Pre-mortgage loan (předhypoteční úvěr)
A loan the bank provides while a lien cannot yet be registered on the property being financed. Typically this is a flat in a new build that does not yet exist in the land registry, or a purchase where the buyer is not yet the owner. Once the land registry enters the lien, the loan turns into a standard mortgage. The rate, substitute security and maximum duration vary from bank to bank.
Example
You are buying a flat from a developer for CZK 5,000,000 and the unit is not yet in the land registry. The bank releases up to CZK 4,000,000 in stages as a pre-mortgage loan, to cover the payments in the schedule. Suppose that until the unit is registered you pay only interest on the amount drawn: once the full CZK 4,000,000 is out, that comes to roughly CZK 16,700 a month at 5.00 %. After the lien is registered, an annuity of CZK 23,384 over 25 years begins.
In practice
Find out how long the pre-mortgage phase may last and what happens if the developer misses final approval (kolaudace) and the registration of the unit. The period tends to be limited, and when it runs out the bank may ask for substitute security. Ask, too, whether the rate still applies after the switch to a mortgage. Check the completion date in the developer contract, and make sure a penalty for delay is agreed.
How it differs
A bridging loan covers the wait for money, say from selling your old flat or from building savings. A pre-mortgage loan waits for the lien to be registered and then turns into a mortgage by itself. It differs from staged drawdown in that the lien may already be registered there, whereas a pre-mortgage loan exists precisely because it is still missing.
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