Loan term (doba splatnosti)
The total time over which the mortgage is to be repaid, as agreed in the loan agreement. Banks cap it with their own maximum length and with the age by which the applicant must finish repaying. A longer term lowers the monthly payment and so helps in the creditworthiness assessment, but it raises the interest paid over the life of the loan. You can shorten it later with an extra repayment.
Example
Consider a CZK 4,000,000 mortgage at 5.00 %. Over 25 years the payment is CZK 23,384 and total interest CZK 3,015,080; over 30 years the payment is CZK 21,473 and interest CZK 3,730,231. A payment CZK 1,911 lower therefore costs roughly CZK 715,000 extra. It may also decide whether you pass the creditworthiness assessment at all.
In practice
A longer term works as a safety net: if you want to, you repay faster with extra repayments, and if your income drops, the payment stays low. Every year you can send up to 25 % of the original loan amount without a fee, during the month before the contract anniversary. Picking the shortest possible term to save interest leaves you with no buffer if your income drops.
How it differs
A fixation period is just a stretch of the term during which one rate applies, and a 30-year term usually spans several of them. Principal repayment determines how quickly the debt falls along the way. After an extra repayment, shortening the term saves more interest than lowering the payment.
Related terms
In-depth guide
Calculate your own situation
Instead of abstract definitions — enter your own parameters and see the result for yourself. No registration, no form, no salespeople.