is under no circumstances a reason for arranging a loan. The key is the complete comparison of rates and fees, even taking into account the currently running promotions. Sometimes a combination with a low rate and charges is better, and sometimes a higher-rate, non-fee option. From this point of view, the guideline may be the APR rate, which should also include the basic fees related to the execution and management of the loan and express the actual cost of the loan.
In general, the higher the loan, the greater the interest rate difference. On average, banks now offer mortgages at 2.10%. A client or mortgage broker who has an overview of bank offers and can negotiate with banks can achieve an interest rate advantage of up to 0.3 percent. In the model example, where we count on a 2 million mortgage, the maturity of 25 years and interest rate fixation for 5 years, the savings due to the lower rate (I pay less, repay faster) amounted to less than 30,000 CZK after 5 years of repayment.
The list of the most common mortgage fees and their price range
The big differences are across banks and in fees for credit processing, property valuation or drawing, which can total up to CZK 20,000 (the table lists the most common mortgage fees and their price range. Fees charged by the Land Registry for deposits in the Land Register are fixed). And then it is up to the client or his mortgage broker to find the optimum combination of credit with the lowest rate and the lowest fees. However, it is clear from the above figures that even in the extreme – completely free of charge mortgages – the cost savings could not offset the advantage of a negotiated reduced rate of 3 tenths of a percent.