Are you considering buying your first owner-occupied home? Home ownership has become increasingly popular among young adults as well – each year, around 20,000 people in Finland buy their first home. Here is information and tips for buying your first home.
Taxation for first-time home buyers changed on 1 January 2024
According to the proposal made by the Finnish Government on 12 October 2023, the tax exemption for first-time home buyers was removed on 1 January 2024. The legislative change affects home transactions as follows:
- The transfer tax rate on real property decreases from 4 per cent to 3 per cent.
- The transfer tax rate on shares in housing companies and real estate companies decreases from 2 per cent to 1.5 per cent.
- The first-time home buyer’s exemption from transfer tax is removed
The act entered into force at the beginning of 2024, but the tax rates are applied retroactively to transfers made on or after 12 October 2023, the date the government proposal was submitted.
If the deed of sale was signed by 31 December 2023 at the latest, the purchase of the first home is deemed to have been made during 2023.
Read more about the changes to transfer tax on the Ministry of Finance website
Help with changing homes
Are you planning to buy your first home? Do you need more information about the changes to transfer tax?
Planning the purchase of a first home
Define your budget and criteria for the home
When looking for a suitable first home, it is a good idea to start with the basics. Determine the maximum price you can pay for the home and list the most important criteria (for example, location, size of the home, number of rooms).
Look for homes that match your budget and wishes using our property search or, for example, the Oikotie.fi and Etuovi.com services. You can also activate the REMAX buyer alert, which sends you an email as soon as homes matching your search criteria come on the market. This saves you time and effort.
Apply for a loan promise from your bank
It is sensible to arrange the financing for the home before attending viewings. That way, when you come across the home of your dreams, you can make an offer right at the viewing. So book an appointment for loan negotiations with your bank well in advance and ask the bank for a loan promise. This way you can make an offer with peace of mind when you find a suitable home.
The ASP loan intended for first-time home buyers is also one way to save in advance for buying a home. The ASP loan is intended for first-time home buyers aged 15–39. The benefits of an ASP loan include a free state guarantee for the loan and interest subsidy paid by the state for a period of 10 years.
Collateral when buying a first home
The home being purchased usually serves as collateral for the home loan. The collateral value of a home varies from bank to bank, but it is most typically 70–75% of the value of the home. For the remaining 25–30% you must provide additional collateral, which can be, for example, a bank deposit, a personal guarantee or a chargeable credit guarantee offered by the bank.
With ASP loans, the state guarantee included in the ASP loan is usually sufficient as additional collateral for the home loan.
Prepare the purchase offer carefully
A purchase offer for a home should always be made in writing. The purchase offer should state, for example
- the personal details of the seller and the buyer
- the object of the transaction
- the purchase price
- the transfer of ownership and possession
- the date of the transaction
- the validity period of the offer
- other terms of the transaction, for example the deposit.
The purchase offer is signed by both parties to the transaction, i.e. the buyer and the seller. It is important to be careful when drawing up the purchase offer so that it is prepared correctly. You can ask a real estate agent for help in preparing the purchase offer.
Be prepared for a deposit or standard compensation
When buying a home and making a purchase offer, it is good to note that a standard compensation or a deposit is typically set as security for the offer. Nowadays standard compensation is more commonly used
Standard compensation, i.e. a contractual penalty, means that the buyer or the seller undertakes to pay a predetermined sum if, for one reason or another, they withdraw from the offer after both parties have accepted it. A deposit means that the buyer of the home pays a deposit to the seller, and if you as the buyer withdraw from the transaction of your own accord, the deposit remains with the seller. If the seller cancels the transaction, they are obliged to return the deposit to the buyer.
The amount of the standard compensation or deposit may be no more than 4% of the purchase price. The amount of the standard compensation or deposit and the terms of its payment are defined in the written purchase offer.
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