Dec 28, 2023

Mortgage Miracles for Christmas

To close up on the year, I would like to share a few exceptional expat mortgage case examples that might seem impossible to get approved, yet actually were.

Less than 6 months in the Czech Republic and 100% financing!

For the first story, we have to travel back in time to 2015 when a couple from another EU country decided to move to the Czech Republic in the middle of the year. Soon after, they heard that 100% financing was possible. They were looking to purchase a family house in Kralupy and boy did they get a good deal!

For less than 3.5m CZK, with no down payment, and after just a few months in their new jobs in Prague, they got everything paid by the bank… Sigh… Good ol’ times. For those of you perhaps new to the mortgage market in the Czech Republic, though this couple was able to get 100% financing, it is not possible now. Currently, it’s capped at 90%.

Business owner with minimum income, yet a 10m CZK mortgage was easy.

Being a business owner is challenging and rewarding at the same time. The challenge comes from financing, as very often company owners pay themselves a very low salary, or none at all. This was the case of our client two years ago. He had a successful IT company and the business was doing great. However, to save on taxes, he paid himself a small salary.

Would that be a problem for a mortgage? Normally yes, since the mortgage amount is directly dependent on how much income you have. However, there are two banks that consider company turnover, rather than your personal income, as long as you are a majority shareholder or owner of the company. Since the company was doing great, no one cared that the official salary was too low and the high mortgage was approved based on the company numbers.

Lawyer ran away with the money, yet the flat was purchased.

We already covered this in our previous article but it was such an extraordinary event (with a happy ending though!) that I need to mention it again.

Imagine that you send money to the seller to pay for the purchase of a flat and then you hear in the news that the lawyer misused the money and was caught by the police, just before leaving the country. It didn’t help much, the money was gone. Even today there is about 150m CZK still missing! Part of this is from our client.

The deal was saved though. How, you ask? We were lucky since we didn’t send all the money at the same time and also that the purchase contract was structured so that upon paying the agreed amount into the escrow account, it was considered paid. Because the money was misused after it reached the escrow account, we fulfilled our condition and in court, we would win the case. Ufff, this one was close.

Project miracle financing

There were clients who were living in a family house that they wanted to purchase. Unfortunately, they didn’t have the 10% down payment needed, only about 5%. How did we solve this? No – we didn’t take a second loan to cover the difference.

Instead, we went to the bank and without telling them the purchase price, we let them conduct their official valuation. It came above the asking price! The clients negotiated down a bit and viola, a completely clean purchase of a family house with less than 5% down payment, only because the valuation went so well.

25% discount for property

Two years ago, I was approached by a couple who wanted to purchase a property they lived in. It was a flat in Malá Strana, before the renovation, about 56m2, and the owner wanted to sell it to them. They had a 10% down payment but the owner wanted 10m CZK for the flat. We thought that was really too much so we ordered a bank valuation and it came at 7.5m CZK, a bit more of a realistic price for sure!

But what now? We could go only to this one bank and the owner wanted 2.5m CZK more. We played the only card we had the valuation. The clients wanted to purchase it, but they really could not pay more than the bank valuation since we were limited by the 90% financing. And guess what – the owner agreed with 7.5mbCZK! I couldn’t believe it myself!

The clients actually needed six more months to save up to the 10% needed so they signed a future purchase contract securing the deal and completed it later the next year. It was clear that the owner just shot the 10m CZK from the blue sky, just testing us – and luckily the bank valuation played in our favor.

So there you have it, five miracle property purchases that at first might have seemed impossible but in the end worked out. Of course, there are always hard cases and they don’t always work out, but as long as you know all the avenues to try, sometimes they do end in success.

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