Buying a home

When you buy a home, you either purchase a housing share (asunto-osake) or real estate (kiinteistö).

Housing shares are homes in either blocks of flats or terraced houses. These houses are owned by housing companies, or housing cooperatives.

When you buy a detached house, you buy real estate. Real estate usually comprises a detached house and the related plot.

When looking for a home, you should prepare for up to several months of searching.

Homes are sold by private persons, real estate agencies and housing constructors. Adverts for available homes can be found online and in newspapers, for example. Once you find a home that interests you, book a time with the seller to go and see it. Sometimes the adverts indicate a time when you can go and see the home. In such cases, you do not need to book a time in advance.

If you are not an EU or EEA citizen and you are buying real estate on its own property, you will usually need a permit to do so. Apply for a permit at the Ministry of Defence.

You do not need a permit if you are buying a housing share. You also do not need a permit if you are buying real estate together with your spouse or common-law spouse who is an EU or EEA citizen.

The website of the Ministry of Defence has additional information on applying for a permits and exceptional cases.

Once you have found a home that you like, gather all of the relevant information on it. In particular, you should find out about the condition of the home.

If you are about to buy a housing share, find out if any renovations are planned in the housing company, and if yes, what the related costs will be. For example, a plumbing renovation can cost the owner-occupier tens of thousands of euros. You can obtain information on forthcoming renovations from the house manager.

Responsibilities of seller and buyer in home sales

The seller of a home is held responsible for any defects in the home for some time after the sale. The seller’s responsibility for defects usually lasts for two years in the case of housing shares. In the case of real estate, the seller’s responsibility lasts for five years.

By law, the seller of a home must notify the buyer of any known defects in the home before the sale. If it is clear that the seller has known about a defect in the home, but has failed to inform the buyer of it, the seller may be obliged to pay compensation to the buyer.

Before you buy a home, inspect it for any defects. You cannot demand compensation for a defect afterwards if

• you should have noticed the defect when inspecting the home, or
• you were aware of the defect before buying the home.

The home may also have hidden defects. This refers to damage of which no one is aware. Hidden defects often include water damage, for example. If the home has a serious defect which, if known, would have affected the sale of the home, the seller is obliged to pay compensation to the buyer.

Most people finance their home purchases with a mortgage (asuntolaina). Anyone can apply for a mortgage from a bank. In order to be granted a mortgage, your income needs to be at a level that allows you to repay the loan without problems. Many banks have mortgage calculators on their website. These allow you to make advance assessments of whether or not you would be able to repay the mortgage.

If you are unsure about whether a bank will grant you a mortgage, it is advisable to visit a bank and negotiate the loan well before buying a home.

Mortgages are repaid, i.e., instalments are paid off, once a month. In addition, you must pay the bank interest (korko) on the loan.

You can ask for offers from several banks and compare them. Different mortgages have different conditions. When you consider different mortgage alternatives, take account of the following:

• What is the interest rate on the mortgage?
• What is the amount that you must pay back every month?
• How many years will it take to pay off your mortgage?

Bear in mind that if interest rates rise, the cost of your mortgage will also increase. In that event, the monthly payment to the bank will increase or the loan period will extend.

Mortgage collaterals and securities

A mortgage usually requires collateral (vakuus). The home that you are buying covers part of the collateral, usually about 70% of the value of the home. In addition to that, you need collateral for the remaining amount of the mortgage. You can arrange collateral by, for example,

• Taking out a state guarantee (valtiontakaus) through your bank. The state guarantee covers up to 20 per cent of the mortgage and not more than 60,000 euros in total.
• Asking one of your relatives or friends to secure the loan. If you are unable to repay the mortgage to the bank, the guarantor will have to pay the amount of mortgage he/she has secured.

However, you will not need guarantors for your loan if you have saved up part of the price of the home in advance, or if you have property that can be accepted as collateral for the mortgage.

Support for buying a home

The state grants interest subsidy (korkotuki) on mortgages. Interest subsidy is granted to young people buying their first home. Read more on the Ministry of the Environment's website.

When buying a home, you also need to pay transfer tax (varainsiirtovero). If you buy a housing share, the transfer tax is 1.5 per cent of the debt-free price of the home. If you buy real estate, the transfer tax is 3 per cent of the debt-free price of the home.

When you are sure that you want and can buy a home, you can make a bid for it. It is advisable to make the bid in writing. The bidding price can be, for example, 5–10 per cent less than the seller is asking for the home. However, the seller may not always be willing to lower the price that he/she has asked for.

A bid is binding. This means that you cannot cancel your bid. If you cancel a bid, you may need to pay a fine or the down payment to the seller. The amount usually equals a few per cent of the price of the home.

If the seller of the home accepts the bid, the agreement is signed in the buyer’s bank. Those present usually include the buyer, the seller and the real estate agent if one was used.

A sales contract is an agreement specifying, for example, the size, price and condition of the home as well as the day on which the buyer gains possession of the home. The sales contract is usually prepared by the bank or the real estate agent. The buyer has the right to familiarise him/herself with the contents of the sales contract before the signing date.

The bank grants a mortgage to the buyer and the mortgage amount is transferred to the seller's bank account.

Down payment

A down payment is an advance payment on the home. The buyer can pay a down payment to the seller at the sale preparation stage. A down payment is usually around 4 percent of the price of the home. If your own savings are insufficient for making the down payment, you can borrow it from the bank as part of your mortgage.

Your cost of living depends on the following:

• the amount of your mortgage
• the size of your home
• the condition of your home
• the location of your home.

Housing share

If you own a housing share, you usually pay

• repayments and interest on your mortgage
• maintenance fee (hoitovastike)
• charge for financial costs (rahoitusvastike) if the housing company holds debt
• water rates and electricity charges
• possible repairs.

Real estate

If you own real estate, you usually pay

• repayments and interest on your mortgage
• real estate tax (kiinteistövero)
• water rates and electricity charges
• heating costs
• waste collection fees
• possible repairs.

In Finland, domestic waste has to be sorted into different waste bins. Read more on the InfoFinland page Waste and recycling.

• The page Rights and obligations of occupants gives important information on your rights and obligations in your home.
• The page Housing in Finland gives information on home prices in Finland.
• The page Safety at home gives information on, for example, fire safety and how to avoid water damage.