Buying my own home

Buying a home is one of the major investments in life. These instructions will guide you forward.

  • 1. Chart your own financial position

    1. Chart your own financial position

    Determine your income, expenses and assets. This way you will know how much money you can spend on housing expenses and buying an apartment.

    Everyone’s situation is always uniquely assessed at the bank, and many things will affect your ability to get a housing loan. These include, for example, your income, expenses, liabilities, savings and collateral.

    The most important thing is that your ability to repay the loan is in order. In addition, you will need your own savings or other collateral. For us, it is important that the loan suits your life in such a way that you can also do other things that are important to you and prepare for the future in a smart way.

  • 2. You need your own savings

    2. You need your own savings

    Granting the loan usually requires that you have your savings or can offer an additional security for the loan. In major towns, the home can serve as the collateral for a maximum of 70–80% of the trade price. If you need a loan greater than this, for example for renovation, you will also need additional collateral.

    The amount of your own savings or additional collateral depends on the home that is being bought and usually amounts to 20–30% of the price of the purchase.

    Most often the parents’ home or other property is used as the additional collateral. Alternatively, a chargeable loan guarantee from an insurance company can be applied.

    A loan cap determines the amount of the home loan granted. For a buyer of a first home, it can be at most 95% of the value of the collateral assigned to the loan. In other words, you must have at least 5% of the price as your own savings or other collateral. For those buying something else than their first home, the amount of loan can be at most 90% of the value of the collateral assigned to the loan.

    Example:
    The selling price of the home is €200,000. According to the above percentages, the home can serve as a collateral for a loan of €140,000–160,000. In addition to the purchased home, you will also need your own savings or other collateral for the loan for approximately €40,000–60,000.

    Come talk to us about buying a home. You can also apply for chargeable loan guarantee, which may eliminate your need to ask for additional collateral from your parents, for example.

  • 3. ASP for the buyer of a first home

    3. ASP for the buyer of a first home

    ASP is a Finnish bonus system for home savers. It is intended for people aged 15–39, buying their first home.

    If you are looking to buy your first own home, it is worthwhile becoming an ASP saver. If you have saved at least €150–€3,000/quarter for eight calendar quarters and, at the same time, at least 10% of the price of the dwelling, you can qualify for a low-cost ASP loan guaranteed by the state. In addition to the normal 1% interest on your ASP savings, we will pay you an extra interest of 4% if the terms of the home saver bonus agreement are met and the dwelling is purchased.

  • 4. Ask for a loan offer

    4. Ask for a loan offer

    You can apply for an initial loan offer without any commitment. This way you have an idea of what kind of a property you can look for.

    Loan application: Apply for a loan in eBanking or book a meeting

  • 5. Examine your dream home carefully

    5. Examine your dream home carefully

    Although it may be love at first sight, do not let the first impression catch you off guard. Study the apartment or house carefully. We will be glad to assist you in assessing the financial position of the housing company, as well. We have prepared a model for you for assessing the economy of the housing company, which you can use as a checklist or fill out and take with you to a loan negotiation.

    What kinds of homes are being sold? 

    Learn about the home offers in your region. The real-estate agency Kiinteistömaailma, a partner of Danske Bank, is a reliable partner for you when buying or selling a home. If you are thinking about changing homes, invite a representative of Kiinteistömaailma for a free home visit.

    Kiinteistömaailma.fi

  • 6. Get the right amount of home credit

    6. Get the right amount of home credit

    A housing loan is always a major financial decision and should match your economy as well as possible so that you can also fulfil your other dreams and prepare for the future. There is no point living in the home of your dreams but missing out on everything else because of the loan.

    Housing loan: Learn more

  • 7. Sort out your insurance coverage

    7. Sort out your insurance coverage

    Remember to update your insurance coverage according to your new home and life situation. Join the Danske Benefit Programme to receive considerable benefits with Fennia insurance products, as well.

