Mortgage parameters
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For a quick result with a chart and LTV, use the mortgage calculator.
Principal and interest month by month
At the start, interest takes up to 70% of your payment — the bank takes most of what you pay. This gradually flips: by the end, almost everything goes to principal.
| # | Period | Payment | Principal | Interest | Balance |
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How is a mortgage payment calculated?
A Czech mortgage payment is an annuity: payment = loan × i / (1 − (1 + i)−n), where i is the monthly rate (the annual rate divided by 12) and n the number of months. For CZK 4,000,000 at 5.00 % over 25 years (300 payments) that gives CZK 23,384. The first payment is CZK 16,667 interest and CZK 6,717 principal; the principal share then grows every month.
Almost all Czech mortgages are repaid this way: the monthly amount stays the same for the whole fixation and comes from one formula. Here is the full breakdown.
The annuity formula
The monthly payment of an annuity mortgage is:
M = P × r × (1 + r)n / ((1 + r)n − 1)
Where: M = monthly payment, P = principal (loan amount in Kč), r = monthly rate (annual ÷ 12, as decimal), n = number of monthly payments (years × 12).
Step by step on a real example
Compute the monthly payment for a 4,000,000 Kč mortgage at 5.00 % p. a. for 25 years:
- Monthly rate: r = 5.00 ÷ 100 ÷ 12 = 0.0041667
- Number of payments: n = 25 × 12 = 300
- (1 + r)n = (1.0041667)300 ≈ 3.48129
- M = 4,000,000 × 0.0041667 × 3.48129 / (3.48129 − 1) = 23,384 Kč
Headline rate vs. RPSN — what you actually pay
When comparing offers from Czech banks you'll see two percentages:
- Nominal interest rate — what banks advertise (e.g. "5.00 %"). This drives the annuity formula above.
- RPSN (annual percentage rate of cost) — total annual cost including processing fees, account fees, mandatory insurance. Always higher than the nominal rate.
Always compare offers by RPSN, not the headline rate.
Czech mortgages in 2026 — context
The ČNB holds its 2T repo rate at 3.75 %, and the average new mortgage rate per the ČBA Hypomonitor is around 5.00 %. Specific bank offers run mostly 4.7–5.8 % depending on profile, LTV and fixation; ten-year fixations average 6.35 % (Swiss Life Hypoindex, October 2026). For a quick run on your own numbers use the mortgage calculator on hypoteky.com — free, no sign-up.
Frequently asked questions
How exactly is the monthly mortgage payment calculated?
Using the annuity formula: M = P × r × (1 + r)n / ((1 + r)n − 1), where P is the loan amount, r is the monthly rate (annual ÷ 12), and n is the number of months. Annuity means you pay the same amount every month — only the principal/interest split changes.
What is an annuity payment and why is it standard in CR?
An annuity payment is a fixed monthly amount throughout the fixation period — easy to budget, predictable. The alternative is "even principal" repayment (interest decreases, total payment shrinks), but it's not common for Czech mortgages: the vast majority are annuities.
Why am I paying mostly interest in the early years?
Interest is calculated on the current outstanding balance. Early on the balance is high, so 60–70 % of each payment goes to interest. As the balance shrinks, interest in each payment shrinks too. Near the end almost the whole payment goes to principal.
What's the difference between the rate and APRC (RPSN)?
The nominal rate (e.g. 5.00 %) is what the bank puts into the annuity formula. APRC (RPSN, the annual percentage rate of charge) adds the compulsory fees and insurance and turns everything into one yearly figure, so it is always higher than the nominal rate. Compare banks by APRC; the details are in APRC vs interest rate.
Which loan term should I choose?
Longer term (30 years) = lower monthly payment, dramatically more total interest. Shorter (15–20 years) = higher monthly payment, hundreds of thousands saved. A practical compromise: take the maximum term and use extra payments to shorten it actively.
What happens to my payment after fixation ends?
The bank recalculates the payment using the current market rate. The annuity formula stays the same, but with a new r and n (remaining months). If your old rate was much lower than market, the new payment will be substantially higher. Use the calculator's "+1 %" / "+2 %" scenario toggle to see the impact.