Repaying a Czech mortgage early is free at the end of the fixation, up to 25 % of the original loan each year in the month before the contract anniversary, and on a sale 24 months after signing. Otherwise a purpose-bound mortgage is capped at 0.25 % of the amount repaid per started year of the fixation, 1 % in all; an American (non-purpose) mortgage at 1 %, 0.5 % in its last year (Act No. 257/2016 Coll., § 117).
On a purpose-bound mortgage the 1 % is only a ceiling. The actual fee is an administrative charge of up to CZK 1,000 plus an interest difference measured against the average rates on new loans that the ČNB publishes. If rates have risen since you signed, that difference is negative and the fee does not exceed CZK 1,000. A mortgage signed before 1 Sept 2024 moves to the new regime only when its next fixation starts.
Whether to repay at all depends on your cash reserve, any dearer debts and your rate. At around 5 % repaying usually pays off for most new mortgages (the ČBA put the average rate on new loans at 5.00 % in August 2026 and 5.1 % in September), while on a fixation of around 2 % there is no hurry. How to send an extra payment has its own article. This one is about what repaying costs and whether to do it.
When is early repayment of a mortgage free?
The law lists the cases in which a bank may not ask for any compensation (§ 117(3), in force in this form since 1 Sept 2024). For housing loans, the American mortgage included, they are these:
| Situation | Condition |
|---|---|
| End of the fixed-rate period (fixace) | you repay within 3 months of the bank telling you the new rate; it must do so at least 3 months before the fixation ends |
| Up to 25 % of the original loan a year | paid in the month before the anniversary of signing; if you repay more, the first 25 % is still free and the fee is calculated only on the excess |
| Sale of the property | at least 24 months have passed since the loan agreement was signed; the loan was secured on the property being sold or taken out for it |
| Settlement of community property (SJM), for example after a divorce | the same 24-month condition; it must concern the property the loan is tied to |
| Death, long-term illness or disability | of the borrower or of the spouse or partner, if it substantially reduces the ability to repay |
| Insurance payout | from insurance meant to secure repayment of the loan, for example repayment protection insurance |
| Period with no fixed rate | a variable rate, or the time after a fixation in which no new rate has been agreed |
Every early repayment, free or not, also lowers the total cost of the loan by the interest and other costs you would otherwise have paid (§ 117(1)).
How much does early repayment cost in the middle of a fixation?
Outside those cases the bank may demand only compensation for its reasonably incurred costs (§ 117(2)). On a purpose-bound mortgage there are three ceilings, and the bank applies the lowest:
| Ceiling | How it is calculated |
|---|---|
| Percentage | 0.25 % of the amount repaid for each started year until the end of the fixation, 1 % at most; the 1 % ceiling applies when more than 3 years of the fixation remain |
| Reasonably incurred costs (§ 117a) | administrative costs of up to CZK 1,000 plus the interest difference: the contractual interest to the end of the fixation minus the interest at the average rate of new loans published by the ČNB; a negative difference reduces the costs |
| Interest to the end of the fixation | the compensation can never exceed the interest you would have paid until the fixation ends |
Suppose a purpose-bound mortgage. You repay CZK 500,000 with 3 years of the fixation remaining, and the contractual rate is 5.00 %. The percentage ceiling is 3 × 0.25 % = 0.75 %, which is CZK 3,750. We estimate the interest difference in a simplified way, as the amount repaid × the rate difference × the years.
| ČNB average rate (assumed) | Interest difference | Administrative CZK 1,000 plus difference | Fee |
|---|---|---|---|
| At 5.50 %, market above your rate | −CZK 7,500 | negative | no fee (CZK 0) |
| At 4.90 % | +CZK 1,500 | CZK 2,500 | CZK 2,500 |
| At 4.50 %, market below your rate | +CZK 7,500 | CZK 8,500 | CZK 3,750 (percentage ceiling) |
A bank's real calculation differs, because it works with the amortised balance and the proportional part under § 117a(2). The direction holds, though: the more rates have risen since you signed, the smaller the fee. Anyone who fixed in 2023, when the average rate on new contracts moved between 5.65 and 5.93 % according to the ČBA, is now above the market (5.00 % in August 2026), so the fee comes close to the ceiling.
If the anniversary is close, wait. If it is far off, the fee is usually worth paying. Take CZK 300,000 with 10 months to the anniversary and just under 3 years to the end of the fixation. Waiting costs CZK 12,500 in interest, before you subtract what the money earns on an account in the meantime. The fee is at most CZK 2,250.
A non-purpose loan, that is the American mortgage, has a different ceiling: 1 % of the amount repaid, or 0.5 % if no more than a year of the agreed term remains, and never more than the interest to the end of the fixation (§ 117(4) and (5)). The details are in the article on the American mortgage.
Do the new rules apply to an older mortgage?
They apply to mortgages signed from 1 Sept 2024. A fixed-rate mortgage signed earlier stays under the older rules until a new fixation starts on it.
From the start of that new fixation the new regime applies, new free cases included, namely a sale and a divorce. The earliest possible date is 2 Sept 2024. The basis is the transitional provision of Act No. 462/2023 Coll., which the ČNB interpreted in its regulatory opinion RS2024-38.
What counts is the date of signing or the start of the new fixation, not the date you repay. You will find it in the contract or in the amendment for the new fixation. Under the older regime the bank may demand only reasonably incurred costs, usually an administrative fee from its price list.
