Getting a mortgage in Finland

Most people in Finland buy their home with a bank loan, and the bank requires security for it. The form this security takes depends on what you are buying. A house or plot is real estate, and the bank takes a mortgage on it, which is an entry in the National Land Survey's register. A flat normally consists of shares in a housing company, and the bank takes a pledge on the shares. The difference is explained in buying property in Finland.

How much you can borrow

The Financial Supervisory Authority (FIN-FSA) caps the proportion of a home's value that a bank may lend. At the time of checking:

So on anything but a first home you bring at least a tenth of the value yourself, or extra collateral; on a first home, at least a twentieth. Eligible collateral includes housing company shares, a mortgage on real estate, and the capital value of a right-of-occupancy or part-ownership agreement, as well as other real estate, deposits and pledges from third parties. State guarantees, deficiency guarantees from an insurer or another bank, and personal guarantees do not count towards the cap.

The cap is a ceiling, not a promise: the bank still decides whether to lend you that much.

A mortgage on real estate

In Finland, a mortgage is not the loan itself. It is an entry in the Land Information System that makes the property available as security. It remains in force until it is extinguished, meaning it does not end when the loan is paid off. The same mortgage can later secure a new loan, and a buyer can take over mortgages that the seller already had in place.

Mortgage deeds are now electronic and held in MML's system. An old paper mortgage deed can be converted into electronic form, and an electronic deed is transferred to the lender rather than handed over physically.

Applying

The property's owner, or the bank on the owner's behalf, applies to MML. During a purchase, the bank usually prepares the mortgage alongside the transaction, and you can apply for the mortgage at the same time as the registration of title, either through the Property Transaction Service or via MML's e-service. There is also a paper form available on suomi.fi.

Fees, at the time of checking:

Each mortgage, and each change to one, is charged separately.

Buying a property that already has mortgages

The certificate of mortgages and encumbrances (€16 in MML's e-service, at the time of checking) shows the mortgages on a property. Agree with the seller before you sign whether these will be paid off or transferred to you or your bank, and write this into the deed of sale. A mortgage that remains in place keeps the property as security for the seller's debt.

A pledge of housing company shares

For a flat, the bank takes the shares as security instead.

• Paper share certificates. You sign a pledge agreement, and the bank holds the share certificate as collateral.
• Shares in the electronic register. Newer housing companies, and older ones that have converted, do not have paper certificates. The lender applies to MML to register the pledge, which requires your consent, either as a signed pledge agreement attached to the application or your signature on the application itself. If you have not yet become the registered owner, the seller must consent as well.

If your flat still has a paper certificate held by the bank, the bank can apply to convert it to the electronic register on your behalf.

Leaseholds

A house on a leased plot can also be used as security. Once the leasehold is registered with MML, it can be mortgaged in the same way as real estate. How leaseholds are registered is covered in renting out your property.

Related

• Buying property in Finland
• Property register and cadastre
• Renting out your property, if the flat will pay part of its own loan
• Finding a flat to rent, for the years before you buy