{"id":6387,"date":"2025-10-02T08:53:20","date_gmt":"2025-10-02T06:53:20","guid":{"rendered":"https:\/\/fintalk.cz\/?p=6387"},"modified":"2025-10-02T08:53:20","modified_gmt":"2025-10-02T06:53:20","slug":"new-build-renovation-or-construction","status":"publish","type":"post","link":"https:\/\/fintalk.cz\/en\/2025\/10\/02\/new-build-renovation-or-construction\/","title":{"rendered":"New Build, Renovation, or Construction?"},"content":{"rendered":"

When You Want to Live in Your Own Home: Buy a New Build, Renovate, or Build from Scratch?<\/strong><\/p>\n

Property prices in the Czech Republic continue to rise, and during the summer, apartments and houses reached new record highs. Mortgage rates, on the other hand, have stopped declining and stabilized around 4.5%, with a further drop now unlikely. So, if you\u2019re planning to buy your own home with the help of a mortgage, there\u2019s no reason to wait. Have you decided whether to buy a new build, an older property to renovate, or start building right away? Let\u2019s look at what to expect with each option.<\/strong><\/p>\n

If you know you\u2019ll need to finance your housing with a mortgage, it\u2019s best to find out right at the start how much and under what conditions banks will lend you. At this stage, having a financial advisor on your side is invaluable \u2013 they can compare offers across the market, negotiate lower rates with banks, and handle the paperwork. They also know exactly which banks to turn to if your situation is specific \u2013 for example, if you\u2019re self-employed or run a business.<\/p>\n

Once you know how much money you can borrow and under what conditions, you\u2019ll quickly see what type of property you can afford. Now, let\u2019s take a closer look at the pros and cons of several options for acquiring a new home with the help of a mortgage.<\/p>\n

\n

Buying a New Build<\/h3>\n

Purchasing a property as its first owner is usually the most expensive option per square meter \u2013 the average price for new builds has exceeded CZK 133,000 per square meter. In Prague, it\u2019s more than CZK 162,000, while in the regions, average prices are over CZK 105,000. VAT is also included in the price of new builds if sold within 23 months of final approval. On the other hand, thanks to higher energy standards and the use of modern materials, you\u2019ll save on utilities and initial maintenance. If you\u2019re buying a property still under construction as part of a development project, you often have the chance to influence layouts or material choices.<\/p>\n

If the property is already completed and approved, getting a mortgage (assuming you meet the bank\u2019s requirements) is relatively straightforward, especially if your loan is pre-approved. The bank disburses the funds in a lump sum after receiving all necessary documents and transfers them into escrow (lawyer, notary, real estate, or a bank account), which guarantees a smooth transaction for both seller and buyer.<\/p>\n

For development projects still under construction, banks release funds gradually, based on construction phases agreed upon by the bank, buyer, and developer. During construction, you pay only interest on the amount of the mortgage drawn so far. Full repayment of principal and interest begins after final approval and full disbursement of the mortgage. That\u2019s why choosing a reliable developer is crucial to minimize delays.<\/p>\n

Pros<\/strong><\/p>\n

    \n
  • \n

    Modern materials and low energy costs: new homes must meet current energy efficiency standards, typically meaning better insulation, modern heating systems, and lower utility bills.<\/p>\n<\/li>\n

  • \n

    Warranties and low initial maintenance: developers provide guarantees on construction and fittings, avoiding the \u201cunknown past\u201d of older installations.<\/p>\n<\/li>\n

  • \n

    Easier financing when the property already stands: banks usually finance the purchase in a lump sum via escrow, avoiding the complexities of phased disbursement.<\/p>\n<\/li>\n<\/ul>\n

    Cons<\/strong><\/p>\n

      \n
    • \n

      Higher price: new builds are more expensive per square meter than older homes, with VAT included in the price.<\/p>\n<\/li>\n

    • \n

      Deadlines and risk of construction delays: unfinished development projects may extend the waiting time, during which you only pay interest.<\/p>\n<\/li>\n

    • \n

      Weaker local infrastructure: new builds located outside established neighborhoods may lack developed amenities.<\/p>\n<\/li>\n<\/ul>\n

      Buying an Older Property for Renovation<\/h3>\n

      One of the main appeals of older properties is their lower price. For example, older apartments in regional cities can be around 30\u201340% cheaper than new builds. Of course, it depends on location and condition. Individually, you may secure an even better price if the seller is in a hurry and willing to discount. For renovations aimed at improving energy efficiency, you can also take advantage of subsidies under the \u201cNew Green Savings\u201d program<\/strong>, ideal for insulation, heating replacement, solar panels, or other energy-saving upgrades.<\/p>\n

      Even if you plan to renovate, it\u2019s worth hiring a specialist to assess the property\u2019s technical condition so you know what you\u2019re getting. Since you\u2019re buying a property with a history, always check whether there are easements, liens, or foreclosures. For older, non-insulated properties, expect higher heating costs.<\/p>\n

      If your renovation is extensive and affects shared parts of an apartment building, you\u2019ll need the homeowners\u2019 association\u2019s (HOA\/SVJ) approval. For standalone houses, major structural work will require notifying the building authority or even obtaining a building permit.<\/p>\n

      Thanks to the lower purchase price, mortgages for older properties are generally more accessible. Within one mortgage, you can finance both the purchase and renovation. In this case, the bank determines the maximum loan amount based on the appraised post-renovation value. To start drawing on renovation funds, you must already own the property. Until the mortgage is fully disbursed, you pay only interest.<\/p>\n

