Mortgage vs. consumer loan — when to use which
Need a large amount and don't know whether to take a mortgage or a consumer loan? The difference is dramatic — both in rate and in term.
Basic comparison
| Mortgage | Consumer loan | |
|---|---|---|
| Rate 2026 | 4–5 % | 8–14 % |
| Max term | 30 years | 10 years |
| Max amount | up to property value × LTV | typically up to 1M CZK |
| Security | Property (lien at registry) | None typically |
| Approval time | 2–6 weeks | 2–7 days |
| Documentation | Heavy | Light |
When mortgage makes sense
- Buying or building real estate (obvious)
- Major renovation (mortgage for renovation)
- Large amount (1M+) where consumer loan rate is too punishing
- Long horizon (5+ years) where rate matters more than approval speed
When consumer loan makes sense
- Smaller amounts (under 500,000 CZK)
- Short repayment (1–3 years) where mortgage setup costs eat the rate advantage
- You don't own property, or your property is already mortgaged to limit
- Speed matters (urgent need)
- Don't want lien on property
FAQ
Can I take a mortgage to pay off consumer loans?
Yes, called debt consolidation. American mortgage works for this. Cost-saving substantial: 8 % consumer loan to 5 % mortgage = 3 % savings on 500K CZK = 15K/year.
Why is consumer loan rate so much higher?
No collateral. If you stop paying, bank has nothing to seize. Higher default risk = higher rate. With mortgage, bank can foreclose on property.
Are there products in between?
Yes, secured personal loan (against car, savings). Falls between mortgage and unsecured. Less common in CZ market.