Principal benefits of home saving loans

The advantages that long-term loans from home saving banks offer are genuinely rare in mortgage loans.

Interest rates guaranteed for the entire loan repayment term

The first advantage is the constant interest rate guaranteed for the entire loan repayment term that some types of long-term loans offer. When signing the loan contract the client thus knows what interest rates will apply through the repayment period and therefore how much he will have to pay. Considering their other benefits, home saving loans thus offer very competitive interest terms, especially when compared with mortgages with long interest rate fixation periods (5, 10, 15 or 20 years).

Option of unscheduled payments

Another indisputable advantage is the usual option of paying off the loan ?more quickly? with unscheduled and scheduled payments of any amount. This means that the client?s unscheduled payment options are not restricted by the interest rate fixation periods customary for mortgages.

Option of retroactive defrayal of receipts and invoices

Home saving banks offer the option of retroactive defrayal of receipts, invoices or even the purchase price of real estate. The client can thus claim sums he previously paid out of his own money. This option is not standard with mortgage loans.

Option of having a guarantor provide extra security on the loan

If the value of the pledged real estate is insufficient for acquiring the loan, extra security of up to CZK 300,000 can be provided in the form of a guarantee commitment by a guarantor.

In view of the need to enter into a home saving contract to gain a loan the somewhat higher overall fees for provision of the loan ? usually 1.5% of the target amount ? are something of a disadvantage. In addition, you should always keep in mind that home saving banks tend to be somewhat slower in all phases of the loan.

Who home saving loans are good for

Long-term loans from home saving banks are a truly excellent alternative to mortgage loans when financing house construction. The possibility of having receipts up to one year old defrayed, the lesser demands on the flexibility of payment of contractors? invoices, the option of having a guarantor provide extra security ? these are the advantages that home saving banks? clients appreciate most.

Another major advantage is that the majority of home saving banks do not require the client to invest all his own money as per the financing plan submitted during the loan approval process before drawing the first money from the loan. By contrast, banks always require that all the client?s own finances as stated in the budget are invested first, and the mortgage merely serves as additional financing for the construction work leading up to the award of building approval.

A loan from a home saving bank can also be used to buy real estate in a situation where there is no pressing need for quick payment of the purchase price to the seller. Even though some home saving banks are as flexible as banks in their dealings and provision of loans, they are not an entirely suitable solution when the price of the property has to be paid quickly.