A renovation can be paid for with an ordinary purpose-bound mortgage at a rate of around 5.00 % (the average for new mortgages in August 2026, according to ČBA). The bank will lend up to 80 % of the property's value, or 90 % if at least one applicant is under 36.
With a renovation, the valuer can value the property as it will be once the works are finished, which leaves room for a bigger loan than the flat's current condition would support.
In return the bank wants paperwork: an itemised budget, a document from the building authority for larger works, and invoices against which it releases the money. You never get cash in hand. Financing a renovation is easiest when the purchase and the works go into one mortgage; borrowing afterwards for works already done is more complicated.
How much will the bank lend for a flat and its renovation?
Up to 80 % of the property's value, or 90 % under 36, and some banks take the value after the works. Petra and Marek are buying an older three-bedroom flat (3+1) for CZK 4,000,000. Straight after the purchase they want to replace the wiring and plumbing, the windows, the bathroom and the kitchen, which the itemised budget puts at CZK 800,000. The valuer puts the flat at CZK 4,000,000 as it is and CZK 5,200,000 after the renovation (illustrative figures). In total they need CZK 4,800,000.
Petra and Marek in figures (purchase CZK 4,000,000, renovation CZK 800,000; 30-year term, rate 5.00 %, annuity payment):
- The bank works from today's value: a loan of at most CZK 3,200,000 (80 % of CZK 4,000,000), own funds of CZK 1,600,000, a payment of CZK 17,178.
- The bank works from the value after renovation: a loan of up to CZK 4,160,000 (80 % of CZK 5,200,000), own funds of CZK 640,000, a payment of CZK 22,332.
- If one of them is under 36: a loan of up to CZK 4,680,000 (90 %), own funds of CZK 120,000, a payment of CZK 25,123.
Valuing the flat after the works cut the own funds they needed by CZK 960,000. A bigger loan does mean a bigger payment, though, and the bank checks whether their income can carry it.
Not every bank accepts the value after renovation, and some do so only for works backed by a budget from a building firm. Ask at the first meeting, not after the valuation. How the valuation works, and what to do if it comes in low, is explained in Property valuation for a mortgage.
Banks treat an older house bought with a renovation the same way. What else to check on a house, and how much to insure it for, is covered in our guide to buying a house with a mortgage.
What the bank counts as a renovation
| Banks usually accept | Banks usually do not accept |
|---|---|
| new windows, doors, floors, wiring and plumbing | free-standing furniture and appliances |
| a new bathroom and a fitted kitchen built into the flat | work with no budget and no invoices |
| insulation, a roof, new heating or a heat pump | repairs to a property you do not own and will not pledge |
| an extension, an extra storey or a loft conversion with a permit | work you paid for earlier from your own money (at some banks) |
Money from a purpose-bound mortgage has to go on housing, so furnish the flat from your own money or with a smaller loan. Interest on a mortgage for the maintenance or alteration of a building you live in is tax-deductible just as it is for a purchase, up to CZK 150,000 a year (§ 4b and § 15 of the Income Tax Act).
Do you need invoices for a renovation mortgage?
Yes, for most of the money: the bank releases the renovation part against invoices or supplier contracts, not as cash in hand. The purchase part goes to the seller or into escrow, as with any purchase. The renovation money is released step by step: against invoices, against advance payments under contracts with suppliers, and sometimes as a smaller sum for materials without an invoice. For larger works the bank sends a technician to check that the building work matches the budget. Everything the bank asks for before releasing money is described in Drawing down a mortgage.
Until the loan is fully drawn you normally pay only interest on the amount drawn so far. Ask for a generous drawdown deadline, because renovations overrun, and once the deadline has passed the bank does not have to pay out the rest. If you also plan to use a subsidy, how pre-financing works is covered in New Green Savings and a mortgage.
If you already own the flat
- A flat with no mortgage: a new purpose-bound mortgage secured on the flat. Allow for a valuation at CZK 3,000–6,000 and CZK 2,000 to register the lien in the land registry, so it makes more sense for larger amounts.
- A flat with a mortgage: the simplest route is usually a top-up at your current bank, since it already holds the lien. Another bank will usually want to refinance the whole debt.
- A smaller repair costing a few hundred thousand: an unsecured renovation loan is quicker and needs no valuation, but it is dearer. A comparison on CZK 1,000,000 is in Mortgage or consumer loan.
- The renovation is already finished: some banks finance it retrospectively, but only for a limited time after the invoices and only against receipts. If you paid for it with another loan, this counts as refinancing a housing loan.
One legal detail: a loan earmarked for altering a building, meaning building modifications, an extension or an extra storey, is a housing loan under the law even without a lien (§ 2(2) of the Consumer Credit Act). It comes with 14 days to think it over before signing and the same early repayment rules as a mortgage. The pre-contract information will show you how the bank has classified your loan.
Documents to have ready in advance
- An itemised budget from a building firm or a quantity surveyor. The valuation of the flat after renovation is based on it.
- A document from the building authority, if the Building Act requires one for the works, typically for changes to load-bearing structures, extensions or extra storeys.
- Works contracts with suppliers and their payment schedules.
- Photographs of the current state, so the valuer can compare before and after.
- For a flat in a building with an owners' association (SVJ), its consent if you are touching common parts such as the risers or the windows.
Sources
- ČNB – macroprudential policy: LTV limit of 80 % (90 % for applicants under 36)
- Act No. 257/2016 Coll., on consumer credit, § 2(2) (housing loan, including alterations to a building), § 111 (time to think it over)
- Act No. 586/1992 Coll., on income taxes, § 4b (maintenance and alteration of a building as a housing need), § 15 (interest deduction)
- Act No. 283/2021 Coll., the Building Act (permits for alterations to buildings)
- ČBA Hypomonitor – average rate on new mortgages, August 2026