      The bank will also require a renovation budget, project documentation, and potentially a building permit. During phased disbursement, you must document the progress of work. Banks may also demand completion within an agreed deadline, with extensions incurring fees.<\/p>\n

      An alternative is to take out a mortgage only for the purchase and later use, for example, a building savings loan for the renovation. This can sometimes offer better terms with longer repayment or lower rates.<\/p>\n

      Pros<\/strong><\/p>\n

        \n
      • \n

        Lower purchase price: older properties can be significantly cheaper than new builds.<\/p>\n<\/li>\n

      • \n

        Subsidies: programs like New Green Savings<\/em> or Fix the House after Grandma<\/em> support insulation, heating, and renewable upgrades.<\/p>\n<\/li>\n

      • \n

        Established infrastructure: the property is likely in a developed area with amenities.<\/p>\n<\/li>\n

      • \n

        Building savings loan as support: renovations can be financed advantageously through this.<\/p>\n<\/li>\n<\/ul>\n

        Cons<\/strong><\/p>\n

          \n
        • \n

          Need to know the true technical and legal condition: hidden defects, liens, or foreclosures may surface.<\/p>\n<\/li>\n

        • \n

          Permits: extensive renovations require bureaucracy and permits.<\/p>\n<\/li>\n

        • \n

          More complex mortgage drawdown: banks may demand budgets, inspections, and proof of progress.<\/p>\n<\/li>\n

        • \n

          Temporary double housing: during major renovations, you may need alternative housing.<\/p>\n<\/li>\n<\/ul>\n

          \n

          Building on Your Own (Self-Build)<\/h3>\n

          The rising cost of construction services has led many to build their own homes in recent years, with help from family, friends, and occasional contractors. Savings can reach tens of percent compared to turnkey houses or development projects. However, building also requires significant time, effort, and navigating mortgage specifics, where a skilled advisor can be invaluable.<\/p>\n

          Unlike buying a completed property, self-build mortgages are drawn in stages as construction progresses. The land and partially built house serve as collateral, and the bank releases funds gradually after verifying construction progress. Choosing a bank that supports this process without excessive bureaucracy is crucial. A smooth drawdown is far more important than a fractionally lower interest rate.<\/p>\n

          If you already own land, financing is simpler, and you can draw funds more quickly. If you\u2019re buying land together with building, banks usually require two loans so that the entire mortgage isn\u2019t consumed by land purchase, leaving you paying only interest until construction begins. Ideally, arrange the mortgage for the actual build once you have a project study and are close to a building permit. It\u2019s smart to borrow about 20% more than budgeted \u2013 you don\u2019t need to use it, but it creates a cushion for rising material costs or unexpected work.<\/p>\n

          Banks no longer disburse funds based on invoices but on appraisers\u2019 inspections confirming the construction matches the approved budget. Therefore, keep your budget more general to avoid complications. Mortgages must be fully drawn within two years, with possible (but charged) extensions. Use funds wisely \u2013 first for essential structures, later for finishing touches.<\/p>\n

          For energy-efficient homes, you can receive subsidies exceeding CZK 500,000 under the New Green Savings program<\/em>. Banks also support green construction with slightly better rates \u2013 up to several tenths of a percent lower.<\/p>\n

          Pros<\/strong><\/p>\n

            \n
          • \n

            Cost savings: compared to turnkey homes, savings can be significant.<\/p>\n<\/li>\n

          • \n

            Flexibility: build exactly the home you want within your budget.<\/p>\n<\/li>\n

          • \n

            Financial cushion: some banks allow borrowing up to 20% above budget.<\/p>\n<\/li>\n

          • \n

            Subsidies: over CZK 500,000 available for energy-efficient homes.<\/p>\n<\/li>\n<\/ul>\n

            Cons<\/strong><\/p>\n

              \n
            • \n

              High time investment: you must dedicate significant time to construction and coordination.<\/p>\n<\/li>\n

            • \n

              Complex mortgage drawdown: staged funding, appraisals, and documentation required.<\/p>\n<\/li>\n

            • \n

              Time limits: the mortgage must be drawn within two years, with extensions incurring fees.<\/p>\n<\/li>\n<\/ul>\n

              \n

              Final Thoughts<\/h3>\n

              Whether you choose a new build, an older property with renovation, or a self-build, each path comes with its advantages and challenges. The common denominator for success is always a smoothly managed mortgage \u2013 including bank requirements, staged drawdowns, necessary permits, and deadlines. This is where a financial advisor can save you considerable stress, guiding you through the process from initial calculations to selecting the right bank and ensuring smooth disbursement. They can secure the best terms for you and handle complications, leaving you free to focus on what truly matters \u2013 your new home, where you\u2019ll feel at home.<\/p>\n","protected":false},"excerpt":{"rendered":"

              When You Want to Live in Your Own Home: Buy a New Build, Renovate, or Build from Scratch? Property prices in the Czech Republic continue to rise, and during the summer, apartments and houses reached new record highs. Mortgage rates, on the other hand, have stopped declining and stabilized around 4.5%, with a further drop […]<\/p>\n","protected":false},"author":6,"featured_media":6384,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-6387","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/posts\/6387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/comments?post=6387"}],"version-history":[{"count":3,"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/posts\/6387\/revisions"}],"predecessor-version":[{"id":6390,"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/posts\/6387\/revisions\/6390"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/media\/6384"}],"wp:attachment":[{"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/media?parent=6387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/categories?post=6387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fintalk.cz\/en\/wp-json\/wp\/v2\/tags?post=6387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}