How to calculate whether you can afford to buy a home in the Czech Republic?
Updated: Nov 18, 2021
In my previous article, To rent or to buy - which is better? I answered the questions that you need to ask yourself when deciding whether to buy your own home or to live in a rented one. If you are inclined to buy, then you need to calculate how much money you need.
If you are not one of those who have funds to buy real estate for cash, then first you need to calculate how much mortgage you could get. I wrote about this in more detail in my article Mortgage in the Czech Republic: how to get it?. This way you will know how large down payment you’d need in order to buy a property.
Calculate how much money you need for furniture. When buying a new building, you will also have to buy a kitchen. If buying a second hand home, the kitchen is likely to be there, though the question is: in what condition? Sometimes you can come across an apartment or a house that is sold already furnished.
Utilities and maintenance
When calculating, do not forget to take into account utility bills. Will you be able to pay 3, 5 or even 10 thousand CZK a month for utilities?
In the case of condominiums all the tenants pay for the maintenance and repair of the building, while in a private house, all payments will fall on your shoulders. Therefore, it is very important to set aside money for future malfunctions and replacement of equipment from the very beginning of owning a house.
There are other payments that should also be taken into account, such as insurance and annual property tax.
If you buy an apartment from a serious real estate agency, then the costs of legal support of the transaction and escrow account should already be included in its commission, which in its turn, should be included in the purchase price of real estate. On the other hand, the client of the agency is the seller. Therefore, I recommend having your own realtor who will protect your interests in the transaction - the way it works in the Western countries. Without a realtor, you will need at least your own lawyer who deals with real estate transactions. I will talk about the difference in the services of a lawyer and a realtor in my next article. Additionally, you may need funds for a technical inspection of the property.
Compare the rental price with your mortgage payments
Check the rental prices in the area where you want to buy the property. Will the rent cover the monthly mortgage payment? Of course, you may not consider renting out your new property anytime soon, but it’s still good to know whether the potential renting will cover your mortgage payment or not.
If you are thinking about buying a property, reach out to me, and I will help you calculate the necessary investments.
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