Mortgages and financing

Interest rate (úroková sazba)

In Czech: 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.

Also called: borrowing rate, úrok

What it means

The interest rate (úroková sazba) tells you how much you pay the lender for lending you money. It is expressed as an annual percentage of the outstanding balance. At the start of a mortgage interest makes up a large part of each payment; as you pay down the principal (jistina), its share falls.

Czech mortgages have either a fixed rate (pevná sazba), which does not change during the fixed period (fixace), or a variable rate (pohyblivá or variabilní sazba), which moves with a market reference rate such as PRIBOR. The exact mechanism is set out in the loan agreement.

How it works in the Czech Republic

The bank prices the rate according to the length of the fixed period, the LTV, the applicant's creditworthiness (bonita) and any other products the client takes out. The final rate is confirmed in the offer and the loan agreement and applies for the fixed period.

When the fixed period ends, the bank offers a new rate for the next period. You can accept it, negotiate, or refinance elsewhere. Under the Consumer Credit Act as worded in October 2026, you can repay the loan without compensating the lender's costs within 3 months of being notified of the new rate, and also during a period when the rate is not fixed. A change to the Act is scheduled from 1 January 2027, so check the current wording.

The rate on its own does not show the full cost of a loan. To compare offers, use RPSN, which adds fees and other required payments to the interest.

Practical example

For example, on a CZK 3,000,000 loan a difference of half a percentage point means roughly CZK 15,000 more or less interest in the first year, because interest is charged on the outstanding principal. The bank or a mortgage calculator can show the exact effect on your monthly payment.

What to watch out for

  • Ask what conditions a rate discount depends on and what happens if you stop meeting them.
  • Check whether the contract rate is fixed or variable, and how a variable rate is adjusted.
  • Work out the payment at a higher rate than today's as well.
  • Compare offers by RPSN, not by the advertised rate alone.

Frequently asked questions

Can the rate change during the fixed period?

A fixed rate stays the same for the fixed period unless the contract says otherwise, for example when you stop meeting the conditions of a discount. A variable rate changes according to the rules in the contract.

Can I move to another bank if I do not like the new rate?

Yes, you can refinance. Under the Consumer Credit Act as worded in October 2026, you can repay the loan without compensating costs within 3 months of being notified of the new rate; check the details in your contract.

  • 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.
  • RPSN (annual percentage rate of charge)RPSN (roční procentní sazba nákladů) is the Czech annual percentage rate of charge: the total cost of a consumer loan expressed as a yearly percentage of the loan amount, including fees, not just interest.
  • 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.
  • Early mortgage repayment (předčasné splacení)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.

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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