Mortgages and financing

Early mortgage repayment (předčasné splacení)

In Czech: Předčasné splacení hypotéky

Early mortgage repayment (předčasné splacení) means paying off all or part of a loan sooner than the repayment schedule says. The law allows it at any time, but the lender may claim reasonably incurred costs.

Also called: prepayment, overpayment, mimořádná splátka

What it means

Early repayment (předčasné splacení hypotéky) covers both paying off the whole mortgage and making an extra payment (mimořádná splátka) that reduces the principal. After an extra payment the bank, depending on the contract, either lowers the monthly payment or shortens the term.

Under the Consumer Credit Act (zákon o spotřebitelském úvěru, No. 257/2016 Coll.), a consumer may repay the loan in full or in part at any time while it runs. In that case the lender is only entitled to compensation of the reasonably incurred costs this causes.

How it works in the Czech Republic

Under the wording of the Act in force as of October 2026, the loan can be repaid without compensation in situations including a period when the rate is not fixed, within 3 months of a new rate being notified, in the event of death, long-term illness or disability, after a transfer of the property at least 24 months after the contract was signed, and up to 25% of the total loan amount during the 1 month before the anniversary of the contract.

Outside these cases, housing loans have a cap: compensation may be at most 0.25% of the amount repaid early for each started year left until the end of the fixed period, no more than 1% in total, and also no more than the costs under section 117a, i.e. the interest difference and administrative costs of at most CZK 1,000. This regime was introduced by Act No. 462/2023 Coll. with effect from 1 September 2024; according to the ČNB it applies to older contracts from the start of a new fixed period after that date.

A change to the Act is scheduled from 1 January 2027, and its content is not covered here. Before making an extra payment, check the current wording of the law and the terms of your loan agreement, and ask the bank for a written calculation of any compensation.

Practical example

For example, a borrower with a housing mortgage has just under three years left in the fixed period and wants to repay CZK 400,000 early. Under the wording in force as of October 2026 the cap is 0.25% for each started year, so 0.75%, which is at most CZK 3,000, and never more than the costs under section 117a. Paid in the month before the contract anniversary and within 25% of the total loan amount, the same sum would carry no compensation.

What to watch out for

  • Find out the exact anniversary date of your contract; the 25% rule only applies in the month before it.
  • Ask the bank for a written calculation of the compensation before you send the money.
  • If your contract predates 1 September 2024, check whether a new fixed period has started, as the new cap applies from then.
  • Check how the payment or term changes after an extra payment.
  • Watch for the change to the Act planned from 1 January 2027.

Frequently asked questions

How much can the bank charge me?

For housing loans, under the wording in force as of October 2026, the cap is 0.25% of the amount repaid early for each started year until the end of the fixed period, at most 1%, and no more than the costs under section 117a. The bank will calculate the exact amount.

Is the 25% compensation-free repayment available every year?

The Act ties this option to the 1 month before the anniversary of the contract and to 25% of the total loan amount. Check in your contract how your bank applies it.

  • Mortgage rate fixation (fixace)Mortgage rate fixation (fixace) is the period during which the interest rate on a loan stays the same. When it ends, the bank offers a new rate and the borrower decides whether to stay, refinance or repay part.
  • Mortgage refinancing (refinancování)Mortgage refinancing (refinancování) means paying off your existing mortgage with a new loan, usually from another bank on better terms. It is typically done when the fixed-rate period ends.
  • Mortgage (hypotéka)A mortgage (hypotéka) is a long-term housing loan secured by a lien on a property. The borrower repays it in regular monthly instalments, usually over many years.
  • Interest rate (úroková sazba)The interest rate (úroková sazba) is the price of borrowed money, stated as a yearly percentage. On a mortgage it sets how much of each payment goes to interest and is either fixed for a period or variable.
  • Lien (zástavní právo)A lien (zástavní právo) secures a debt: if the debtor does not pay, the creditor can be satisfied from the pledged property. On a property in the land register it arises by entry and stays with the property when it changes hands.

Sources

Laws and official pages this text is based on (in Czech).

This text is for information only and has not yet been checked by a legal or financial expert. It is not legal, tax or financial advice. Verify important details in the listed sources or with a professional.

Updated 25 October 2026

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