Home buying in Finland is actually not as tricky as you might think it would be for expats. As long as you have the proper residence permits and visas to reside in and move to the foreign country, buying a home is possible. Although the country is much smaller in size then the U.S., there are usually many great homes on the market. It is in your best interest to begin your house hunt while still in the states and after hiring a Finnish real estate agent.
Search for Your Home in Finland
Your search for a home in Finland will prove interesting. The housing types are a little different than what you’d find in America so don’t expect to get the same accommodations and features. Many of the properties you’ll find for sale are apartments and flats, so you’ll need to decide what it is you truly want in a home.
Once you begin your search, create a list of everything you desire including specific amenities, how many bedrooms and bathrooms you need, whether or not you want a split level or ranch style home, and whatever preferences you might have. Although you may not find everything you’re looking for in a home, your real estate agent will do everything they can to supply lists of properties in your interest and budget.
While looking for a home in Finland, check out local publications and online resources. You’ll find that not every home for sale in the nation is listed but your real estate agent should still have the information needed for these homes. If you’re not in the country yet, you’ll have to depend on your agent to get all the information you need for a home. Try to have this prepared before you move to the nation of Finland.
The Legalities and Details of Buying a Home with a Finnish Mortgage
Finnish banking institutions grant housing loans for buying a home as well as for building or renovating a home. As with all worldwide mortgages and loans, the criteria for purchasing a home loan in Finland is based on the borrower's ability to repay the debt. Having a temporary job isn’t necessarily an obstacle when applying for a home loan if prospects in the industry are right. However, banks are naturally cautious and if you are not a citizen of Finland you may face additional obstacles. This is where your real estate agent proves invaluable.
In the long run an owner-occupied home usually provides the most affordable way to live in Finland. The nation has lower home loan rates than many other nations so this is where you’ll benefit in comparison to owning a home in the U.S. However, all borrowers should be prepared for interest rate fluctuations.
Interest rates- The trend in interest rates on housing loans in Finland has been at a steady decline over recent years. As of early 2017, the average interest rate was 1.09%, down from 2.38% in March 2011.
Loan cap- As of 2016, the amount of a housing loan may amount to a maximum of 90% of the current value of the collateral posted at the time of loan approval. The buyer must therefore have at least 10% in their own savings or other collateral. Loans for purchase of a first home are an exception, with a maximum of 95%.
Cap reduction- From July 2018 the cap will be lowered to 85%. For first-time home buyers, the cap will remain at 95%.
Tax benefits- Part of the interest paid on a home loan can be deducted in taxation, and capital gains on a home are tax exempt after 2 years of living in the home.
Applications for Home Loans- Contact the banks directly to arrange interviews. You can make a formal loan application at an interview if you wish.
Helpful Advice for Acquiring Home Loans
- Make inquiries to as many banks as you can to see what they offer - the differences in interest rates and charges vary greatly. Your real estate agent and banking institution should provide you with plenty of help and guidance.
- The banks have English speaking agents who will gladly explain tax issues. They will tell you which documents the tax authority requires
- Have all documents translated into English