New Czech consumer credit law signed: what changes for mortgages and loans from February 2027

What has been signed?

A law rewriting much of the Consumer Credit Act of 2016, to bring in Directive (EU) 2023/2225, has passed both houses and been signed. The directive regulates consumer credit "in much more detail" than the one it replaces, the government's explanatory report says (our translation).

The government sent the bill to the Chamber of Deputies on 25 March. The Chamber passed it on 11 September by 134 votes to none, and the Senate approved it unchanged on 21 October. It reached the President on 27 October, and he signed it on 4 November, the Chamber's record of the bill shows.

When does it start?

"This act takes effect on 1 February 2027," the law's last article says (our translation). There is one date for the whole law.

The directive asks EU countries to apply its rules from 20 November 2026, and the government had proposed that date. In the third reading the Chamber moved it, on a deputy's proposal, by 130 votes to none. The finance minister backed the change as a compromise, telling deputies she wouldn't support a much longer delay because Czechia was already under pressure from the European Commission.

Loans signed before then stay under today's rules, except for the refix and overdraft rules below and statements for open-ended credit. On 5 November the law wasn't yet in the Collection of Laws, the step that makes it law.

What changes for mortgages?

The biggest change is what happens when the bank is late with its refix letter. Today the bank must send the new rate and instalment at least three months before a fixation ends. The law keeps that and adds a consequence:

• If the letter comes late, the new rate starts only three months after you receive it.
• From the end of the fixation until then, your rate is the ČNB's repo rate valid on the day after the fixation ends.
• You can still agree another rate with the bank, the explanatory report says.

This applies to mortgages you already have, except those whose fixation ends within three months of 1 February 2027. The fee-free window to repay or move the loan stays at three months after the letter. For mortgages signed from 1 February 2027, a late letter also stretches it: it runs from the day after the fixation ends until three months after the letter comes. Our guide to refinancing a mortgage in Czechia covers the rest of a refix.

The new rules for credit checks cover every consumer loan, mortgages included:

• A lender may not use special categories of personal data, such as health, or anything from social networks.
• People borrowing together are assessed together, their incomes and expenses added up.
• If the check uses automated processing of your data, you can ask the lender's staff to explain it, give your view and have a person review it.
• If you're refused, you're told without delay and, where it fits, pointed to debt advice. If a debtor database was the reason, the lender must name it.

Today's rule stays: a loan given despite reasonable doubt that you can repay is void, and you return only what you borrowed. The law adds a presumption that you were creditworthy if you repaid the loan in full (except small loans of up to 12 months and 20,000 Kč) or, for a home loan, paid instalments for at least 18 months. The Finance Ministry said it answers some law firms' practice of trying to void loans already repaid over formal flaws in the check.

Mortgages in Czechia as a foreigner explains how banks assess borrowers from abroad today.

What changes for everyday credit?

Interest-free credit, outside the law today, comes under it. A firm offering it, buy now pay later included, will need a licence from the ČNB and must check that you can repay, the explanatory report says. A shop's own deferred payment with no interest or fee stays exempt if it's due within 50 days. For a large firm selling online the limit is 14 days, and it mustn't sell the debt on. Where such a payment isn't exempt, a lighter check is enough for amounts up to the national average wage: employers' monthly reports to the state where they exist, your bank account data and a debtor database.

A price cap covers consumer loans other than mortgages. A loan's annual percentage rate of charge may not exceed four times the sum of the ČNB's repo rate and 8 percentage points. The repo rate is the one valid on the first day of the half-year the loan is signed in, counted as at least 4%, so the cap never falls below 48% a year. For loans of up to 12 months and up to 20,000 Kč, all costs together may not exceed 2,000 Kč plus what that rate allows. A lender that charges more gets only interest at the repo rate, the explanatory report says.

Advertising for credit other than mortgages must carry the warning "Watch out! Borrowing money costs money" (our translation), or words meaning the same. An ad in another language should carry it in that language, the explanatory report says. Ads may not suggest a loan improves your finances.

Other changes:

• Overdrafts: the bank gives 30 days' notice before ending or cutting one, and before going to court it offers to let you repay in 12 equal monthly instalments at the same rate, without extra cost. This covers open-ended overdrafts you already have.
• Falling behind: before going to court, a lender offers, where suitable, a reasonable change such as a longer term, a pause or a lower rate, and points you to debt advice.
• Withdrawing: if a contract for a loan other than a mortgage lacks required information, your 14 days to withdraw don't end until 14 days after you get it; at most 12 months and 14 days if the contract mentions the right.
• Insurance: if a loan other than a mortgage requires insurance, the insurance offer can't be changed or withdrawn for three days, in the cases the law sets out.

What does the right to be forgotten cover?

From 1 February 2027, an insurer may not use data about a cancer seven years after its treatment ended, for insurance connected with a consumer loan other than a mortgage, with a few exceptions the law lists. The government had proposed 15 years, the most the directive allows. The Chamber cut it to seven, 121 votes to 2. A proposal to extend it to mortgages failed, 47 to 74. Policies taken out before 1 February 2027 keep the old rules.

What does it mean if you rent or buy?

If you rent, a lease with no right to buy isn't consumer credit, so your lease doesn't change. The law reaches you if you pay for furniture in instalments, keep an overdraft or borrow towards a deposit and move-in costs.

If you have a mortgage, check when your fixation ends. If it ends more than three months after 1 February 2027, the late-letter rule covers you. Keep the bank's letter and note the day it came, because both windows count from it.

If you're buying after 1 February 2027 and borrowing together with a partner, the lender assesses you together. The mortgage calculator and the buying costs tool show what a purchase would cost, and rent or buy compares the two.

What happens next?

• Next: publication in the Collection of Laws.
• 1 February 2027: the law takes effect, all at once.
• Up to 16 months later: firms lending interest-free under today's exemption can carry on for 16 months, or until the ČNB decides on a licence they applied for in that time.
• Within a year of 1 February 2027: the Senate has asked the finance minister to evaluate the law's effects, including on vulnerable people's access to legal loans. Non-bank lenders had warned that caps could push borrowers to loan sharks, Forbes Česko reported.

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