Stay tuned folks… I’m in the process of selling my apartment in Stockholm! I’ll have more to report. If you’re interested in the process generally, take a look at this post. I sold an apartment on behalf of the HOA board a few years ago. The process is fundamentally the same, but since it wasn’t my place to sell, I wasn’t as attached to the final selling price as I will be for this unit.
During these COVID-19 times, you would have expected housing prices to drop like it’s doing in major metropolitan areas in the US. But oddly enough, it hasn’t. Granted, the realtors are probably taking more precautions during viewings which means that less people are at the viewings (and therefore fewer potential bidders), but it doesn’t mean that people aren’t buying. They certainly are.
The process to buy and sell apartments is still as easy as used to be – people check out Hemnet or visit their local realtor’s website to see what’s out there. However, one significant difference is how the banks are responding. Finansinspektionen, the financial supervisory authority, is giving banks the possibility to grant exemptions to the amortization requirement.
What’s the amortization requirement? Well, there are three contributing factors, and each factor requires the borrower to lower their principal by 1%, for a maximum of 3%.
The amount of your loan is over 50% of the property’s value;
The amount of your loan is over 70% of the property’s value; and
The amount of your loan is more than 4.5x your total annual income.
It’s quite easy to trigger these depending on your personal circumstances, and with each percent means an increased monthly payment. However, with this new ruling, borrowers can apply for the exemption and banks will decide based on your income and ability to pay. I haven’t heard of any banks rejecting any requests, but at the same time, if you have the ability to pay, you really should amortize – it’s a form of savings!
Another thing I thought I’d throw into this update: interest rates. Assuming you are a low-risk borrower, you should be able to, with relative ease, get a loan between 1.15% and 1.30%. If you move your savings into the bank and save monthly with them, you might be able to get it closer to 1%. If you’re paying more than that, GO BACK TO YOUR BANK AND RENEGOTIATE!
Thanks for stopping by and read on below for the original article.
Update: August 1, 2013
Seeing as this is one of my most popular posts, I thought I’d do an update for my readers. The living situation in Stockholm hasn’t really changed since this post: a) it’s still very difficult to find a place to rent, and b) prices to buy are still high if you want to live in the city center.
However, a few things have changed around loan costs and the structure of loans. Interest rates have dropped a lot, and people are using the lower rates as an excuse to go into their banks to renegotiate their loans.
Banks are also reducing the amount of money you can borrow – now you can borrow a maximum of 75%, which means you need to have enough cash on hand for the down payment (“handpenning”). For new college grads, new couples, etc – that is a really high barrier to entry.
One thing I’ve started to see more and more – or maybe it’s just that my circle of friends has evolved over time – is that people are starting to room together with a friend. I always thought Swedes were against rooming together, but I guess the difficulty in finding rentals has made that a more popular option.
Are you in the market to buy? Here are some tips!
Shop around at different banks for the best loan and get yourself a lånelöfte. The lånelöfte will give you an idea of how much you can borrow. Don’t be afraid to pit one bank’s offer against another, and go to DIFFERENT BRANCHES of the same bank. They are all different profit centers so you’d be surprised how varied the responses can be.
Many banks will require that you transfer all of your financial assets to them (e.g. direct deposit from your employer, your pensions, etc) but you just have to agree to it. Since they know it takes time to do the transfer, you can often lock down a favorable interest rate before you do the actual transfer.
If you find a property that you’re really interested in, contact the real estate agent and ask for a “förhandsvisning” – a viewing in advance. Sometimes this gets you in at the right moment, and if you can put in a bid that the seller will take, you’ll avoid a bidding war.
Location, location, location. A crummy apartment can always be fixed up. But a bad location is… well, a bad location. I’ve lived in my apartment for 5 years now and I tell you – location is KEY! The closer you are to public transportation, the better off you’ll be, and the easier it’ll be to sell your apartment when it comes time.
Pay attention to the månadsavgift – the monthly fee that you need to pay to the association (bostadsrättsförening) – and compare it against other similarly sized properties in the area. That is more or less a fixed fee every month which doesn’t go towards paying down the mortgage, so keep an eye on it.
I hope this helps. If you have any other questions, post something in the comments and I’ll respond! Happy apartment shopping!
