The main advantage of building savings is state support of up to 3,000 a year, which is credited to it during the period of saving. Other advantages include the constant interest rate for the entire duration of the building savings loan and the fact that it is not necessary to guarantee real estate for a loan or bridging loan up to a certain amount (usually CZK 300,000).
Mortgages, in contrast to building savings, have lower interest rates (especially for shorter fixations) and greater variability, where the client can choose the parameters of the mortgage to suit their needs. It can choose the period of interest rate fixation, the repayment period, the repayment method (progressive, degressive) and mortgages combining the purpose and non-purpose mortgages in one product and the like can also be used. The offer of mortgage loans is also considerably wider in our market than in building savings loans.
Building savings as your own resources to complement your mortgage
Most mortgage banks now offer up to 100% of the value of the mortgaged property, but the most common and at the same time the most advantageous in terms of interest rate is the mortgage provided at 70% of the value of the property. In addition, even if the bank lends you only 70%, you will usually want to show you how you will finance the rest of the property. So the question is where to take the remaining 30%.
Building savings is the ideal solution for this situation
To supplement the mortgage, it is possible to use both the saved amount and the regular building savings loan as well as the bridging loan. In the case of a proper loan, this combination is practically ideal, also due to the low-interest rate of a regular building savings loan.
However, situations, where the building savings client has not concluded at all and therefore do not meet the conditions for providing a proper loan, are much more frequent. Then he can use the bridging loan. However, it must be borne in mind that the client will initially face a relatively high financial burden.
In addition to repaying a mortgage and bridging loan, he is still building a building savings account to meet the conditions for a proper loan, which is substantially cheaper than a bridging loan. However, this can be eliminated by choosing a progressive method of repayment of the mortgage, where at the beginning of the repayment of the mortgage pay lower installments and gradually installments rise. The advantage of this combination is the use of state support from building savings, which is also credited during the repayment period of the bridging loan.
Building savings as a mortgage payment
The second way to combine both products is to use building savings as an extraordinary mortgage payment. As a combined product, some mortgage banks even offer this particular combination. In the case of this combination, the client only pays the interest on the mortgage to the bank and saves the amount attributable to the loan to building savings.
On building savings, the client uses state support and saves funds for extra repayment of part of the mortgage. Once the client has reached the conditions for a proper loan, the mortgage is partially repaid. Then the mortgage is already repaid in the usual annuity. In addition to the mortgage, the client also repays the building savings loan at the time, but thanks to the lowering of the mortgage principal, the monthly payment from it will also decrease.