First Home as a Young Person: How to Enter the Housing Market in Sweden

Buying your first home is a big and exciting event in life, but it can also feel like an overwhelming challenge, especially for young adults in Sweden. With rising housing prices and tough competition, it can be difficult to know where to start. This article provides you with a comprehensive guide on how to enter the housing market as a young person in Sweden, from saving for the down payment to finding the right home and understanding the legal aspects.

What are the Biggest Challenges for Young People in the Swedish Housing Market?

Entering the housing market as a young person in Sweden is often associated with several significant challenges. First, saving for the down payment (kontantinsats) is a major hurdle. With high housing prices in Sweden, a significant sum of money is required, which can be difficult to accumulate with a limited income at the beginning of a career. Many young people also have student loans that affect their ability to save and get loans.

Second, the competition in the housing market in Sweden is fierce, especially in major cities and popular areas. Several potential buyers may be interested in the same property, which drives up prices and makes it harder for first-time buyers to compete with more established buyers.

Third, the lack of knowledge about buying a home in Sweden can be an obstacle. The process is complex and involves many legal and financial aspects that can be difficult to understand without experience. It is important to do your research and seek advice from experts to avoid pitfalls.

Finally, the requirements from the banks in Sweden can be tough. Creditworthiness is carefully reviewed, and a stable income and a good financial history are crucial for obtaining a mortgage. Many young people have not yet had the chance to build up a sufficiently strong creditworthiness.

How Do You Save for a Down Payment as a Young Person in Sweden?

Saving for the down payment is often the biggest challenge for young people who want to buy their first home in Sweden. Here are some strategies and tips for success:

• Set a clear savings goal: Determine how much you need to save and set a realistic timeframe. Break down the goal into smaller sub-goals to make it more manageable and motivating.
• Create a budget: Map out your income and expenses to identify areas where you can save. Use a budget app or spreadsheet to get a clear overview.
• Reduce unnecessary expenses: Review your subscriptions, streaming services, and other recurring costs. Ask yourself if you really need everything and where you can cut back on expenses.
• Automate saving: Set up an automatic transfer from your salary account to a savings account each month. This way, you save regularly without having to think about it.
• Increase your income: Explore opportunities to increase your income, such as through a part-time job, freelance assignments, or selling things you no longer need.
• Utilize savings vehicles: Consider saving in an investment savings account (ISK) or a capital insurance to have the opportunity to earn a return on your savings. However, keep in mind that investments always involve a risk.

Example:

Let's say you need to save SEK 100,000 for the down payment and want to reach your goal within three years. This means you need to save approximately SEK 2,778 per month. By reducing your expenses by SEK 1,000 per month and increasing your income by SEK 1,778 per month, you can reach your savings goal.

What Different Types of Housing are Suitable for Young First-Time Buyers in Sweden?

When you are going to buy your first home in Sweden, it is important to consider different types of housing and choose the one that best suits your situation and budget. Here are some options:

• Bostadsrätt (Cooperative Apartment): A bostadsrätt gives you the right to live in an apartment in a housing cooperative (bostadsrättsförening). You do not own the apartment itself, but you have the right of use and are a member of the association. Bostadsrätter are often a good option for first-time buyers in Sweden because they are generally cheaper than villas and townhouses.
• Hyresrätt (Rental Apartment): Although rental apartments do not mean that you own your home, they can be a good option for young people who are not yet able to buy in Sweden. Rental apartments offer flexibility and require no down payment.
• Radhus (Townhouse): Townhouses are a type of housing that lies between an apartment and a villa. They are often more affordable than villas and can be a good option for young families or couples who want a little more space.
• Villa (House): Buying a villa is often a bigger step financially and requires more maintenance in Sweden. It can be a good option if you have a stable economy and want a lot of space and a garden.
• Kollektivboende (Co-living): A kollektivboende can be a good option for young people who want to live cheaply and socially in Sweden. You often share a kitchen and other common areas with other residents.

