 Finnish
Bank Loans
Housing
Loans in Finland
Finnish
Credit Cards
Interest
Rates on Credit Cards & Loans
Additional
Information
Finnish Bank Loans
As in any developed country, your chances of getting a loan
in Finland depend on your employment status, income, how
much you want to borrow, your residence status, your credit
rating and history, and your guarantor(s) if available.
Contact the banks directly
for an interview/application.
Some tips from expats in Finland are:
- try as many banks as you can and see what they
offer - the differences in base rates and margins
can be substantial
- the banks have specialists who will also explain tax
issues - they will tell you which documents the tax authority
requires
- make sure ALL documents are translated into English,
not just the ones the bank suggests are appropriate
Finnish Housing Loans (
source: www.ara.fi )
A personal housing loan from a bank can typically cover
some 70% of the price of the dwelling, with the rest being
paid in cash. It is possible to finance up to 85% of the
cost through a personal loan by using a state guarantee (see
below).
The banks are by far the main source of personal housing
loans. Personal loans are typically tied either to 6- or
12-month Euribor interest rates or to prime rates set by
the banks, with a fixed margin varying from about 0.8 to
1.6 percentage points depending on the housing market, the
bank and the customer. The State subsidises personal housing
loans through tax relief on mortgage interest. The typical
amortisation period for personal housing loans increased
during the 1990s and stands today at approximately 20 years.
State subsidies for the finance of owner-occupied
housing production
The State currently supports owner-occupied housing production
through an interest subsidy system for the construction of
single family houses and an interest subsidy loan for multi-family
housing.
In addition, the State guarantee for owner-occupied housing
loans can be used when constructing a single family house,
while tax relief on mortgage interest is available as well.
State interest subsidy based on social need can be granted
to a housing loan for the construction of a single-family
house.
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Finnish Credit Cards
A recent immigrant to Finland will usually
find it difficult to get credit until they have established
a significant bank account and a history of steady employment.
Experiences with applications for a credit card appear to
vary widely between banks, end even between branches of the
same bank.
Essentially, if you have been in Finland
long enough to establish a satisfactory credit rating and
you have a regular income, you should have no trouble getting
a credit card. But, how do you get a credit history when
they won't give you a loan or credit card without one? The
regular income aspect goes a long way to making you a viable
risk, and long-term residency doesn't hurt either. However,
a huge sum of money in the bank will NOT necessarily warrant
approval for credit. All you can do is ask.
If you are self-employed, chances are you
don't have a regular income. When applying for a card you
will be asked to provide your company's profit/loss statements
for recent years - if these look promising you will once
again be in good stead to be approved. However, it may be
that you are self-employed and have only been resident in
Finland for a relatively short time!
One option, if you absolutely require a
credit card and have the requisite funding, is to pay a security
deposit to the bank. The deposit will be three times the
amount of the credit limit for which you are applying, and
will be held by the bank for a period of three years. If
you pay your bills on time for that period the bank apparently
then considers you a safe bet, and will return your deposit.
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Interest Rates
on Loans & Credit Cards
Average interest rates on loans by Finnish monetary financial
institutions to euro area households since 2003:
- excluding overdrafts and credit cards:
3 - 4%
- including overdrafts and credit cards: 5 - 6.5%%
For housing loans the average rate has been 3.5 - 3.8% since
mid-2003.
Comprehensive interest rate statistics on loans, deposits,
housing loans, student loans and more are available at the Finnish
Central Bank (Suomen Pankki) Web site.
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