Mortgage lending in other countries is becoming more and more popular among our compatriots. And this is not surprising, because the acquisition of real estate abroad is a reliable investment of funds. Mortgages in Finland are among the most demanded transactions of this type. And this is despite the fact that the conditions for providing long-term housing loans for non-residents are not as favorable as for borrowers who are citizens of a given country. Let's try to figure out why Russians prefer cooperation with Finnish creditors.
Features of buying real estate in Finland
Buying real estate in Finland has its own characteristics, both in terms of registration of the transaction and in terms of what the owner of the purchased property will ultimately receive. Let's consider them in more detail:
- the speed of processing a loan - a foreigner can receive funds in just a few days;
- the maintenance of real estate costs a small amount. For comparison: the size of utility bills for a house with an area of 100 m2 in the country of Suomi is less than for a 1-room apartment of a smaller footage in Moscow;
- a mortgage loan in Finland, received for the purchase of a house by the lake, allows the borrower to become the owner of the coastline, which in turn makes it possible to fully use the water area of the reservoir;
- the acquired housing is located in an ecologically clean region. Finland is the "greenest" state in Europe, the country of a thousand lakes;
- a mortgage in Finland for Russians allows our compatriots to move to a state with the safest residence. According to the world ranking, in terms of the crime situation, the country of Suomi is perhaps the safest in Europe.
Real estate options for purchase
In the Finnish media, you can find information that local parliamentarians propose to impose restrictions on the purchase of real estate by Russians in the border area. However, the matter does not go further than talk - no prohibitions were ever adopted.
Mortgage lending in Finland allows a foreigner to obtain ownership of an apartment, a private house, a commercial object, real estate for investment, a land plot. Let us dwell in more detail on two types of real estate.
The owners of apartment buildings in the country of Suomi are the so-called ZhAO - housing joint stock companies. The adjacent territory is also in their ownership or they use the land on a leasehold basis. A specific number of shares is assigned to any apartment in accordance with its value. Based on this, taking a loan for real estate in Finland and buying such housing for borrowed funds, a foreigner acquires the status of a member of the ZAO. Owning shares is de jure equivalent to ownership, and this, in turn, allows the owner to dispose of the apartment at his own discretion.
In recent years, investors from all over the world have shown an increased interest in acquiring real estate in Finland. There are several reasons for this:
- legal security and good return on assets;
- reasonable by European standards prices;
- high economic and political stability of the country of Suomi.
Against this background, mortgages in Helsinki are especially advantageous. In this case, we are talking about subletting the acquired housing. Judge for yourself: the cost of renting a 2-room apartment in the center of the Finnish capital is € 1,850 / month. Arithmetic calculations show that interest in this amount is payable on a mortgage loan of € 277.5 thousand even at the maximum 8% per annum - it is for this money that you can buy a decent 2-room one-bedroom apartment in the Finnish capital.
Conditions and requirements for borrowers
Mortgages in Finland for Russians are provided on slightly different conditions than for citizens of this country:
- the term of the long-term housing loan agreement is not more than 10 years;
- the maximum loan amount is 50 percent of the market value of the property; very rarely - 75%;
- the initial payment is 50% of the loan amount;
- monthly payments do not exceed 30% of the client's income for this period of time.
Immediately after completing the purchase of a home using borrowed funds, the borrower must formalize the ownership and transfer this property as a pledge to the bank.
It should be noted that financial institutions put forward stricter requirements for non-residents than those that apply to Finnish citizens.
In particular, foreign borrowers must meet the following requirements:
- at the time of the transaction, the minimum age of the borrower must be between 18 and 25 years old (depending on the bank);
- the maximum age of the client at the time of full repayment of the mortgage is 65 years;
- unblemished credit history;
- the presence of a permanent residence permit.
Mortgage interest rates
Loans for the purchase of real estate in the country of Suomi have a fixed and floating rate. Moreover, in most banks, their parameters are almost identical. So, the interest on a mortgage in Finland for a foreigner cannot be less than 4.5. The upper limit of this indicator is capped at 8.5%.
