Housing loans
When considering a housing loan, borrowers must assess:
- how much money they need and can afford to borrow
- how big a share of the required amount they can finance themselves
- how fast they can repay the loan
- how they would prefer to space out their repayment instalments
- what repayment alternative they would prefer
- to which reference interest rate they would prefer to tie the loan
- what type of risk they wish to protect themselves from and how.
The loan period can be extended up to 25, or even 30 years. Customers must always assess the relationship of the loan capital to their own loan servicing ability, their assets and the value of the house/apartment in question.
All housing loans require collateral, which can be the intended house/apartment in question supplemented, where needed, with a guarantee. The intended house/apartment can serve as sole collateral in the event that the borrower has saved a part of the purchase price themselves. Should additional guarantees be needed, borrowers are advised to find out if they are eligible for a government guarantee. If they are not eligible for a government guarantee, they need to provide a guarantee in the form of other assets of their own or somebody else’s assets, or else obtain a third-party guarantee.
Further online information
Housing loan interest rates are currently tax deductible up to a certain limit. For further information, please visit the relevant tax guide that is linked on the right hand side of the page (link in Finnish only).
The government provides interest subsidy for purchase of a house/apartment, subject to certain conditions. In addition, a special government support scheme is available for first-time house buyers aged 18–30.
Further information about different financing alternatives for house/apartment purchase can be obtained online from banks, the Federation of Finnish Financial Service and the National Consumer Administration.
24 October 2011