• Sweden's news in English
 
app_header_v3
The Local List
Five questions before buying a Sweden home
Here's what you need to know before buying a home in Sweden. Photo: Fredrik Sandberg/SCANPIX

Five questions before buying a Sweden home

The Local · 6 Oct 2015, 08:03

Published: 23 Apr 2015 15:42 GMT+02:00
Updated: 06 Oct 2015 08:03 GMT+02:00

1. Can I afford a home in Sweden?

With its chilly winter climate and famously expensive restaurants, Sweden might not seem like the obvious place to move to or buy a holiday home in. But Johan Vesterberg, head of press for Sweden's largest estate agent, Fastighetsbyrån recently told The Local that with just a €100,000 budget (£72,000, $106,009, 933,210 kronor) "you can find a decent property in most parts of the country, it will just be a question of size", especially if you stay away from the coast and avoid the nation's major cities. And with record-low interest rates, now is the time to strike.

While in many other countries the rules of borrowing are quite simple (letting you borrow, say, up to five times your salary), in Sweden it's a bit more complicated with many factors involved.

Here's a quick example though, according to SBAB's (the nation's state-owned mortgage broker) mortgage calculator. Say you wanted to buy a 50-130 square metre house in Stockholm municipality and were able to pay 10,000 kronor towards it a month (including paying off your mortgage, housing association fees and utilities costs), you would be able to borrow 1,812,254 kronor (85 percent of the property's value) to buy a home for approximately 2,132,064 kronor, paying a cash deposit for the remaining 15 percent.

However, it is not an exact science and you should always discuss potential property purchases with your bank manager or lawyer first.

READ MORE: Sweden's most beautiful property bargain spots


Swedish dream homes are cheaper than you think. Photo: Johan Willner/imagebank.sweden.se

2. How does the viewing process work?

If you're looking for a home in the Gothenburg, Malmö or Stockholm areas, make sure you approach estate agents as soon as you're thinking of buying. Rising prices and high demand for apartments in Sweden's three largest cities have led to a growing number of properties being sold without public viewings, according to a survey carried out by SBAB.

The shift brings Sweden closer to the approach favoured in other European countries such as the UK, where customers in property hotspots are often granted private viewings. However, the most common approach in Sweden is still for potential customers to attend an open house viewing before they submit their bids for the property.

3. How do I win the bidding war?

Via text message. Yes, you read that right. In tech-savvy Sweden, the bidding process is often done by sending the amount you're willing to pay for the property in an SMS to the property agent until your fellow prospective buyers back out and a price is agreed on.

In many parts of the world, the seller sets the price and then negotiates with potential buyers, with the final price landing somewhere in the middle. In Sweden, buyers try to outbid each other – often resulting in a windfall for the seller. Make sure you meet with your bank beforehand to agree on how high you are able to go as there are no legal regulations on these bidding wars, which tend to push costs well above the asking price – especially in attractive city regions. Tor Borg, chief economist at SBAB told The Local that his main advice for customers was to "keep your head calm and don't get engaged in offering a price that you cannot afford".

READ MORE: One in five flats sold before viewing starts

The whole process is usually lightning fast. Bidding starts just days after the public viewing and, if the final price is satisfactory to the seller, the deal can be closed within the week. Before you know it, you're a home owner and a member of a 'bostadsrättsförening', a Swedish housing association.

4. What exactly does a housing association do?

When you buy a home in Sweden, especially if it is an apartment, you are likely to become a member of the tenant-owner association which formally owns the building. You have to pay a monthly fee to the association, which can have a huge effect on your living costs, so don't forget to check how much it is before you buy.

The housing association manages things like maintenance, the building's finances and other issues that might arise. It appoints a board of directors to represent the organization at the annual meeting of members, which are notorious for their wild debates on everything from large building renovations to finding out who forgot to remove the fluff from the dryer in the common laundry room.

Story continues below…


The process from finding a home to buying it is lightning fast. Photo: Pontus Lundahl/SCANPIX

5. How do I pay off my mortgage?

In Sweden, house buyers usually need to be able to pay at least 15 percent of the cost up front, with mortgage providers offering a loan of up to 85 percent of the value of the property. You can choose how fast you would like to pay off your loan. However – unlike in most other parts of the world – home buyers in Sweden are allowed to purchase a house and never actually repay the full mortgage.

Mortgages account for 95 percent of Swedes' total debt, and borrowers currently hold a mortgage debt 3.7 times higher than their annual income. Choosing not to 'amortize', as the concept of repaying your loan in increments is known, has been criticized for fanning the flames on an already overheated property market. There are concerns that Swedes are accumulating debts they can never repay and in fact, a study by Sweden's central bank in 2014 suggested that most Swedes with mortgages would die before repaying their debts.

In a move designed to stabilize the country's economy and prevent the housing bubble from bursting, financial watchdog Finansinspektionen (FI) – which sets the rules and regulations followed by mortgage brokers in Sweden – put forward a new strategy in 2014 to make it obligatory for all house buyers to repay their mortgages in part. In April 2015, however, it announced after receiving legal advice that it would not go ahead with the proposal.

READ MORE: Sweden scraps new mortgage rules

For more news from Sweden, join us on Facebook and Twitter.

