Changes on Czech financial market
Housing financing at the beginning of 1 th December 2016 were changed, the rights of clients were strongly improved.
The most important benefits for clients:
- The “cooling off” period of 14 days. Clients have now a 14-day “cooling-off” deadline prior to signing a credit agreement whereby the bank may not change the terms of the loan during this period.
- Extraordinary mortgage payments free of charge. Newly, clients can give up to 25% extra payments every year free of charge.
- Penalties for early repayment, in the case of exceptional life situations: sale of real estate, death of the debtor, or divorce, the penalty for early repayment is reduced only to the purposefully spent costs of the bank corresponding to the bank’s expenses for early repayment (1% of unpaid principal max. 50,000 CZK).
- Structured offers. Banks need to provide information about the total cost of the loan in a fixed structure so that the individual offers of individual banks can be better compared with each other. Banks must indicate the RPSN.
- Appeal against the Bank’s Misconduct, newly introduced the possibility for the client to appeal against the nullity of the contract, if the bank failed in the scoring and provided the loan demonstrably to the debtor unable to repay, this period is 3 years.
The new disadvantages for clients:
- Stricter assessment of the applicant’s financial situation, more detailed examination of revenue and expenditure structure. For example, banks examine a bank statements of client.
- Longer period of loan processing.