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PROPERTY

What extra costs should you budget for when you buy a house in Sweden?

Before buying the Swedish house of your dreams, make sure unexpected extra fees don't become a nightmare.

What extra costs should you budget for when you buy a house in Sweden?
Ready to take the leap and buy a home in Sweden? Photo: Janerik Henriksson/TT

When you buy the property, it’s not just your mortgage and deposit you’ll need to think about, and even if you’ve previously bought an apartment in Sweden or a property elsewhere, the fees for a house are quite different.

The first cost is something you need to pay for before signing contracts.

If buying a freehold, you have a legal responsibility to carry out a thorough inspection of the property, and that often means paying for a survey.

You cannot claim for compensation from the seller for errors that should have been discovered through an inspection, and that applies whether or not you get a professional survey, but the advantages are that a professional should know what to look for and if they miss something that later causes you a problem, you should be able to apply for compensation directly from them.

PROPERTY IN SWEDEN:

The main type of survey is a transfer survey (överlåtelsebesiktning) – prices vary, but you can generally expect to pay at least 7,000-16,000 kronor. This will depend on the size of the property, and may increase if you need extra surveys, for example if the property has its own water supply.

Two of the other big costs are title deeds and mortgage deeds.

A title deed (lagfart) is proof of ownership; it’s compulsory to register your ownership of the property with the Swedish Land Registry. You don’t have to pay this straight away, but the deadline is three months after completion of the purchase. This also includes stamp duty, at 1.5 percent of the purchase price, plus a fee of around 825 kronor for the deeds (correct as of 2020).

A mortgage deed (pantbrev) is the cost of transferring the mortgage deeds for the property; these are the bank’s proof of security. If you’re taking out a mortgage, you either need to transfer the existing deeds or get new ones issued (if you need to borrow more money than is in the current deeds). The cost of this is 2 percent of the mortgage deed plus a fee of 375 kronor, as of 2020.

Both lagfart and pantbrev are costs you can apply for a tax deduction for, which means that when you eventually come to sell the house, you can reduce the amount of tax you pay on the profit because you’ve already paid these costs.

As well as these fees at the point of purchase, you will of course need to budget for future monthly costs.

As a property owner, you’re responsible for paying fees like electricity, heating, water, sewage/waste collection and internet bills, as well as any repairs or maintenance costs, and it’s a good idea to research them as the prices may be different from what you’re used to. You’ll be given an estimated ‘operating cost’ by the seller or estate agent, but it’s worth doing your own research because your usage might be different and there’s no legal obligation on the seller for this figure to be accurate.

And you’ll pay an annual property tax (fastighetsavgift) which is based on the property’s market value up to a maximum ceiling – although some new properties are exempt.

A final cost to look out for is ground rent (tomträttsavgäld), which is an annual rent you have to pay if the municipality or state owns the ground the property is built on. 

Note: these tips are for people buying a freehold, not a house or apartment that is part of a bostadsrättsförening. This applies most often to detached or semi-detached homes. If you’re looking to buy a property that’s part of a bostadsrättsförening (tenant-owner cooperative), you’ll find information on the relevant fees here:

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PROPERTY

MORTGAGE Q&A: Your questions on Swedish interest rates answered

In the second part of our property Q&A, we answer reader questions on when interest rates will start going down, as well as how and when to negotiate rates with your bank.

MORTGAGE Q&A: Your questions on Swedish interest rates answered

In a post on Facebook, we asked The Local’s readers to submit their questions on property. Here’s the first part of that article, where we discuss questions like whether it’s better to buy or rent, whether to buy a house or apartment, and if house prices have stabilised.

In this article, we answer questions to do with interest rates and mortgages.

When will interest rates start going down?

Sweden’s interest rates currently stand at 2.5 percent, with the next key interest rate meeting (where the Riksbank will decide whether to alter interest rates or not) scheduled for February 9th. 

These meetings take place roughly two months, with further meetings scheduled for April 26th, June 29th, September 20th and November 22nd this year.

Most analysts expect the bank to increase the policy rate by 0.50 points at this meeting. Handelsbanken’s chief economist Christina Nyman told the TT newswire that she expects another rate increase in April to 3.25 percent, after which rates will stay at that level for some time.

Nordea’s economists have the same prognosis, while experts at Swedbank expect a further increase in June to a peak of 3.5 percent.

Danske Bank predicts that the Riksbank will raise rates by 0.5 percentage points in February to 3 percent total, with a possible second hike of 0.25 percent predicted for April, depending on inflation in the first quarter of 2023.

In terms of drops in the interest rate, it predicts that rates will remain high throughout 2023, with the Riksbank waiting until 2024 to lower the rate by a total of 1 percentage point.

What is the new normal for interest rates going to be?

As above, we can expect rates to rise and remain high throughout this year, dropping to around 2.25 percent in 2024, if Danske Bank’s predictions are correct.

This is slightly lower than the current level of 2.5 percent, so it looks like we can expect things to get worse for at least a year, after which rates will be slightly lower than they are currently.

Essentially, don’t expect rates to drop to the same low or even negative levels they have been in recent years any time soon.

How do you negotiate interest rates with the bank?

The first time you negotiate your interest rates will be when you buy your property. You might be keen to get a deal sorted as quickly as possible so you know your purchase has been finalised, but negotiating a good rate is important as it can literally save you thousands – or even tens of thousands – of kronor over the course of a year.

Firstly, do your research. This includes using price comparison tools such as Compricer or Konsumenternas, but also looking at individual websites of mortgage providers and comparing interest rates there.

Make sure you look at both listräntor (the advertised interest rates) and snitträntor (the average rates people were actually given in recent months) to get an idea of what you should be paying, and remember, the listränta is a starting point for negotiations rather than a fixed offer.

Check if your bank offers any discounts for moving your pension over or opening an account with them, or rewards for energy-efficient properties, for example.

Many banks have a calculator on their website allowing you to use a sliding scale to alter the size of your deposit and see how that affects your interest rate, so make sure to have a look to see if you can get any discounts there, too. Some banks will offer you a discount if your belåningsgrad (the size of your loan compared to your deposit) is lower, so consider buying a slightly cheaper property or putting in more cash, if you can.

Here’s our article on how to get the best rate on your mortgage for more advice.

When should I renegotiate?

In general, you should consider renegotiating your interest rate when your fixed-term rate expires (variable rates are technically fixed for three months, so this applies to all types of mortgage). You may be able to get a better deal if you qualify for any new discounts or if your circumstances have changed for any other reason, such as if you’ve paid off enough of your loan that your belåningsgrad is significantly lower than when you applied.

If you renegotiate your interest rate before your fixed-term rate has expired, you will be charged ränteskillnadsersättning (literally: “interest difference compensation”) to compensate the bank for the loss of income between the point at which you renegotiate your loan and the point your current rate was due to expire, so you may not be any better off financially than if you’d just kept paying the same rate of interest.

If you have a variable rate, however, you won’t be charged ränteskillnadsersättning for renegotiating your loan before the date your current interest rate is due to expire.

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