Home Buyer's Guide: How to Make Smart Choices and Find the Right Mortgage?

Buying a home is one of the most important decisions in a person's life, affecting both the quality of everyday life and financial situation. Anne Pärgma, head of home loan products at Swedbank, shares advice on how to make informed choices when purchasing a home and taking out a loan.

Choosing between a new or older apartment

When searching for a home, the question often arises: should you prefer a new or older apartment? Both options have their advantages and disadvantages. New apartments offer modern solutions and lower utility costs thanks to energy efficiency, but may come with additional costs for contemporary features such as smart home solutions. New apartments also often have better spatial solutions, taking into account today's needs. However, new apartments may be located in developing areas where infrastructure has not yet fully developed or you may need to be prepared early for neighboring buildings still being constructed.

Older apartments are often located in established neighborhoods with existing infrastructure, parks, schools, and shops. Their purchase price may be more affordable, but you should account for potential renovation costs and higher utility bills. When purchasing older property, however, it is possible to request a longer-term overview of costs for the property and characteristics of future neighbors. When making a decision, you should evaluate both financial capabilities and personal preferences.

Applying for a home loan and its terms

Banks offer various options for applying for a home loan, including through internet banking, which makes the process more convenient and faster. When applying for a loan, it is important to evaluate your financial capability and to do so along with the new loan obligation. Banks' websites typically also have a home loan calculator that helps calculate monthly payments and interest costs, allowing you to make more informed decisions.

When repaying a loan, an annuity payment schedule is often used, where the monthly payment is the same throughout the entire loan period, depending only on changes in the interest rate. Before signing a loan agreement, it is advisable to familiarize yourself with different loan offers and choose the solution that works best for you. It is important here to pay attention not only to the offered margin, but also to other conditions. Can you change the payment date? Is this change subject to a service fee? What are the options for taking payment breaks? How does communication with the bank work, and how quickly will my questions be answered? How can I get a current overview of my loan? What are the conditions for early repayment of the loan, etc.

Securing a loan with real estate

Taking out a loan secured by real estate is a serious decision with long-term consequences, and therefore requires careful consideration. It is important to understand that if the loan obligation is not fulfilled, the property provided as loan security must be sold. Therefore, you should first ensure that the obligation you are taking on is manageable in the long term, and if you experience difficulties with loan repayment, notify the bank immediately. It is especially important to consider securing someone else's loan with your real estate, as the owner may not be aware early on of payment arrears that have occurred.

Buying a home and taking out a home loan are important steps that affect your future. It is important to make informed decisions, carefully weighing the various options and assessing your financial capacity. Anne Pärgma, head of home loan products at Swedbank, recommends always thoroughly analyzing the advantages and disadvantages of both new and older apartments and choosing a solution that best meets your needs and possibilities.