At the same time, potential clients are advised to insist on obtaining a long-term loan at a floating interest rate. The reason for this is the following trend: over the past few years, rates have been steadily decreasing, which means that the bank can reduce the value of this parameter in the current lending agreement. However, it is possible that the interest rate on mortgages in Finland in 2021 may increase. Therefore, it is worth making sure of your ability to pay higher monthly installments.
Let's give an example of calculating mortgage interest. To do this, we will use the following formula:
PI = (OZ × (GS / 100) × KDMD) / KDG, in which:
PI - mortgage interest, the required parameter;
ОЗ - total debt in the billing month;
ГС - annual rate;
KDMD - the number of days between the dates of the previous and current contributions;
KDG - the number of days in a year.
Let's calculate the size of the monthly payment with the following values of the components of the above formula: OZ = € 2 million, GS = 6%, KDMD = 30, KDG = 365.
PI = (2,000,000 × (6/100) × 30/365 = € 9863.01
How to get a mortgage loan
To take out a mortgage in Finland, a foreigner needs to do a number of the following:
- Reserve your property. To this end:
- check the object you like. This means an assessment of the state of engineering communications, as well as the presence of encumbrances on housing;
- open a current account with a Finnish bank;
- to draw up a preliminary sales contract (hereinafter referred to as DCT) and pay a deposit.
- Conclude a PrEP. This document indicates the value of the property and the date of its receipt by the buyer for use.
- Make payment for the purchase.
- Register a new home owner. The buyer registers the property in his name at the city court. If the apartment was purchased in a housing estate, the new owner informs about the transaction so that it is included in the register of shares of this housing organization.
A package of documents for obtaining a mortgage
In order to buy real estate in Finland on a mortgage, a Russian needs to submit the following documents to the bank:
- current international passport;
- a document capable of confirming the ownership of real estate in the territory of the Russian Federation;
- papers from banks, proving that previously issued loans were repaid on time;
- preliminary PrEP;
- 2NDFL certificate showing income for the last 2 years.
All documents must be notarized and translated into Finnish.
Expenses and taxes when buying real estate on a mortgage
Any bank in the country of Suomi, when applying for a long-term home loan, will require an appraisal of real estate. The cost of such a service is about € 250. Finnish financial institutions also practice charging a commission fee for issuing a mortgage, which is usually 0.4% of the transaction amount. The total cost of notarization and translation of papers does not exceed € 500-700. Registration of real estate (but not an apartment - housing of this type in Finland refers to movable property) in your name will cost € 119.
As for insurance, this procedure should be carried out without fail only in relation to the acquired real estate.
For example, a policy covering the risks of damage to a detached house of 100 m2 from a fire or hurricane costs about € 300 per year. The actual cost of the policy differs from company to company. But the mortgage borrower can insure his life and health at his own discretion.
At the same time, one should not forget about the existence in the Russian Federation of a fiscal fee from material benefits obtained from savings on the payment of interest on loans issued in foreign banks. The personal income tax rate in this case is 35% of the financial benefit. But this tax is levied only on those Russians who stay abroad for no more than 183 days a year.
Leading banks
Many banks in Finland provide mortgage loans to Russians. Moreover, money is lent to foreigners not only by financial institutions "registered" in this country, but also by branches of foreign credit organizations. The former include:
- Pulkkilan Osuuspankki;
- Lappo Andelsbank;
- OP-Pohjola;
- Helsinki OP Bank;
- Aktia Savings Bank;
- Bank of Finland and others.
Branches of such foreign banks have been opened in Finland:
- Danske Bank;
- Citibank;
- Carnegie Investment Bank;
- Nordea and a number of other financial institutions.
Domestic banks do not work in this country.
Mortgage loan repayment
Mortgage payments are made, as a rule, once a month or quarter from a current account opened with the same credit institution that provided the loan. The amount specified in the agreement is simply debited from this account.
It should be borne in mind that early repayment of a mortgage loan is allowed only if it is spelled out in the loan agreement. Otherwise, penalties are imposed on the borrower.
Finally
Russians can become owners of real estate in Finland by taking out a mortgage in one of the banks operating in this country. At the expense of borrowed funds, it is allowed to purchase an apartment, a private house, commercial real estate and a land plot. At the same time, the conditions for long-term lending for foreigners are more stringent than those that apply to Finnish citizens.
