Buying a Home – A Short Guide and Checklist for Buyers

Buying a home is usually the single largest investment we do during our lifetime. We listed ten things you should consider before buying a home.

Familiarize Yourself With the Price Level in the General Area

Information about home prices can be found in the database of the Ministry of Environment (in Finnish and Swedish) or under Blok’s neighbourhood comparison. Also check Oikotie and Etuovi to find out the sale prices of comparable apartments in the area.

Obtain a Mortgage Promise

Speed is everything – especially if the apartment is located in a hot part of the city. If you need a mortgage for your purchase it is recommended you ask your bank for a mortgage promise. Having the necessary financing in place enables you to make an offers quickly if necessary. Mortgage promises can be obtained in your internet bank, however, ask for competing offers at other banks and remember to negotiate the terms and margins for your loan. A loan-offer obtained using your internet bank can usually be improved if you actually visit the bank for a chat and come prepared with competing offers.

Keep an Open Mind

Don't mind bad photos. Many sellers and brokers don’t invest in the visual presentation even though it would greatly help the sale of the property. If you see something you might like go and have a closer look on-site. Many buyers do not bother showing up if the photos are low-quality or missing entirely. For an active buyer this is an opportunity to find real treasures.

Ask for the Paperwork Related to the Apartment and Study It in Advance

All the important details regarding the apartment such as maintenance fees, future renovations and the financial state of the housing company can be found in the building manager’s certificate. By familiarizing yourself with these aspects you can avoid properties that are beyond your price range. Sometimes prices might seem tantalizingly low, however, that might be a sign of expensive renovations to come.

Find out the Financial Soundness of the Housing Company

The housing company’s income statement plainly states where the company gets its revenue and how it is spent. Housing companies own adjacent commercial spaces are usually to be preferred as it means the company has an additional source of income that might lower the maintenance fee. The balance sheet displays loans and assets and provides you with an overview of the liquidity of the company. In case of something unexpected, would the housing company survive without external funding?

Thinking About Remodelling?

In case you are planning to remodel the apartment make sure to check with the housing manager which walls can be removed and which changes can be made before making an offer. This way you'll avoid unfortunate surprises.

Conditional Offer

Are you worried about being able to sell you current home? Did you know you can put down the sale of your current home as a condition for an offer. This was you avoid getting stuck with two apartments. Other common conditions are the condition of obtaining a mortgage or and the condition of performing a moisture tests.

Selling Price vs Debt-Free Price

The terminology used in the real estate industry might sometimes come across as vague, especially regarding prices. The so-called debt-free price is the price displayed in listings. The debt-free price consists of the selling price (the amount payed to the seller) and the apartment’s outstanding share of the housing company loan. As the amount of debt varies from one apartment to another which is why the debt-free price is a good way of comparing real prices of apartments.

Transfer Tax

Keep in mind that you have to pay transfer tax when buying an apartment. The tax-rate depends on whether you are buying real estate (e.g. single family homes) or a share in a housing company. Transfer tax on real estate is 4 % whereas the rate on housing company shares is 2 % (both are calculated using the debt-free price). However, if this is your first home purchase or you haven’t previously owned more than 50 % of any dwelling unit or house (summer cottages, for example, are excluded) you are exempted from paying transfer tax. Read more about the transfer tax on the Tax Administration website.

The Seller Has a Two-Year Responsibility

The seller is responsible for any defects found in the apartment for two years after the sale even if the defect was unknown to the seller when the apartment was bought. The seller is also held responsible if an advertised quality in the apartment turn out false, for example if a parquet floor is discovered to be laminate. If you find any hidden defects or other issues with your apartment please make a complaint to your broker immediately.

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