Traditionally, home loan collateral has been a family matter. Now, traditions are changing: an increasing number of Finns are choosing professional mortgage guarantees over collateral provided by relatives. More than 100,000 Finnish home dreams have already been realized with the help of a Garantia guarantee. What is behind this popularity?
When searching for a home, spirits are often high—until the conversation with the bank turns to a collateral shortfall. For many first-time homebuyers, their own savings and the property being purchased are not enough to cover the amount of collateral required by the bank. In the past, eyes would turn toward parents at this stage, but today, more and more people are choosing differently.
Six reasons why professional mortgage guarantees are replacing traditional family-provided collateral:
- A desire to handle matters independently Today’s homebuyers value financial independence. Buying your own home is a milestone of self-sufficiency, and many want to acquire their home on their own terms without relying on family assistance.
- Not wanting to cause concern for family members Even with a stable income, many find it difficult to ask their parents to put their own property at risk. A professional guarantor spares family members from stress and keeps financial matters separate from family relationships.
- Long loan periods require long-term commitment Mortgages today are often taken for 25–30 years. If parents act as guarantors, their assets are tied to the child’s loan for a significant amount of time, which can limit their own future plans.
- Partner loans and family dynamics When a home is bought together with a partner, the situation becomes more complex. An external guarantee is a clear and fair solution that does not put either party’s parents in an unequal position.
- Tightening bank regulations and collateral valuation Banking regulations and, consequently, collateral requirements have become stricter. Even if there is a will to help with the home purchase, a parental property may not necessarily be accepted by the bank as additional collateral due to factors like location or condition. A guarantee is often the missing piece that makes a loan decision possible.
- Increased awareness of alternatives In the past, it was believed that a parental guarantee was the only option. Today, homebuyers know how to demand modern solutions from their mortgage banks. When a collateral shortfall can be resolved easily and affordably as part of the loan process, the threshold for using a professional guarantee lowers.
How does a mortgage guarantee work in practice?
The mortgage guarantee provided by Garantia is a solution implemented in cooperation with the bank.
It is effortless: You don’t need separate meetings or complex contracts; everything is handled with Garantia’s partner bank during your loan negotiations. It is an investment in peace of mind and a faster real estate transaction.
Are you planning to buy a home? Check Garantia’s partner banks and learn more about the topic on our website.
Read also: Buying your first home – Tips for loan negotiations
Ville Korte
Head of Sales and Marketing
Garantia
The author has over 20 years of experience in mortgage lending at Garantia and in the banking sector.