Step-by-step guide to finding the right home in Sweden:

1. Define your needs and wishes: What is important to you in terms of location, size, price, and amenities?
2. Do your research: Investigate different areas and housing types to get an idea of what is available and what it costs in Sweden.
3. Contact a real estate agent (mäklare): A mäklare can help you find homes that fit your criteria and guide you through the buying process in Sweden.
4. Go to viewings (visningar): Visit different homes to get a feel for what you like and don't like.
5. Be prepared to compromise: It is rare to find a home that meets all your wishes. Be prepared to compromise on certain points.

How Do the Mortgage Cap (Bolånetak) and Amortization Requirement (Amorteringskrav) Affect Young Home Buyers in Sweden?

The mortgage cap (bolånetak) and amortization requirement (amorteringskrav) are two regulations that affect how much you can borrow when you buy a home in Sweden and how quickly you have to pay back the loan. These regulations are of particular importance to young home buyers.

The mortgage cap (bolånetak) means that you can borrow a maximum of 85% of the home's value. You must pay the remaining 15% in cash. This requirement makes it harder for young people to buy a home in Sweden because they often have difficulty saving up for a large down payment.

The amortization requirement (amorteringskrav) means that you must amortize (pay back) a certain percentage of your mortgage each year. There are two levels of amortization requirements in Sweden:

• If your mortgage exceeds 70% of the home's value, you must amortize at least 2% of the loan per year.
• If your mortgage exceeds 50% of the home's value, you must amortize at least 1% of the loan per year.

The amortization requirement affects young home buyers in Sweden by increasing their monthly costs. This can make it harder to make ends meet, especially at the beginning of a career when incomes are often lower.

Tips for managing the mortgage cap and amortization requirement in Sweden:

• Save up for a larger down payment: The more you can save up, the less you need to borrow, and the less you are affected by the mortgage cap and amortization requirement.
• Improve your creditworthiness: A good creditworthiness can give you better loan terms and lower interest rates, which reduces your monthly costs in Sweden.
• Review your budget: Make sure you have a realistic budget that takes into account the amortization requirement and other costs associated with owning a home in Sweden.

What Grants and Support Can Young People Receive When Buying a Home in Sweden?

There are various forms of grants and support that young people may be entitled to when buying a home in Sweden. These can help reduce the financial burden and make it easier to enter the housing market.

• Bostadsbidrag (Housing Allowance): Bostadsbidrag is a government support aimed at people with low incomes and high housing costs in Sweden. Young adults may be eligible for bostadsbidrag if they meet certain criteria regarding income and housing costs.
• Startlån (Start Loan): Startlån is a loan offered by some municipalities to first-time buyers in Sweden. The terms and requirements vary between different municipalities, so it is important to investigate what applies in your municipality.
• Borgenslån (Guarantee Loan): A borgenslån means that someone else, such as a parent, guarantees your loan. This can make it easier to get a mortgage if you have difficulty meeting the bank's requirements in Sweden.
• Gåvor och förskott på arv (Gifts and Advance on Inheritance): Parents or other relatives can give you a gift or an advance on inheritance that can be used for the down payment. It is important to document the gift or advance correctly to avoid problems with the Swedish Tax Agency (Skatteverket).

Important to keep in mind in Sweden:

• Investigate what grants and support you may be entitled to and how to apply for them.
• Be aware that the terms and requirements may vary depending on your situation and where you live in Sweden.
• Seek professional advice if you are unsure which options are best for you.

What Legal Aspects are Important to Consider When Buying a Home in Sweden?

Buying a home is a big deal that involves several legal aspects in Sweden. It is important to be aware of these to avoid problems and protect your interests.

• Köpekontrakt (Purchase Agreement): The köpekontrakt is a legally binding agreement between buyer and seller. It contains information about price, access date, any conditions, and other important details. Read the köpekontrakt carefully and seek help from a lawyer if you are unsure of anything in Sweden.
• Besiktning (Inspection): Before you sign the köpekontrakt, it is important to carry out an inspection of the home. An inspector examines the condition of the home and identifies any defects and shortcomings. This can help you avoid unpleasant surprises in the future in Sweden.
• Pantbrev (Mortgage Deed): Pantbrev is a document used as security for a mortgage. When you take out a mortgage, you pledge your home, and the pantbrev serves as proof of this. The cost of pantbrev depends on the size of the loan in Sweden.
• Lagfart (Title Deed): Lagfart is a registration with the Swedish Mapping, Cadastral and Land Registration Authority (Lantmäteriet) that shows that you are the rightful owner of the home. You must apply for lagfart within three months after you have bought the home. The lagfartsavgift (title deed fee) is 1.5% of the purchase price plus an administrative fee.

