Prodloužení splatnosti hypotéky: Jak na to a kdy to nepomůže

Title: Rising Interest Rates Pose Financial Challenges for Czech Families

Subtitle: Proactive Measures Needed to Mitigate Impact on Household Budgets

Date: [Insert Date]

In recent months, many Czech households have been grappling with the effects of rising interest rates on their mortgages. One such family is the Rik family from the Central Bohemian Region, whose interest rate on their million-crown mortgage has increased from 2.8% to 6% after their fixed-rate period expired.

The sudden increase in monthly repayments has put a strain on the Rik family’s budget, with Mr. Rik, the household’s financial manager, expressing concern over the impact on their finances. “Given the rising cost of living and the expenses associated with running a household with two children, this increase represents a significant blow to our budget, despite both my wife and I having stable jobs,” he said.

Financial advisor David Kuera, from the Partners Group, suggests a possible solution for families in a similar situation. He recommends approaching the bank at the end of the fixed-rate period to negotiate an extension of the loan term to 30 years. This option may be viable for the Rik family, as they are still in their productive years, and the bank may be willing to accommodate them due to their relatively low interest rate.

By extending the loan term, the Rik family’s monthly mortgage payment would decrease by approximately 3,700 crowns compared to the new increased payment. However, this change does come with an administrative fee of around 5,000 crowns, which the family would need to pay. Additionally, the bank is likely to reassess their creditworthiness, as the original repayment amount was lower than the new one.

In cases where extending the loan term is not sufficient to alleviate the financial burden, economists suggest exploring other options. One possibility is to seek assistance from relevant authorities to determine if the household is eligible for housing subsidies, which can help ease the strain on the family budget. However, it is important to note that mortgage expenses are not included in the calculation for housing subsidies.

Another, albeit more challenging, solution is to consider a change in employment or taking on additional work. Unemployment rates in the Czech Republic are relatively low compared to other European countries, and there are job opportunities available. While these may not always align with one’s ideal job, it is worth considering as a means to improve the financial situation.

For valuable and experienced employees, requesting a salary increase may also be a viable option. Companies often invest significantly more in recruiting and training new employees than they would in granting a salary raise of a few thousand crowns per month.

When it comes to refinancing a mortgage, it is crucial to approach the process with caution and not accept the first offer from the bank. It is advisable to have an understanding of the competition and negotiate with one’s own bank. Banks often offer existing clients interest rates around 6% per annum for a new period, while it is possible to secure a rate of approximately 5.59% per annum without additional conditions.

It is important to note that the costs associated with refinancing the loan are typically covered by the bank within the first two years of repayment. After that, the bank deducts these costs from its profit, rather than passing them on to the borrower. By negotiating with the bank, borrowers can save thousands of crowns on cancellation and registration fees, as well as time spent on paperwork.

When discussing new loan terms with the bank, it is essential to approach the negotiation process with sound arguments rather than relying on misinformation about other banks offering significantly lower rates. In the current situation, David Kuera recommends fixing the interest rate for a maximum of three years. It is anticipated that rates may decrease in the next year as inflation eases, making a five-year fixed-rate term more favorable.

In conclusion, the recent increase in interest rates has posed financial challenges for many Czech families. Proactive measures, such as negotiating loan term extensions or exploring alternative sources of income, are crucial to mitigate the impact on household budgets. By seeking professional advice and carefully considering refinancing options, families can navigate these challenging times and secure a more stable financial future.Title: Prodloužení splatnosti hypotéky může pomoci, ale ne vždy

Subtitle: Finanční poradce radí, jak se vyhnout finančním problémům při refinancování hypotéky

Date: July 3, 2023

In recent years, many Czech households have been struggling with the increasing interest rates on their mortgages. One such family is the Rik family from the Central Bohemian Region. Until now, their million-crown mortgage had an interest rate of 2.8 percent. However, since their fixed interest rate period expired, the bank offered them a new mortgage with a 6 percent interest rate.

“For us, this means an increase in monthly installments by more than 5,000 crowns, from almost 22,000 to over 27,000 crowns,” said Mr. Rik, who manages the family’s finances. “Considering the rising costs of running a household with two children, this is a significant blow to our budget, despite both of us having stable jobs.”

According to financial advisor David Kuera from Partners Group, there is a solution to this situation. He suggests that the family should request an extension of the loan repayment period to 30 years at the end of the fixed interest rate period. This option is viable for the Rik family, as they are still in their productive age and the bank should be willing to accommodate them due to their relatively low interest rate.

