What you need to buy a home in Finland

Many foreigners in Finland would love to buy a home instead of renting one. Unfortunately acting on the Finnish real estate market has been everything but easy for people from abroad. This is why I put together a list of what you need before you buy a home in Finland. 

Knowledge about your finances

First, you should have a clear picture of your general financial situation. The banks you are going to contact will ask similar questions so do the homework first. What assets like cash or investments do you already own and what are your current liabilities?
Another important question is how much you (and your partner) earn and currently spend every month. I suggest you analyze your bank account transactions and make a budget if you haven’t yet. This will give you a clear picture on what you can spend monthly for loan, interest and running charges. Remember to keep an emergency fund and room for surprises.

Enough cash or securities

Finnish banks usually accept 70% of a home’s market value as security (also called collateral) for a loan. For the missing 30% you need own cash or other securities. Here is an example:

You plan to buy a home worth 160 000 €. The bank usually gives a 112 000 € loan for it (70% of the home value count as security). Typically, the bank would demand a down payment of 48 000 € from you or other securities to get more loan.

For first home buyers banks can give a loan for even up to 95% of the purchase price. Note that the bank will have higher requirements to your income and overall financial situation, if you want 95% of a home price as a loan.

If you want more loan than 70% of your new home’s price you will have to offer additional securities to the bank. More securities can be accepted from another home, shares, or a personal guarantee. There are also possibilities to buy additional securities from banks or insurance companies.

Your loan promise in advance

I highly recommend to submit loan applications to different banks before starting your home search. Most banks have online applications where you can enter the data of a fictive home at your maximum budget price.
This allows you to simulate how different banks would finance you already before acting on the real estate market. Please note it can take 1-2 weeks to get loan offers from banks. See my separate post on how to get the right home loan in FInland.

Once you receive loan offers you can compare them regarding costs and other terms. The banks will also tell you if you need extra securities. Usually, loan offers are valid 3 months unless there are changes in the situation of the applicants. To be sure we recommend checking whether the bank granted you a loan promise for a comparable home and until when.

Start the hunt when prepared

With above homework done and a loan offer in hand you can move to the next and much more interesting phase. You are now ready to play an active role in the real estate market!
Once the ideal home shows up, you know you are able to make a purchase offer fast and self-confidently. Reaction pace and the ability to make the suitable purchase offer are key factors when acquiring the home you want.
Just remember to remain in your budget and keep your bank loan offers valid.

What if it seems not possible to buy a home in Finland?

If you have no possibility to buy a home in Finland now, there are still good alternatives. You can for example think of opening an ASP account or look into right-of-occupancy flats (asumisoikeus). There are also good reasons to rent an apartment such as maximum flexibility and no worries about renovations.