How to Furnish a Home When Your Savings Went to the Down Payment

Purchasing your first home is one of life's biggest transactions. Therefore, it's not uncommon for a home buyer to discover after the purchase that all their available funds went towards the apartment down payment, leaving little money for furnishing the home.

Marie* (27) recently purchased her first apartment. "I kept an eye on the real estate market for a long time, but since I wasn't in a hurry to buy, I waited for the right home while also saving for the apartment down payment. When I saw a listing for an apartment a few months ago that seemed just right, I didn't hesitate long - I found my dream apartment and received a positive decision on a home loan. Then came the notary, the keys, the joy, but an empty room," described Marie's experience with the home purchase.

The woman began carefully planning the apartment's furnishing and made a list of necessary items with estimated costs. "Even though the apartment seemed move-in ready at first glance, I didn't have furniture and also wanted to make some changes to the apartment. The list of necessary items turned out to be quite long, and the question arose - how can I furnish the apartment now when all my available funds went towards the down payment? The monthly loan amount is also quite high due to Euribor, and since this is my first real home of my own, the preference is to buy something quality and durable, not something temporary," noted Marie.

Inbank's cards and loans sales manager Evelin Rahkema pointed out that many homeowners underestimate the ancillary costs associated with home purchase. "When taking out a home loan, it's worth accounting for furnishing and essential appliances from the start - because these costs can reach several thousand euros."

"Unfortunately, it's not always possible to obtain a larger loan for a home purchase that would also cover furnishing and renovation costs, and therefore it's not uncommon for a home buyer to have put all their savings towards the apartment down payment," explained Rahkema, adding that often a home loan is also taken out at the maximum amount offered by the bank. Based on LHV data, the average loan amount last year reached nearly 142,000 euros.

"Ideally, it's worth saving early for a so-called soft landing when purchasing a home - for example, a fund set aside alongside the home down payment, which is intended specifically for furnishing, initial notary and contract fees, and if necessary, minor renovations," recommended Rahkema. In reality, this is not possible for many, especially young people, and if savings have already gone towards the home down payment, the next steps should be, according to Inbank's expert, carefully planned.

"You should start by identifying what renovation work or purchases need to be done and find out the specific costs of the work or necessary items. In doing so, it's worth thinking about what absolutely must be done and which expenses can be made in the future or what you could manage without for a while longer. When purchasing furniture and household appliances, it's worth checking whether it's possible to pay for the purchase interest-free in installments, so you can spread out the costs," said Rahkema.

It's worth preferring interest-free payment solutions

She added that household appliances and furniture can be paid for in installments at most larger tech and furniture stores, and the use of "buy now, pay later" solutions is the most popular precisely when purchasing the aforementioned items. Of course, using each payment solution comes with obligations, but for the consumer it is more sensible to use interest-free payment solutions instead of high-interest installment payments. On the other hand, "buy now, pay later" solutions in the context of home furnishing are typically intended for smaller purchases - the average purchase amount with this solution in 2024 remained around 300 euros.

Credit cards are often also used when furnishing a new home. According to Rahkema's assessment, this can however turn out to be expensive. "On one hand, a credit card offers flexibility in paying for purchases, but on the other hand, interest costs can quickly grow when using a credit limit. If there are many necessary things to purchase for the home, or if, for example, a bathroom or kitchen needs renovation, which is a more expensive repair, it would be worth considering a renovation or home small loan as an alternative. In summary, over a longer period, interest on an unsecured targeted loan can be many times lower than the interest cost of purchasing multiple different home or tech products through installment payments or a credit card," pointed out Rahkema.

Marie also noted that purchasing a home doesn't end at the notary's office, but starts there. "And if all your savings went towards the apartment, you need to move forward smartly - step by step and with a budget that allows you to breathe easily in your home without squeezing your finances," said the woman.

*Name changed

Article author: Inbank Estonia