Original post from 2011 with minor updates:
It’s been a long time since I posted a blog post. A lot has happened in the past few months, both privately and at work, so I’ve been busy. But that’s no excuse – det är dags för ett nytt inlägg!
Today we are going to talk about the Swedish real estate market and the process of getting a mortgage. It seems to be pretty relevant right now since I have many friends who are looking for a place to call their own. I also have a former colleague who will be moving to Stockholm soon, and she just went on an apartment viewing spree today. So yes, it is fresh on my mind.
Since my experience is limited to the Stockholm inner city, take everything I say with a grain of salt!
Apartment price trends 2018-2020
I bought an apartment in Stockholm in the spring of 2008. I found an apartment in Östermalm that fit my taste and was in the bidding process. I was the only bidder, and I put forth an offer of 2,700,000 SEK. The seller countered with 2,800,000 SEK and we split the difference at 2,750,000 SEK. That’s about $320,000 USD using the exchange rate from Sept 2020, but was closer to $460,000 USD back when I bought it. That’s a big chunk of change, even for a kid from San Francisco. Continue reading →
(for information on buying an apartment, see this other post!)
Sorry for the delay, but the process took much longer than I expected (as with most things) – but the good news is, we sold the place in our building so I’m happy to report back with some tips and tricks for those of you thinking about selling. Note that the time lapsed had nothing to do with a difficult Stockholm market or anything – it was simply due to logistics with the holiday season.
The most important thing is to find a real estate agent that you personally feel comfortable with. Rapport with your agent is the most important thing you can invest in, and that should be highest on your priority list regardless of the commission they’re charging. Transactions will probably go relatively smoothly, but when they don’t, you want to know that the person you’ve trusted with the job of selling will go to bat for you. In addition, this agent will represent YOUR personal and legal interests as well as the legal interests’ of the buyer; there is no concept of a buy-side agent in Sweden.
I’m about to facilitate the sale of an apartment in my building on behalf of our homeowner’s association (I’m a Board member). I’m meeting with a few real estate agents/firms to evaluate their offerings and will make a recommendation to the Board. This is new for me – I’ve only ever bought property in Sweden – so if you have any questions, leave a reply and I’ll try to get the answer for everyone.
I’ll blog more about this when the process has moved along a bit…
What a spring so far! I’ve been working hard in Stockholm but also did a decent bit of traveling around the world both for work and pleasure. And of course, I’ve been enjoying every (warm) moment of the spring. I hope all of you have been enjoying the weather equally much I have been!
I thought this time around I’d post about two things: 1) a recent trip I took to the US, and 2) the Swedish midsummer festivities this year. These two things, located on two different continents, really highlighted how Swedish I feel when I’m in the US and how American I feel when I’m in Sweden.
I recently traveled to California and Oregon for 3 wonderful weeks of vacation. I went to the wedding of one of my oldest friends in San Diego, my sister’s medical school graduation in San Francisco, and visited my friends Josh and Kellee and their adorable son Judah in Portland, Oregon. Continue reading →
It’s glögg season again, and it’s time for another post!
Stockholm got its first “real” snow this past week! Real snow is when it actually sticks to the ground and stays around, and boy was it needed. It had been raining a lot and was dark and miserable, as it tends to be during this time of year. But as soon as the snow came, everything brightened up. Yes, it was still cold but I prefer cold and dry to cold and wet. Even WordPress.com has snow on its front page!
Swedes are very proud of the fact that they are one of the most environmentally-friendly countries in the world. Generally, I agree – and this is coming from someone who has lived in the California Bay Area. Bay Area residents have been recycling for decades, and those of us who live in the San Francisco and Berkeley areas know that the local City Councils are extremely supportive of recycling and other environmental issues. Did you know, for example, that grocery stores in San Francisco do not allow the use of plastic bags? They only give out paper bags or sell the reusable grocery bags. The picture featured on this blog are of two containers that are provided to every family: a recycling container and a compost container.
In Sweden, we have recycling centers, everyone promotes lower electrical use, taxi companies have a large fleet of environmentally-friendly cars, we get to use a fantastic public transportation system (at least in Stockholm), and most important of all, everyone understands the importance of doing their part for the environment.
Why do the Swedes have such great design and fashion? What is it about living in a country that is dark during the winter and bright during the summer that teaches someone what “good design” is? Must be something that is truly Swedish. Continue reading →