The Local (news@thelocal.se)

Today's headlines
Where to see the Northern Lights in Sweden
The Northern Lights pictured in Sweden on Wednesday night. Photo: Norrsken Sverige

An unusually high level of solar activity means the spectacle could be visible from rare spots in the country.

Swedish police 'in crisis' says union head
A file photo of Swedish police officers. Photo: Tomas Oneborg/SvD/TT

The creation of a new merged national police authority in Sweden has not gone well, according to the Swedish Police Union.

Nobel Prizes 2016
Nobel Literature Prize announcement delayed
Haruki Murakami (pictured) is one of the bookmakers' favourites. Photo: Bernat Armangue/AP/TT

The delay is due to 'arithmetic', an academician said.

Horny elk hold up Swedish hunt
One of the randy animals in question. Photo: Mikael Fritzon/TT

The giant things just can't contain themselves.

Sweden to ban masks but not burqas at football matches
A masked supporter at a Stockholm derby football match last year. Photo: Janerik Henriksson/TT

The ban is designed to curb violence at sporting events in Sweden, but it must also follow conventions on religious freedom.

Video
Heckler humbles Swedish golf champion with perfect putt
Henrik Stenson met his match in the final practice for the Ryder Cup. Photo: Charlie Riedel/AP/TT

Well that wasn't supposed to happen...

Presented by Invest Stockholm
Stockholm: creating solutions to global challenges

It’s no secret that Stockholm is serious about sustainability. We took a look at how the city's emerging startups are tackling global challenges, making the world a better place.

Warm weather melts H&M profits
An H&M store in central Stockholm. Photo: Maja Suslin/TT

A warm autumn may be good news for Swedes, but it was bad news for Sweden's biggest clothing brand.

Rail delays after heavy winds batter Sweden
The weather is expected to clear up. Photo: Anders Wiklund/TT

Commuters were advised to take it easy in traffic on Friday, after harsh winds toppled trees across roads and railways across Sweden.

Homes
In pictures: Eight traditional Swedish tiled stoves
A tiled stove. Photo: Wrede Fastighetsmäkleri

The traditional Swedish masonry stove (kakelugn) is still a popular feature in many homes today. Houzz.se's Amanda Strömberg has found out more.

Sponsored Article
‘I view the world in a different way now’
National
Here's how much Sweden's highest-earning authors make
Sponsored Article
Top 7 tips to help you learn Swedish
National
Sweden bad, Norway good, Trump better? I'm confused
National
Where to see the Northern Lights in Sweden
Blog updates

27 September

Cutting your nose …. (The Diplomatic Dispatch) »

"Last week, Jeremy Browne, the Special Representative for the City of London, visited Sweden. Jeremy was…" READ »

 

7 September

Svensk or svenska? (The Swedish Teacher) »

"Hejsan! My inbox is full of questions :-). Here’s one about when to use “svensk” and…" READ »

 
 
 
Sponsored Article
Expat finances in Sweden: the Common Reporting Standard
Gallery
People-watching: September 28th
Sponsored Article
Let's Talk: a personal Swedish language tutor in your pocket
National
Aliens' sex lives? Why Swedes want Nasa to send a condom into space
Analysis & Opinion
'If Sweden really wants startups, drop the red tape on migration'
Gallery
Property of the week: Gotland
Sponsored Article
Retiring abroad: ensuring your health is covered
National
Trump an 'embarrassment' Springsteen tells Sweden
Sponsored Article
'Creating a sense of home': Collective living in Stockholm
Gallery
People-watching: September 23rd-25th
Politics
Russian Sweden Democrat aide resigns over suspect deal
Sponsored Article
Life in Jordan: 'Undiscovered treasure'
National
Muslim teacher leaves job after not shaking male colleague's hand
Sponsored Article
Gran Canaria: 'So much more than beaches'
Travel
Why we adore autumn in Sweden
Gallery
People-watching: September 21st
Sponsored Article
Why Jordan is the ‘Different’ East
National
Stockholmers hunt killer badger after attack on neighbourhood hipster cat
Sponsored Article
How to vote absentee from abroad in the US elections
The Local Voices
Why this Russian developer is committed to helping refugees - with tech
Sponsored Article
Why Jordan is the ‘Different’ East
National
Six key points in Sweden's budget plan
Sponsored Article
Retiring abroad: ensuring your health is covered
The Local Voices
How a Swedish name finally made recruiters notice this Iranian's CV
Sponsored Article
'There was no future for me in Turkey'
Gallery
Property of the week: Luleå
Sponsored Article
7 reasons you should join Sweden’s ’a-kassa’
Gallery
People-watching: September 16th-18th
Sponsored Article
‘Extremism can't be defeated on the battlefield alone’
Culture
Why Swedish TV has given these kids' trucks a sex swap
Sponsored Article
Stockholm: creating solutions to global challenges
National
TIMELINE: Everything you need to know about the Julian Assange case
Gallery
People-watching: September 14th
Politics
Why Sweden is putting troops on holiday dream island Gotland
The Local Voices
'What I mean when I say: I came here to blow myself up'
Society
VIDEO: Are Swedes that unfriendly?
The Local Voices
'Whenever I apply for jobs I’m treated like an unwanted stranger'
The Local Voices
Is Swedish bosses' ignorance keeping refugees out of jobs?
3,006
jobs available