Early Repayment Costs of Retail Mortgages in Czech Republic

Prague, 8 July 2019

The Czech National Bank clarified recently the “efficiently incurred costs of the creditor in connection with the early repayment of consumer housing loans” pursuant to The statement on purposefully incurred costs that can be demanded by the consumer in connection with the early repayment of consumer credit for housing under Act No. 257/2016 Coll., On Consumer Credit.

Therefore, banks may charge clients only the costs that are directly related to the early repayment of the consumer housing loans and the amount of which is also justified. For example, the administrative costs of early repayment, such as the costs related to the processing and execution of a consumer’s application for early repayment, the costs related to the procedure for implementing the early loan repayment, land registry fees, postage, printing and copying costs, telephone charges or consumed office supplies, will meet the conditions for effective incurred costs. The amount of the reimbursement may not exceed the financial loss of the creditor.

A commission paid by the provider to the intermediary for arranging consumer credit for housing may not qualify as effectively incurred costs under the aforementioned regulation.