    Loan Insurance secures the repayment of your loan even in unexpected life situations. Loan Insurance is needed particularly when you alone are responsible for the repayment of a loan or only one of the debtors is going to work Amidst a crisis, you can focus your effort on something else than rearranging the loan or selling the home.

    Insurance: Learn about Fennia insurance services (in Finnish)
    Loan Insurance: Read more

  • 8. Follow the development of your financial situation

    8. Follow the development of your financial situation

    When you start planning life in your new home, it is important that you also monitor your new financial situation so that you stay within the economy you planned. If there are changes in your life situation, remember to make use of the flexibility options for the loan. You can always contact the bank if you are having doubts about your life situation.

Questions about buying a first new home

  • I am about to buy a home alone. Is it possible?

    Sure. The income and expenses are assessed in the same way regardless of whether the household has one, two or more people, and you definitely are not the only one doing so. Statistics Finland informs us that as many as 40% of the buyers of a first home are doing so alone.

  • What kind of a home can I afford and will I then have money to travel and fulfil my dreams?

    Others are thinking about the same thing! According to our survey, the majority of first home buyers consider it very important or rather important that they have the possibility to live a rich life while repaying the loan and fulfil their dreams, such as travelling.

    We agree. Always make sure the loan expenses leave space for other living, as well. Few of us want to sit in a fancy apartment without being able to afford anything else.

    In addition to having the right amount of loan, it is good to understand that even though the interest rates are currently very low, a mortgage often spans many years, even decades. At some point during the repayment, the loan interest may take up a considerably higher monthly amount than right now.

    In fact, it is often perceived difficult to assess the euro amounts of the expenses. As a general rule, you should be realistic when estimating your expenses. Find out what you spend money on, what expenses are necessary and important and how much you have remaining each month.

    Well how can I fulfil my dreams if I own that home?
    Especially now with low interest rates, it should also be possible to save for your dreams and future needs. If you have not yet started, try the following simple calculation and start saving immediately:

    Calculate how much more the annual interest expenses of your current or future mortgage would be if the interest rate were to go up by 2 percentage points. For example, with a loan of  €100,000, an interest rate 2 percentage points higher would mean approximately €2,000 per year, or €166 monthly. Start by saving this!

  • What if property prices go down?

    The prices of residential property are in constant flux but one should not worry too much about the changes. The changes in prices will not become an issue until the moment when you are selling the home. The bank does not really monitor the price development of your specific home. If you keep repaying the loan according to agreement, you can continue living in your home regardless of market turbulences.

    How will I know that the home I am buying will keep its value?
    When you are buying a home, it is worth thinking about the future of the locality and region and get to know the housing company and the condition of the building. There are no universal answers to this question, but do contact us, and we will think about it together!

    What if I have to sell the home for less than I bought it?
    When you repay the loan, you are also protecting yourself against the possibility of decreasing prices. In other words, even if the price of the home went down a bit, you will not owe money as long as you get more for selling the home than you have remaining loan.

    Example:
    You buy a home for €150,000. After three years, you want to sell it, and the real-estate agent tells you that another flat in the region was just recently sold for €140,000. Because you have repaid €800 monthly for three years now, you have €28,800 less loan to pay off. (Also consider the expenses related to selling the home. For example, the real-estate agent’s fee can be approximately 3%.)

  • What if the interest goes up?

    Right now the interest rates are exceptionally low. It really is possible that they will go up. Because a housing loan is repaid during several years or decades, the rates will have time to go up and down during the repayment period. This means that you should have the right amount of mortgage so that your economy can withstand even increased interest rates. We will take this into consideration when we grant the loan.

    I have also heard about this interest protection. What is it and should I consider it?
    Yes, there are different ways of protecting your loan, such as Interest Collar and a fixed interest rate. For example, with Interest Collar, the reference rate for your loan will not exceed the maximum collar level during the validity of the Interest Collar period, and you will benefit from lowered rates down to the minimum level. Does that sound difficult?

