Need a mortgage in Sweden? If you have recently moved to Sweden and considering buying property – then the answer is probably yes. Faced with one of the world’s most challenging rental markets, it’s not surprising that anyone with resources quickly considers buying a home instead of renting. Low interest rates and soaring property prices in Sweden make buying seems like an attractive option to many. But how much money will you need and how much will Swedish banks lend you?
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How much money will you need?
The bad news is that you will need deep pockets to buy a home in any Swedish city. Here are the latest property prices for Stockholm which cover the period May – July 2017. (Source: Svensk Mäklarstatistik)
Apartment prices in Stockholm: The average price for an apartment in the greater Stockholm area is currently 3 641 000 SEK or 58 630 SEK per square metre whilst in central Stockholm the average price is 5 542 000 SEK or a whopping 93 681 SEK per square metre.
Houses prices in Stockholm: The average house in Stockholm now costs 5 763 000 SEK or 46 471 SEK per square metre. How much will Swedish banks lend you?
All loan and mortgage applications are considered individually but in this article we share the guidelines Swedish banks use to calculate the amount you can borrow to buy a home. As a newcomer to Sweden you will also need to be registered in Sweden to be eligible for a mortgage and most banks will want proof of your credit history and any assets or loans abroad.
Where to get a mortgage in Sweden
There are a lot of different places to get a mortgage in Sweden so make sure you compare and look at different options before deciding. But if you are new in a country it may be hard to know where to start so here we have a few options for you to check out:
- Söderberg och partner* – are financial advisors who also offer a few types of loans, including a mortgages. Their thing is fast, good and personal service which can be a bit of a perk if you are a newbie in Sweden and need someone to advice more than the loan handlers at the big banks.
- Lendo* – a comparison site that only does one credit check and connects you with
- Compriser* – a comparison service e that gives you an overview of market mortgage interest rate from different providers for quick reference.
- You can also check with your own bank of course or with any of the Swedish banks such as Nordea, Handelsbanken, Swedbank, Santander Bank etc.
What are the lending requirements?
Lending requirements in Sweden are regulated partly through legislation and partly determined by the banks themselves. In addition to the standard requirement of proof of a steady income from secure employment, Swedish banks use the following calculations to determine how much they will lend you.
1. ”Left to live on” calculation
Banks calculate how much you will have left to live on once your mortgage and other costs are paid. The standard requirement for a family of 4 (two adults and two children), for example, is 23 000 SEK per month. Different banks vary in their assessments of what the minimum amount should be, which is one of the reasons that one bank might approve a loan while another rejects the same loan application.
2. Mortgage ceiling
Following the recent introduction of tighter controls, banks cannot approve mortgages exceeding 85% of the purchase price. In certain cases it may be possible to get an additional unsecured loan but a higher rate of interest would be charged and this loan would have to be repaid within a much shorter period.
3. Amortization requirements
New loans have to be repaid at the rate of 2 per cent per year until the loan is reduced to 70% of the property’s value and subsequently at 1% per year until the loan is reduced to 50%.
4. Loan to income ratios
A maximum mortgage of 5 times your pre-tax annual income is standard.
New stricter lending rules to help cool a red-hot property market
Fears of a property bubble caused by 20 years of rising prices in Sweden and the popularity of interest only mortgages have led to a recent tightening of controls on lending.
A new proposal has also been put forward by Finansinspektionen, Sweden’s financial supervisory authority, to raise the amortization requirements by next year. The Swedish government will have the final say on this matter. If the requirements are raised next year, it will be more difficult to get bank approval for a loan.
Property buying consultation in Sweden
There is a lot to consider when making the decision to purchase a property in Sweden, particularly if you are uncertain about your long term plans. Relocate to Sweden offers home buying consultation to newcomers to Sweden to advise you exactly what is involved in buying and selling property in Sweden and to help you avoid very expensive mistakes. Our property consulting services includes advice on the following areas.
- Mortgage regulations and proposed changes
- Current property tax and tax relief on interest
- Regulations on subletting property
- Capital gains tax on sold property
- Average property prices and price development for any area of Sweden
- How the buying and selling process works in Sweden and costs involved
- Location advice to match your individual needs
- Insight on up-and-coming areas and which areas to avoid
- Which areas in Sweden have the lowest taxes?
- What happens if you lose your job?
- What happens if you leave Sweden?
Make sure you have the best mortgage
A hot tip if you already have a mortgage, is to sign up to Påmind*. This is a free service that keeps track of a lot of different types of contracts and negotiates better prices. Types of contracts they handle are mobile subscriptions, electricity contracts, mortgages, car insurance, broadband, home insurance, private loans. According to Påmind, their users save an average of 2000 sek per year. So definitely worth a try.
Homefinding services
We can also help you to find your dream home by doing the research to find properties in locations that match your needs. We accompany you to property viewings to provide extra insight and assist you through the entire purchasing process.
Contact or follow Relocate to Sweden for more information
Considering buying property in Sweden? Then don’t hesitate to contact us to arrange a property buying consultation or to avail of our homefinding services. You can also follow us on LinkedIn or Facebook for updates on property prices and other relocation tips and advice. Relocate to Sweden
Written by Anne Pihl
An Irish expat in Stockholm. I moved to Sweden in 1998 with my Swedish husband and new-born daughter after living and working in England, Germany and Ireland. With nearly two decades of experience of living, working and raising a family in Sweden, I now help other expats moving to Sweden through my relocation company.
