Real estate glossary

The gradual repayment of the loan principal through regular instalments. Each instalment includes a portion of the principal and interest, with the principal share gradually increasing.

A regular, constant mortgage payment that covers both principal and interest. The annuity amount stays the same for the entire fixation period.

The client's ability to repay a loan. The bank assesses creditworthiness based on income, expenses, existing liabilities and other factors.

Registration of an ownership right or lien in the real estate cadastre. The cadastral office has 30 days to decide on the registration.

Debt Service to Income — the ratio of monthly payments on all loans to net monthly income. The Czech National Bank recommends a limit of 45%.

Debt to Income — the ratio of total debt to annual net income. The Czech National Bank recommends not exceeding a multiple of 8.5.

Repaying part or all of the mortgage before the end of its term. In the Czech Republic, up to 25% of the principal can be repaid each year free of charge. Full repayment without a fee is possible when the fixation changes.

Safe deposit of the purchase price with a third party (lawyer, notary, bank) during the sale of a property. It protects both parties to the transaction.

A third party's right to someone else's property (e.g. right of passage, right of lifetime residence). It is recorded in the real estate cadastre and passes with the property.

The period during which the mortgage interest rate remains unchanged. Common fixation periods are 1, 3, 5, 7 or 10 years. After the fixation ends, the bank offers a new rate.

The total floor area of an apartment or house measured in square metres. It does not include balconies, loggias, cellars or garages (these are listed separately).

The price of borrowing money, expressed as a percentage of the amount owed per year. For mortgages it is fixed for a certain period. It affects the monthly payment amount.

Assignment of the insurance payout from property insurance in favour of the bank. It is a mandatory condition for drawing the mortgage.

The transfer of the approved mortgage funds to the seller's account or into escrow. It can take place as a single payment or in stages (for construction).

Loan to Value — the ratio of the mortgage amount to the value of the mortgaged property. The lower the LTV, the better the loan terms. Most banks finance up to 80% LTV.

The total period over which the mortgage is repaid. Usually 15–30 years, with a maximum of 40 years. A longer term means a lower monthly payment but higher total interest.

The bank's right to the mortgaged property serving as security for the mortgage. In case of non-payment, the bank can sell the property at auction.

A bond backed by receivables from mortgage loans. It serves banks as a source of mortgage funding.

The legal document by which ownership of a property is transferred from the seller to the buyer. It must be in writing and the signatures must be officially verified.

A professional assessment of a property's market value prepared by an expert or appraiser. It is a mandatory part of the mortgage approval process.

A public register maintained by the state that records ownership rights to real estate, liens, easements and other data.

Land or a building firmly attached to the ground, or a building right. The property serves as collateral (security) for the mortgage.

The process of setting a new interest rate after the fixation period ends. The client can accept the bank's offer or refinance with another bank.

Transferring an existing mortgage to another bank on better terms. It is most often done at refixation, when you can switch without fees.

Annual percentage rate of charge — the total cost of the loan expressed as a percentage, including interest and all fees. RPSN is a more accurate indicator of the cost of a loan than the interest rate alone.