“With this option, the family’s mortgage installment would decrease by approximately 3,700 crowns per month compared to the new increased installment,” explained David Kuera.

However, this solution is not without costs. The Rik family would have to pay an administrative fee of around 5,000 crowns for the change in loan conditions. Additionally, the bank will most likely reassess their creditworthiness, as the originally agreed installment was lower than the new one. Only then can the loan repayment period be extended.

In case the applicant fails the creditworthiness assessment and is unable to meet the new installment, they can apply for loan restructuring after at least one unpaid installment. However, this will result in a negative record in the banking register, warns the financial advisor.

There are situations where extending the loan repayment period may not be enough to help households cope with their financial situation. Economists predict that inflation will decrease to below ten percent in the second half of this year. While the path to the Czech National Bank’s 2 percent inflation target may still be long, a decrease in interest rates is expected. Until that happens, mortgage rates will remain around six percent. This means that for some households, even extending the loan repayment period may not be sufficient to cover their expenses.

According to David Kuera, there are only two options left in such cases. Firstly, it is advisable to consult the relevant authorities and explore the available benefits that households can utilize. One common benefit is a housing subsidy, which can help alleviate the financial burden on the family budget, the financial advisor suggests. However, it is important to note that mortgage expenses are not included in the eligible costs for the housing subsidy.

Secondly, although more challenging, changing employment or finding additional work can be a more secure way to address the financial situation. In this regard, the advisor points out that unemployment in the Czech Republic is relatively low compared to other European countries. While job offers may not always meet one’s expectations, there are opportunities available.

For experienced and valuable employees, it may be worth considering requesting a salary increase. The cost of securing and training a new employee for a company is often significantly higher than granting a salary increase of several thousand crowns per month, adds the financial advisor.

When it comes to refinancing a mortgage, it is important to approach the negotiation process with caution. It is advisable to have an overview of the competition and use that knowledge when dealing with one’s own bank. Banks often offer their existing clients interest rates for the new period of around six percent per annum, while it is possible to secure a rate of approximately 5.59 percent per annum without any additional conditions, according to David Kuera.

It is important to note that the costs associated with securing the loan are typically covered by the bank within the first two years of repayment. After that, the bank deducts these costs from its profit,

What are the potential benefits of negotiating with the bank for refinancing a mortgage in terms of lowering monthly repayments and overall savings

Ending the loan term may not be sufficient to alleviate the financial burden.

In such cases, it is advisable for households to explore other options to mitigate the impact on their budgets. One possibility is to seek assistance from relevant authorities to determine if the household is eligible for housing subsidies. While these subsidies may not cover mortgage expenses, they can still provide some relief and help ease the strain on the family budget.

Another, more challenging solution is for individuals to consider a change in employment or taking on additional work. The low unemployment rates in the Czech Republic compared to other European countries mean that there are job opportunities available. While these opportunities may not align with one’s ideal job, considering them as a means to improve the financial situation can be beneficial.

For valuable and experienced employees, requesting a salary increase may also be a viable option. Companies often invest significantly more in recruiting and training new employees than they would in granting a salary raise of a few thousand crowns per month.

When it comes to refinancing a mortgage, it is crucial for individuals to approach the process with caution. They should not accept the first offer from the bank and instead have an understanding of the competition and negotiate with their own bank. By doing so, individuals may be able to secure a lower interest rate, resulting in lower monthly repayments and potential savings.

It is important to note that refinancing a mortgage does come with costs. These costs are typically covered by the bank within the first two years of repayment. After that, the bank deducts these costs from its profit, rather than passing them on to the borrower. By negotiating with the bank, borrowers can save thousands of crowns on cancellation and registration fees, as well as time spent on paperwork.

When discussing new loan terms with the bank, it is essential to approach the negotiation process with sound arguments. It is advisable to rely on accurate information and not be swayed by misinformation about other banks offering significantly lower rates. Seeking professional advice and carefully considering refinancing options can help households navigate these challenging times and secure a more stable financial future.

In conclusion, rising interest rates have posed financial challenges for many Czech families. Proactive measures, such as negotiating loan term extensions or exploring alternative sources of income, are crucial to mitigate the impact on household budgets. By seeking professional advice and carefully considering refinancing options, families can navigate these challenging times and secure a more stable financial future.