Contracts from before 1 Dec 2016 that have had no new fixation since then are governed by the contract itself (§ 167 of Act No. 257/2016 Coll.).
How do you repay a mortgage early?
- Find the anniversary date of the contract, the end of the fixation and the date the bank sent, or will send, the new rate. That tells you whether you can repay for free.
- Tell the bank you intend to repay. The law sets no notice period; banks put one in the contract or the terms and conditions. Česká spořitelna takes the request in its George app, on a mortgage under “Doplatit”.
- Ask for a payoff statement. Without undue delay the bank must send you the amount due split into principal, interest and other costs, the expected compensation with the assumptions behind it, and a note of when nothing is payable (§ 117(6)).
- Send the amount from the statement. For a partial repayment, decide in advance whether the term is shortened or the payment lowered.
- After a full repayment, ask for a receipt (kvitance) and consent to deleting the lien (zástavní právo), and file the application to register the deletion in the land registry (katastr). The fee is CZK 2,000.
Is it worth repaying a mortgage early?
It depends on your cash reserve, any dearer debts and your rate. A decision table:
| Your situation | What to do with spare money |
|---|---|
| A reserve smaller than a few months of expenses | build the reserve first, repay afterwards |
| You have a consumer loan or a credit card balance | repay the dearer debt first |
| Mortgage rate around 5 %, money sitting in an account | send it in the month before the contract anniversary (up to 25 % of the original loan free) |
| Fixation ends within a year | wait and decide once you see the new rate |
| A fixation of around 2 % for several more years | save safely elsewhere, repay when the fixation ends |
| Selling the flat in the next few years | don't repay; the sale price will clear the debt |
The order of the rows is deliberate. A reserve and dearer debts always come first. Money sent into the mortgage does not come back, even if you lose your income.
A sure return, trimmed by tax
Every koruna sent into a mortgage at 5.00 % saves you 5 % a year in interest. That return carries no risk and no tax, so against a savings account taxed at 15 % it equals a gross 5.88 %. That is the bar a safe alternative has to clear.
Interest on a mortgage for your own home, however, comes off your tax base under the Czech Income Taxes Act: up to CZK 150,000 a year for a flat or house acquired from 2021 (CZK 300,000 for earlier acquisitions). If you pay less interest than the limit, the mortgage costs you only 4.25 % after the deduction (5.00 % × 0.85), and an extra repayment earns less.
The Nováks and the Svobodas each send CZK 300,000 (both mortgages at 5.00 % over 25 years, five years after signing, 15 % tax rate):
- The Nováks borrowed CZK 2,000,000, owe CZK 1,771,600 and pay CZK 87,400 a year in interest, below the deduction limit. The repayment saves them CZK 15,300 in interest in the first year, but their tax relief falls by CZK 2,300. Their real return is around 4.3 %.
- The Svobodas borrowed CZK 4,000,000, owe CZK 3,543,200 and pay CZK 174,800 in interest. After the repayment it is CZK 159,400, still above the CZK 150,000 limit. Their relief does not change, so they save the full CZK 15,300, a return of 5 %.
For both families the repayment beats leaving the money in a current account. The difference shows why the same advice does not suit everyone.
If you fixed cheaply in past years, don't rush
If a fixation of around 2 % still has several years to run, repaying is the least rewarding use of spare money. Paying off a mortgage at 1.99 % earns you 1.99 %, and less if you claim the interest deduction. Money kept safely elsewhere may earn more before the fixation ends.
At the end of the fixation the picture flips. The new rate will be higher, and that is exactly when you can send any amount without a fee. If you save up until then, you cut the balance just as the mortgage gets dearer. How big the jump in the payment tends to be is shown in End of a mortgage fixation.
Shorten the term or lower the payment
In purely financial terms, shortening the term wins. On a CZK 4,000,000 mortgage at 5.00 %, CZK 300,000 sent after five years saves about CZK 460,000 in interest, and the mortgage ends 2 years and 8 months earlier. Lowering the payment saves about CZK 175,000.
A lower payment works as insurance, though. If parental leave, a change of job or the end of a cheap fixation is coming, a smaller compulsory payment gives your budget room. You can then send a larger amount voluntarily at the next anniversary.
Repaying the whole mortgage at once
It makes sense at the end of a fixation or when you sell the flat. A sale is free of charge if at least 24 months have passed since the loan agreement was signed. If you clear the loan from savings, watch two things:
- You should still have a reserve afterwards. A flat with no debt does not turn into cash within a week.
- You lose the interest deduction. On large mortgages that is worth up to CZK 22,500 a year.
Work out the effect on your own figures with the early repayment calculator.
Sources
- Act No. 257/2016 Coll., on consumer credit, as in force from 1 Sept 2024, § 117 (early repayment, free cases, ceilings on compensation) and § 117a (reasonably incurred costs)
- Act No. 462/2023 Coll., Art. XV point 2 (transitional provision on early repayment under older contracts)
- ČNB, regulatory opinion RS2024-38: from when the new early repayment rules apply to older mortgages
- ČNB: averages of lending rates under § 117a of the Consumer Credit Act
- Act No. 586/1992 Coll., on income taxes, § 15(3) and (4) (interest deduction; limit CZK 150,000, or CZK 300,000 for housing needs acquired before 1 Jan 2021)