With a flat from a developer you typically pay 10–20 % of the price from your own funds when you sign the agreement on a future purchase agreement and during construction. The mortgage covers the rest only after occupancy approval (kolaudace), when the purchase agreement itself is signed.
Because you are buying something that does not exist yet, the bank approves the loan on a valuation based on the project documentation and the price list, and it sends the money straight to the developer, not to you.
The usual ČNB rules apply: LTV at most 80 %, or 90 % under 36. What differs is time. A year or more can pass between signing and drawdown, and rates move in the meantime; the latest known average realised rate (ČBA, August 2026) is 5.00 % and bank offers are rising. Below are the payment schedules, how banks finance a new build, an example for a two-room flat in Prague and the contract terms that decide who carries the risk of delay.
What do you sign: reservation, SoSBK or purchase agreement?
- The reservation agreement (rezervační smlouva) holds a specific unit for a reservation fee, usually for a few weeks. Developers like to get it signed quickly; check when and on what terms the fee is refunded.
- The agreement on a future purchase agreement (smlouva o smlouvě budoucí kupní, SoSBK) is the main document. It sets the price, the specification, the payment schedule (harmonogram plateb), the completion date, penalties and the conditions for withdrawal, so everything that matters is decided here.
- The purchase agreement (kupní smlouva) is signed after occupancy approval and registration of the unit in the land registry. Only then is the mortgage usually drawn.
Some developers also sell units under construction directly under a purchase agreement. You then become the owner earlier and the bank can register a lien on the unfinished flat, but you carry more risk if construction stops.
The payment schedule and when the mortgage comes in
| Model | Buyer's payments | When the mortgage is drawn | What it means for you |
|---|---|---|---|
| Balance after occupancy approval | 10–20 % at the SoSBK or in 2 instalments during construction | in one go after occupancy approval | you pay interest only from drawdown; simplest for the bank |
| By construction stages | e.g. 10 % SoSBK, 30 % shell completed, 60 % occupancy approval | part before occupancy approval, the rest after | during construction you pay interest on the drawn part; the bank needs collateral already |
| Purchase agreement for an unfinished flat | per the agreement, often a larger share up front | gradually as construction progresses | you own it sooner but bear the risk of non-completion |
For the buyer, the safest model is one where the mortgage is drawn only after occupancy approval. If the schedule requires money from the loan before completion, the bank needs security, either a registered unit under construction or another property. Find this out before you sign the SoSBK.
How the bank values and finances a new build
A flat that does not exist yet cannot be inspected, so the bank sets a future value from the project documentation, the developer's price list and comparison with nearby projects. If the developer raises prices after sales start, the valuation may lag behind the price and you pay the difference from your own funds.
Most larger projects have a partner bank, often the one financing the construction. It has already valued the project, so its valuation tends to be quick and cheap and drawdown to the developer's account is routine. Its rate, however, may not be the best. You can take a mortgage from any bank, but expect it to value the project itself.
The mortgage goes to the account named in the SoSBK, usually the developer's project account or a blocked account. Check that your advance payments before occupancy approval go there too, not to the company's current account: that is your main protection if the developer gets into trouble.
A 55 m² two-room flat in Prague
- Own funds: CZK 803,000 at the SoSBK plus CZK 803,000 for the shell, CZK 1,606,000 in total.
- Mortgage after occupancy approval: CZK 6,424,000, which over 30 years at 5.00 % means a payment of CZK 34,485. At the banks' usual internal threshold of 45 %, that needs a net household income of roughly CZK 76,600 with no other debts.
- An applicant under 36 at LTV 90 % pays only CZK 803,000 from own funds and borrows CZK 7,227,000, with a payment of CZK 38,796; at the 50 % threshold an income of around CZK 77,600 is enough.
- If the schedule required 20 % from the mortgage for the shell (CZK 1,606,000) a year before occupancy approval, you would pay interest only for that year, roughly CZK 6,690 a month.
You can work out the payment for a different price and term in the payment calculation. New flats in Prague cost around CZK 146–150k/m² in Q2 2026.
Is VAT on a new flat 12 or 21 %?
A new flat with up to 120 m² of floor area (or a family house up to 350 m²) counts as social housing and carries the reduced VAT (DPH) rate of 12 %; above that, 21 % applies. On a flat costing CZK 10,000,000 before VAT, that means CZK 11,200,000 against CZK 12,100,000, a difference of CZK 900,000. The bank finances the price including tax, so the difference feeds through into your own funds and the payment.
For large flats close to the limit, or when combining two units, check which VAT rate the developer states in the SoSBK and which floor area it is based on.
VAT is charged on the first sale within a statutory period after completion. Since 1 July 2025 that period ends with the 23rd calendar month after the month in which the first occupancy decision (kolaudační rozhodnutí) became final (§ 56 of the VAT Act). Later sales are exempt unless the VAT-registered seller chooses to charge it.
Client changes and handover
Client changes (klientské změny), such as different flooring, moved partition walls or changes to the electrics, are paid for separately, usually in advance and from your own funds. The bank finances them only if they are part of the purchase price and the valuation. If you want them in the mortgage, have them written into an addendum to the SoSBK, with a price, before the bank does its valuation.
The handover of the flat (přejímka bytu) takes place after occupancy approval. At the handover:
- compare the finish with the specification and the agreed client changes;
- record every defect in the report with a deadline for putting it right;
- treat defects that prevent use as a reason not to take the flat over;
- check the floor area, the windows, how level the floors are and whether the installations work;
- bring a technical handover specialist if you do not work in construction.
When construction runs late
Most projects push back their completion date, and the risk to you sits in two places.
- In the SoSBK: the developer's penalty for delay should be comparable to the penalty you pay for a late payment. Also look for a right to withdraw and get your advance payments back if the delay exceeds an agreed period.
- In the loan agreement: an approved mortgage has a deadline for the first drawdown. If occupancy approval slips past it, you have to ask for an extension, and the bank may reprice the loan and reassess your creditworthiness. If you sign the loan agreement well in advance, ask how long the bank guarantees the offered rate.
Projects with flats currently on sale are listed on our sister site novostavby.com.
Sources
- Act No. 235/2004 Coll., on value added tax (reduced 12 % rate for social housing)
- Act No. 89/2012 Coll., the Civil Code, § 1785 et seq. (agreement on a future contract), § 2128 et seq. (purchase of immovable property)
- ČNB – LTV limit of 80 %, or 90 % under 36
- ČBA – Hypomonitor (August 2026) and property price monitor (Q2 2026)