Term dictionary

Mortgage

Mortgage is another expression for the right of pledge which is attached to the real estate. The right of pledge is the right of the creditor, that is of the financial institution, to satisfy himself from the pledged object in case when the debtor, that is the person which takes out the credit, does not meet his obligations (non-payment of the mortgage). The obligation of the debtor is to duly pay off the given mortgage credit.

Mortgage credit

Mortgage credit is defined by the Act on bonds as the credit which is provided for the investment in real estate within the territory of the Czech Republic or for its construction or acquisition, and whose payment including accessories is secured by the right of pledge for this or another real estate within the territory of the Czech Republic.

Mortgage bank

Mortgage bank ** can be either Hypoteční banka, a.s., one of the leading mortgage institutions in the CR, or any other **mortgage bank in the CR, currently there are 13 mortgage banks in the country (outline of all the banks can be found here).

Mortgage guarantor

The guarantor is the person who is obliged to pay the credit at the call of the creditor in case when the debtor does not pay it. If the guarantor pays the credit to the creditor, he has then the right to request payment from the debtor of the paid-out resources.

Right of pledge

The right of pledge is the right of the creditor, that is the financial institution, to satisfy himself from the pledged object in case when the debtor, that is the person who takes out the credit, does not fulfil his obligations. The obligation of the debtor is to duly pay off the given credit.

Tying of payments

Tying of payments for the benefit of the bank means pledging the receivables which the insured has against the insurance company on the basis of the occurrence of the insurance claim covered by the insurance, for the benefit of the bank which provides the mortgage credit. Should an insurance claim occur, the insurance company does not pay out the insurance amount to the insured but to the bank which provided the insured with a credit for the purchase of the house.

Solvency for mortgage approval

Solvency is the term for the ability of the debtor to pay off the credit. It is determined by the bank on the basis of evaluating and analyzing the input parameters of the client, such as the amount of income, the age of the applicant for the credit, the number of the members in the household and expenses of the client. On the basis of solvency, the banks decide if they will provide mortgages and under what conditions (to asses your mortgage click here).