Mortgage alone or with a co-borrower? Which works better for you
· 6 min read
Before you start looking for a flat or a house, it is worth knowing how large a mortgage you can get. And that is where the first big decision comes: apply alone, or with a co-borrower (spoludlužník)?
Who is a co-borrower
A co-borrower is a person who applies for the mortgage together with you and is liable for it in exactly the same way as you. Most often it is a husband or wife, a partner, a parent or a sibling. The bank adds up the incomes of both applicants, but also their expenses and other loans.
Important: co-borrowers are liable jointly and severally. If one of them stops paying, the bank can demand the whole instalment from the other.
Mortgage for a single applicant
Advantages:
- You alone decide about the property and the loan.
- You are not financially tied to another person.
- A simpler situation in case of a breakup or divorce.
Disadvantages:
- The bank counts only one income, so the approved amount is usually lower.
- If you lose your income, there is no one to cover the instalments.
Mortgage with a co-borrower
Advantages:
- Two incomes = a higher amount the bank will approve.
- A better chance of approval if one applicant has a short income history or is self-employed.
- For foreigners: a co-borrower with permanent residence (trvalý pobyt) or Czech citizenship can make approval much easier.
Disadvantages:
- Both of you are liable for the whole debt until it is repaid.
- Releasing a co-borrower from the mortgage later is possible only with the bank's consent, and the bank may refuse.
- Your co-borrower's debts and registry records affect your application as well.
How it works for married couples
If you are married and have community property, banks usually want your husband or wife to be a co-borrower, or at least to consent to the loan. An exception is narrowing the community property at a notary, but even then it depends on the rules of the specific bank.
Co-borrower or guarantor?
A guarantor (ručitel) steps in only when the borrower stops paying. A co-borrower is a full-fledged applicant from the start and their income counts towards creditworthiness. If you need to boost the income, a co-borrower helps, not a guarantor. Moreover, banks today require guarantors for mortgages only exceptionally.
Comparison in a nutshell
| Alone | With a co-borrower | |
|---|---|---|
| Mortgage amount | based on one income | based on the sum of incomes |
| Liability for the debt | only you | both for the whole debt |
| Chance of approval | lower with a lower income | usually higher |
| Breakup / divorce | simpler | an agreement and the bank's consent are needed |
| Property ownership | only you | by agreement (need not match the borrowers) |
What not to forget
- Get insured. With a mortgage lasting decades, insurance of the ability to repay (death, disability, inability to work) is almost a necessity, ideally for both co-borrowers.
- Agree in advance who will own the property and what happens if you split up. A written agreement helps.
- Compare several banks. Each bank assesses incomes, foreigners and entrepreneurs differently.
How Tenaryia can help
We compare bank offers, calculate how much you can get alone and how much with a co-borrower, and help with the whole process from the application to insurance. Consultations in Czech, Slovak, Ukrainian and Russian, free of charge.
Information is indicative and valid as of the publication date; specific conditions vary by bank or insurer.