APR vs. interest rate — what's actually the cost of your mortgage
When comparing mortgage offers, the most important number is not the interest rate, but the APR (RPSN). The difference can be 0.3–1 percentage point, which on a 5-million-CZK mortgage means hundreds of thousands of CZK over 25 years.
What is the interest rate (sazba)
The interest rate is the nominal price of money — what you pay the bank for borrowing capital. Banks advertise this number on billboards and websites: "Mortgage from 4.49 %".
But this number does not include other costs: appraisal, account fees, mandatory insurance and so on. That's why APR exists.
What is APR (RPSN)
APR (RPSN — roční procentní sazba nákladů) is the actual annual cost of the mortgage as a percentage. Includes everything you pay over the term:
- Interest (the rate itself)
- One-off fees: arrangement, appraisal, registry deposit
- Recurring fees: account maintenance, statements
- Mandatory insurance: payment-protection or property insurance, if required by the bank
The APR formula is set by EU law (Directive 2014/17/EU). All banks calculate it the same way — so APR is directly comparable across banks.
Concrete example: when interest rate misleads
Bank A: rate 4.49 %, no arrangement fee, no account fee, but mandatory payment-protection insurance 800 CZK/month → APR ~4.95 %.
Bank B: rate 4.69 %, no fees, no insurance → APR ~4.73 %.
Bank A looks cheaper at first glance (rate 4.49 vs. 4.69), but actually Bank B is cheaper over the term (APR 4.73 vs. 4.95). Difference: 0.22 % × 5,000,000 × 25 years ≈ 275,000 CZK extra cost at Bank A.
What's the difference between rate and APR — typical
For Czech mortgages 2026, the typical difference is 0.1–0.6 percentage points. Smaller difference = bank is honest about fees. Larger difference = there are mandatory products you'd otherwise skip.
If APR exceeds the rate by more than 0.5 % — find out what's included. It's often life insurance or a savings account with a contribution requirement.
FAQ
Where can I find the APR for a specific mortgage?
Banks must show APR in any offer (binding by law). Look for the line 'RPSN' in the calculation or in the offer letter. If it's missing, request it explicitly — the bank cannot refuse.
Can APR change during the mortgage term?
If the rate is fixed (5 years for example), the APR is stable for that period. After the fixation ends, both the rate and APR change with the new rate.
Why is APR for a 30-year mortgage higher than for 15 years?
Because one-off fees (e.g. 5,000 CZK for arrangement) are spread over a longer period — relatively, this raises the annual cost less, but absolute interest paid is much higher. Compare APRs only between mortgages of the same term.