Staged drawdown (postupné čerpání)
The bank pays out the mortgage not in one sum but in tranches that follow the progress of construction, a renovation or the developer's payment schedule. Each further tranche is released only after invoices are submitted or a valuer has inspected the works. Until the full amount is drawn, the client usually pays interest only on what has been drawn, and the full annuity payment starts after the final drawdown.
Example
A house costing CZK 4,000,000 is financed by a mortgage drawn in four stages of CZK 1,000,000. At 5.00 %, the client pays roughly CZK 4,170 a month in interest after the first tranche and about CZK 8,330 after the second. The annuity payment of CZK 23,384 over 25 years starts once the full amount is drawn. Meanwhile the client is usually still paying rent, and the budget has to allow for both.
In practice
Before each tranche the bank asks for invoices, a construction contract (smlouva o dílo) or an inspection by a technician. The first tranche usually depends on a building permit (stavební povolení) and proof of own funds. The contract sets a final drawdown deadline, so if construction slips, ask for an extension in good time. Keep receipts for the own funds you spend at the start; without them the bank may refuse to recognise the money.
How it differs
Staged drawdown is one form of loan drawdown; for a finished flat the bank usually pays everything at once, to the seller or into escrow. Drawdown conditions decide whether the bank releases the money at all, while staged drawdown decides how it spreads the payout over time.
Related terms
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