Tips for managing the legal aspects in Sweden:

• Get help from a lawyer or an experienced real estate agent to review the köpekontrakt and other documents.
• Carry out a thorough inspection of the home before you sign the köpekontrakt.
• Be aware of the costs of pantbrev and lagfart and include them in your budget.

Vanliga frågor / FAQ

Fråga: Hur mycket behöver jag spara till kontantinsatsen?

Svar: Enligt bolånetaket får du maximalt låna 85 % av bostadens värde. Det innebär att du behöver spara minst 15 % av bostadens pris till kontantinsatsen. Om du till exempel vill köpa en bostad för 2 miljoner kronor behöver du spara minst 300 000 kronor.

Fråga: Vad är skillnaden mellan en bostadsrätt och en hyresrätt?

Svar: En bostadsrätt innebär att du köper rätten att bo i en lägenhet i en bostadsrättsförening, men du äger inte själva lägenheten. En hyresrätt innebär att du hyr en lägenhet av en hyresvärd och betalar hyra varje månad. Du äger inte lägenheten.

Fråga: Kan jag få bolån om jag har studielån?

Svar: Ja, det är möjligt att få bolån även om du har studielån. Banken kommer att ta hänsyn till dina studielån när de bedömer din kreditvärdighet och din förmåga att betala tillbaka lånet. Det är viktigt att vara öppen och ärlig med banken om dina studielån.

Fråga: Vad är en besiktning och varför är det viktigt?

Svar: En besiktning är en undersökning av bostadens skick som genomförs av en besiktningsman. Besiktningen är viktig eftersom den kan identifiera eventuella fel och brister i bostaden som du annars kanske inte skulle upptäcka. Detta kan hjälpa dig att undvika obehagliga överraskningar och kostsamma reparationer i framtiden.

Fråga: Vad är lagfart och varför måste jag ansöka om det?

Svar: Lagfart är en registrering hos Lantmäteriet som visar att du är den rättmätiga ägaren till bostaden. Du måste ansöka om lagfart inom tre månader efter att du har köpt bostaden. Lagfarten är viktig eftersom den ger dig ett juridiskt skydd som ägare av bostaden.

Question: How much do I need to save for the down payment?

Answer: According to the mortgage cap, you can borrow a maximum of 85% of the home's value. This means you need to save at least 15% of the home's price for the down payment. For example, if you want to buy a home for SEK 2 million, you need to save at least SEK 300,000.

Question: What is the difference between a bostadsrätt and a hyresrätt?

Answer: A bostadsrätt means that you buy the right to live in an apartment in a housing cooperative, but you do not own the apartment itself. A hyresrätt means that you rent an apartment from a landlord and pay rent each month. You do not own the apartment.

Question: Can I get a mortgage if I have student loans in Sweden?

Answer: Yes, it is possible to get a mortgage even if you have student loans. The bank will take your student loans into account when assessing your creditworthiness and your ability to repay the loan. It is important to be open and honest with the bank about your student loans.

Question: What is an inspection (besiktning) and why is it important in Sweden?

Answer: An inspection is an examination of the condition of the home conducted by an inspector. The inspection is important because it can identify any defects and shortcomings in the home that you might not otherwise discover. This can help you avoid unpleasant surprises and costly repairs in the future.

Question: What is lagfart and why do I have to apply for it in Sweden?

Answer: Lagfart is a registration with the Swedish Mapping, Cadastral and Land Registration Authority (Lantmäteriet) that shows that you are the rightful owner of the home. You must apply for lagfart within three months after you have bought the home. The lagfart is important because it gives you legal protection as the owner of the home.