Are you considering buying your first owner-occupied home? Owner-occupied housing has also become even more popular among young adults - every year about 20,000 people buy their first home in Finland. Here's information and tips for buying a first home.
Who counts as a first home buyer?
According to the definition of Finnish law, a first-time home buyer is a person who:
is between 18 and 39 years old
owns at least 50% of the apartment to be purchased
has not previously owned at least a 50% stake in the apartment
buy an apartment for your own use
move into the apartment at least 6 months after the transaction.
Benefits for the first home buyer
No transfer tax
As a first time home buyer, you don’t have to pay transfer tax, so you save money up to thousands of euros. The transfer tax accounts for 2% of the purchase price in housing shares and 4% in real estate.
However, it is the responsibility of the first-time home buyer to submit a transfer tax return to the tax office no later than two months after signing the deed of sale. If you use a real estate agent to help you buy a first home, the real estate agent will handle all the necessary notifications for you.
Higher mortgage interest rate reduction
Mortgage interest is tax deductible. The amount of the interest deduction varies annually according to the amount set by the Tax Administration. You can check the amount of the deduction from the Finnish Tax Administration website.
Deductible interest is primarily deducted from your capital income. If you do not have capital income or the amount is less than the amount of interest on a deductible mortgage, a so-called deficit.
In 2020, the couple will pay 1,500 euros in interest on the first home loan. Interest can be reduced by 15%, ie 225 euros. There is no capital income, so interest is deducted as a deficit credit from earned income. When the amount of the deficit compensation is 32%, the deficit compensation received by the couple is 216 euros.
Planning to buy a first home
Determine the budget and criteria for the apartment
When getting a suitable first home, it is a good idea to start with the basics. Determine what the apartment can cost up to and list the main criteria for the apartment (e.g. location, size of the apartment, number of rooms).
Find apartments that suit your budget and wishes in our housing search or in Oikotie.fi and Etuovi.com services, for example. You can also activate the RE / MAX buy alert, which will send you an e-mail as soon as suitable apartments are for sale. This saves you time and effort.
Apply for a loan promise from your bank
It makes sense to take care of the financing of the apartment even before visiting the apartment screens. This way, when the home of your dreams hits, you can make an offer for the apartment, even immediately on the apartment screen. So make an appointment for a loan negotiation with your bank well in advance and ask the bank for a loan promise. This will allow you to make an offer without worries when a suitable apartment is found.
An ASP loan for first-time home buyers is also one way to save in advance when it comes to buying a home. The ASP loan is aimed at first-time home buyers between the ages of 15 and 39. The benefits of an ASP loan include a free state guarantee on the loan and an interest subsidy paid by the state over a period of 10 years.
Collateral for the purchase of a first home
The apartment to be purchased usually acts as collateral for the mortgage. The collateral value of an apartment varies from bank to bank, but most typically it is 70–75% of the value of the apartment. For the remaining 25-30%, you must provide an additional guarantee, which can be, for example, a bank deposit, a personal guarantee or, for example, a paid credit guarantee provided by a bank.
In ASP loans, the state guarantee included in the ASP loan is usually sufficient as additional collateral for the mortgage.
Make a home purchase offer carefully
An offer to buy a home should always be made in writing. The offer to buy an apartment must state, for example
- personal information of the seller and the buyer
- the subject of the transaction
- purchase price
- transfer of ownership and control
- trading date
- validity of the offer
- other terms of the transaction, such as a down payment.
The offer to buy a home is signed by both parties to the transaction, ie the buyer and the seller. Care should be taken when preparing a tender offer so that the offer is prepared correctly. You can ask a real estate agent for help in preparing a takeover bid.
Be prepared for a down payment
When buying an apartment, it is also good to be prepared to pay a down payment. The down payment acts as a promise to buy a home in the home trade. As the buyer of the home, you pay a down payment to the seller of the home, and if you withdraw from the shops as a buyer of your own free will, the down payment remains with the seller of the home. If the seller of the apartment cancels the transactions, he is obliged to return the deposit back to the buyer of the apartment.
The down payment is a maximum of 4% of the transaction amount and is counted as part of the total transaction amount. That is, at the time of the transaction, the buyer of the apartment pays the purchase amount less the down payment.
The amount of the down payment and the conditions for its payment are specified in the written offer to purchase the home.
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