Purchasing Real Estate in Sweden - Financing of the Purchase

It is not often that someone will purchase real estate with the full sum up front and most purchasers will have to acquire some sort of real estate financing.

The buyer will normally be able to secure a first mortgage loan up to 80 or 85 per cent of the appraised value of the real estate. An additional second mortgage may also be obtained but at a higher interest rate.

The mortgage is actually a document (pantbrev = “mortgage letter”) issued by the relevant court in the desired amount. Only the registered owner may apply for such a mortgage. A fee of 2 per cent of the amount is charged for this. This “mortgage letter” is then pledged to the lender as security for the loan.

In the purchase situation the buyer’s lender will require sufficient “mortgage letters” to cover the amount burrowed by the buyer, before the buyer has acquire the title to the real estate and thus while the seller still is the registered owner. This is solved by the seller at the transfer date signing applications for the issue of the “mortgage letters” needed indicating the buyer’s lender as recipient of the “mortgage letters”. The court will upon the issue of the “mortgage letters” send them to the lender and not to the seller.

Re-payment of the loans is determined by the amount borrowed, the re-payment plan, the interest, which is calculated by the lender according to current rates; and the type of real estate purchased.