Owner-occupied housing

Most Finns live in owner-occupied homes. One major advantage of owner-occupied housing compared to rented housing is that part of the housing costs, such as mortgage instalments, can be counted as savings. However, buying a home usually entails taking out a loan, which makes it a substantial and long-term economic commitment requiring careful consideration.

© Janne Ulvinen

When the apartment is free of debts, housing costs are lower than those of a person living in a rental apartment. Furthermore, the assets of home-owners increase if apartment prices rise. The risks include the impairment to the household’s ability to service the loan and the decrease of the purchased property’s price level.

The State supports owner-occupied housing by guaranteeing mortgages and granting interest subsidies for the purchase of owner-occupied homes. Another way in which the State supports owner-occupied home purchases is by making part of mortgage interest tax deductible.


The risks associated with mortgages can be reduced by tailoring the amount and loan period by a reasonable amount. Loan servicing costs must remain reasonable compared to the estimated level of income, so that the lenders will have money for other aspects of their lives, as well. The monthly costs may also need to be increased, for example, in case of considerable changes in the level of interest.

A good way to prepare for changes is to “stress test” the mortgage by asking, for example: will I be able to service the loan if the general level of interest increases by 3% and/or my own level of income decreases by 10%?

Get familiar with mortgage terminology before going to the bank

There are several concepts related to mortgage loans that the prospective lender should be familiar with even before starting the mortgage negotiations. These include reference rate, interest margin, annuity, fixed equal payment, personal guarantee, security value and loan protection insurance.

Information on these terms and other housing loan issues is available on the web pages of the Finnish Competition and Consumer Authority, Federation of Finnish Financial Services and The Finnish Financial Ombudsman Bureau.

More information

Senior Adviser Jorma Pietiläinen, The Ministry of the Environment, t. + 358 (0)29 525 0228 firstname.lastname@ymparisto.fi

Published 2014-02-18 at 7:28, updated 2015-08-20 at 11:25