Buying a first home – How to choose your dream home and secure financing with Garantia’s mortgage guarantee

Buying your first home is one of the biggest and most exciting steps in life. In addition to dreams, it often raises many questions, especially for first-time buyers. How do I know how to choose the right home, and how do I get the financing in place? With tips from Garantia, a company specializing in mortgage guarantees, you can get started and find your dream home more easily.

Getting your budget and financing in order – a realistic starting point for your home search

Before you dive into the housing market, it’s important to determine a home price that suits your finances. Clarify at least the following:

Evaluate your finances carefully: Calculate what the total monthly loan payment and housing company fee might be. Also, estimate how much you have in personal savings for buying a home.
Familiarize yourself with Garantia’s mortgage guarantee: If your own savings seem small, Garantia’s mortgage guarantee may be the solution. It can reduce the required down payment, allowing you to get your own home more easily. You can find out the price and suitability of Garantia’s mortgage guarantee for your project from our partner banks. Check Garantia’s partner banks at asuntolainatakaus.fi/en/
Remember one-off costs: There are always one-off costs associated with buying a home, such as transfer tax. For housing corporations, such as apartment buildings, it is 1.5% and for properties, such as detached houses, it is 3.0% of the debt-free price of the home. First-time buyers also have to pay transfer tax.
Get a loan promise: Book an appointment for a bank loan negotiation and apply for a preliminary loan promise. This gives you a realistic idea of what price range of homes you should be looking at.

What kind of home is right for you?

Once you have your budget, it’s time to think about what kind of home best meets your needs and wishes.

Make a list of wishes and needs: Consider the size of the apartment, number of rooms, a balcony or a private yard, and for example, the need for a laundry room or an elevator. These are important criteria in choosing a home. Visualizing your needs helps when you think about how long you plan to live in the home. Is it a studio for your student years, or do you dream of getting a dog or starting a family in the next couple of years?
Go to viewings: By actively visiting home showings, you get the best feel for different residential areas and their offerings.

Location, location, location – consider carefully

The location of the home has a huge impact on the functionality of daily life and even the future value of the home.

Transport connections: How do you get to work or handle other daily errands, by public transport or your own car?
Services: Are shops, daycares, and schools within walking distance? Which services are most important to you in the coming years?
Development of the residential area: Is the home located in a growing area? In areas with population growth, the value of homes often develops more positively, and the range of services improves.

Check the condition of the home and housing company

The condition of the home and the situation of the housing company significantly affect living costs and the value of the home.

Housing company’s repair needs: Are there any major renovations coming to the housing company? A home that seems affordable can turn out to be surprisingly expensive if future renovations have not been taken into account.
Property Manager’s Certificate: This document gives a comprehensive overview of the housing company’s situation and completed basic renovations. Read it carefully!
Additional information about the housing company: You can inquire for more detailed information about the housing company from, for example, the chairman of the housing company’s board or the property manager.
Shareholder structure: Especially in smaller housing companies, it is good to ensure that ownership is distributed. This way you avoid a situation where one major owner could make decisions alone.
Owned or leased land? If the home is on leased land, find out who owns the land, the basis for rent increases, and the duration of the lease agreement.
Housing company’s finances: Review the financial statements. A small housing company fee can be a good sign if the company has other sources of income, but it can also indicate that necessary repairs have been neglected.
PTS (Long-Term Renovation Plan): An excellent tool to familiarize yourself with the housing company’s upcoming basic renovations. Although basic renovations are the responsibility of the housing company, they are usually paid for with a company loan, which is part of the loan you will have to pay.
Major renovations: Pipe (LVIS), facade, window, roof, balcony, and elevator renovations are often the most expensive. Check when they were done or if they are becoming current.
Condition inspection: Especially when buying a detached house, it is highly recommended to have a condition inspection done.

Utilize the help of experts

Buying a home is a collaborative effort where you shouldn’t be alone.

Real estate agent: Provides information about the home and the housing company. However, remember that the agent’s job is to sell the home, so evaluate their sales arguments critically.
Bank loan advisor: Helps you arrange financing and can also help you interpret the Property Manager’s Certificate and the housing company’s financial figures.
Condition survey report: If available, study it carefully.

How much should you pay for a home?

Once you have found the right home, the final step is to think about the right price.

Compare realized prices: Real estate agents have data on realized home prices. You can also use the service from the Ministry of the Environment, where you can see home price information for the last year: https://asuntojen.hintatiedot.fi/haku/?l=2&submit=In+English
Assess the reasonableness of the price:
- Future renovations: Take into account the basic renovation needs shown in the PTS plan or that can be assumed. You can find indicative average square meter prices for renovations online.
- Leased land: If the home is on leased land, add the price of the home and the estimated redemption price of the land to get a comparable idea to homes on owned land.
- Housing company loan share: Don’t be fooled by a potentially large housing company loan share. Always compare the debt-free purchase prices of homes.

Ville Korte

SVP, Mortgage Guarantees
The author works as Senior Vice President for mortgage guarantees at Garantia and has over 20 years of experience in mortgage lending at Garantia and in the banking sector.