    A fixed interest rate means that the interest rate of the loan is fixed for a certain period of time. The period can be, for example, 5 years. You will pay the same rate for the loan throughout the five-year period. You can benefit from a fixed rate if the interest rates in general rise above the collar agreed for you.

    Example: 
    Calculate how much more the annual interest expenses of your current or future mortgage would be if the interest rate were to go up by 2 percentage points. For example, with a loan of  €100,000, an interest rate 2 percentage points higher would mean approximately €2,000 per year, or €166 monthly.

  • How about that year in Paris – what if I want to go abroad?

    Life can present many events, including unexpected twists. One has to live somewhere, and it may be easier to leave a home you own than one you rent.

    You can rent out your home for a short or long period and then return back to an apartment that is yours. And in case you decide not to return, you can always sell the home.

  • Can I sell the home even before I live in it for two years?

    Of course. In case you happen to also profit from it, you will have to pay 30% tax on the profit.*

    It is a surprisingly common misunderstanding that if you sell your home before you have lived in it for two years, you would lose the full capital gain or have to pay 30% of the whole selling price. This is not the case. The tax only applies to the capital gain.

    *The income tax rate for capital gain is 30%, and 34% for the part in excess of €30,000 euros. More detailed instructions on the taxation of capital gain is available on the website vero.fi.

  • I feel horrified about committing myself to a 20-year loan at this point. Is it wise?

    In larger towns in particular, few of us have the possibility to immediately buy the home that we would spend the rest of our lives in. In practice, what happens is that you buy a home you can afford now and that suits your situation in life. When the time comes to change homes, you sell the current one and pay off the existing loan. Then, a new mortgage is negotiated for the new home. That is all there is to it.

  • What if I become unemployed or struggle with other difficulties in life?

    We at the bank are accustomed to dealing with changing situations and are not afraid to talk about even difficult topics. So, do not dwell in your worries alone, but just contact us. For us, it is important that you cope even with difficult situations as well as possible.

    Unlike with paying rent, the payment schedule for a housing loan is not carved in stone. If you have handled your finances well, your loan is flexible. Our home credits already contain free-of-charge instalment-free periods, which you can conveniently apply for in eBanking.

    A loan that is suitable for your life also allows you to save money, allowing you to prepare for changing situations in advance.

    When you own your home, your housing expenses are actually more flexible than if you were renting your home. In addition, the Steady and Steady Plus housing loans contain built-in flexibility options, such as instalment-free periods and loan changes without a separate service fee.

    Read more about our housing loans

    Example: 
    In your own home, your housing expenses usually consist of the maintenance fee, the loan instalment and interest. For example, with a loan of €150,000, the instalment would amount to €536 monthly and the interest €188 per month.* If you become unemployed, you can apply for an instalment-free period, only paying the maintenance fee and interest for your housing. This will temporarily free up the amount of the instalment from your housing expenses and make it available to living. This is the period during which your loan will not be repaid. In addition, in case of prolonged unemployment you can also consider selling the home. If you were renting, you would have to pay the rent for the corresponding home in any case.

    * The example is calculated with a loan of €150,000, a total interest rate of 1,5% and a loan term of 20 years. Source: Loan Calculator

  • What if we own the home together and get separated?

    Separation is something that may happen, and it can be a difficult situation also when it comes to the home and mortgage. Usually, the matters are sorted out by selling the home or with one of the partners staying in the home and redeeming the other partner’s share of it. You are best prepared for this situation when the loan amount is correctly dimensioned for your life and situation. This way, you will avoid situations where you have more loan than the home is worth.

  • What about a serious illness or death of the spouse?

    In particular, if you take out a loan together and the amount exceeds what you would want to have alone, you should think about this possibility in advance. A commonly used way to prepare for the worst is insurance.

    Read more about Loan Insurance, for example.