Buying a house – what to consider

More to consider when buying a house

• Obtain a loan commitment

  When you are thinking about buying a house, it is wise to obtain a loan commitment from a lender. This means that you receive a promise from a bank to lend you a certain amount of money. Even if you have a loan commitment, the bank may later deny you the loan if it finds that the assessed value of the property you want to purchase does not justify the amount of the loan you are seeking.  

  The loan commitment is valid for a certain period of time; the actual duration varies from bank to bank. The loan commitment is based on your income and living expenses. 

  You may borrow a maximum of 85% of the appraised value of the property. You will need to pay the rest in cash. You can finance the down payment yourself or take out a loan for it.

  Further information about mortgages on the website of the Swedish Consumers’ Banking and Finance Bureau (In Swedish)

• Review all costs

  Buying and owning a house costs a substantial amount of money. In addition to the purchase price, you will also need to pay the some of the transaction costs, i.a. the fee for recording the title deed and mortgage lien. Also, think about the costs you will incur and set up a contingency fund for unforeseen expenses.

  What does registration of the title deed into the land registry accomplish?

  Registration of title in your name into the land registry is proof that you own the house. Registration of the title deed is made at Lantmäteriet, the Swedish Mapping, Cadastral and Land Registration Authority. The fee is 1.5 percent of the purchase price or the assessed value, whichever is higher.

  What is a mortgage deed?

  A mortgage deed (pantbrev), sometimes called a trust deed, is a document used as security for your housing loan. It establishes that the real property you own is pledged (encumbered) as security to a specific lender. You cannot sell the property unless you can pay off the loan with the lender at the same time. The recording of the mortgage deed lien costs 2 percent of the amount of your loan.

  Regular house expenses

  There is more than just interest and repayments that need to be paid regularly. Examples of other regularly costs are:

  • heating
  • electricity
  • water and wastewater fees
  • rubbish collection
  • chimney sweeping
  • an intrusion alarm, if desired.

  There may also be costs associated with common areas, such as private roads or docks.

  The house may need renovation

  Even if the house appears to look nice and in good condition, major renovations may be needed, such as re-roofing or replacing windows. Carefully consider the renovation needs and costs of the house you are considering making an offer on. Going to many viewings is a good way to research areas or different types of houses.

  Have a financial reserve when buying a house

  It’s essential to have a financial reserve when buying a house. You may need to purchase things to do immediate repairs or maintenance of the house and grounds. Examples might include:

  • a lawnmower
  • washing machine
  • snow shovel.

  It’s also advisable to have a financial reserve for unexpected expenses, such as if your freezer breaks down.

• Duty of inspection when buying a house

  According to the Land Code (Jordabalken) the buyer has a duty to inspect and investigate when purchasing a house.

  The buyer will not be able to demand compensation from the seller afterwards for defects they missed and should have detected during a thorough inspection.

  You can hire a property inspector to help you fulfil your duty of inspection and investigation, but it is important to know that most conveyancing surveys do not cover the entirety of the duty of inspection.

  You may need to take a closer look at things that were flagged during the inspection or things that were not included in the inspection you ordered. Look at the property inspector’s contract for the service to see what is included in the home inspection.

  For further inspections, you may need to call in a professional such as a dampness expert, an electrician or a chimney sweep.

  You should also inspect the house yourself and test that everything works.

  • turn on the taps
  • flush the toilet
  • look under carpets and behind paintings.

  You will also need to verify that there are permissions for things like individual drainage and whether there are any plans for new roads or buildings in the area, for example.

  If the building has its own well, it is a good practice to take a water sample.

  Inspection after purchase You only have the right to inspect the house after the contract is signed if there is a clause about it in the contract. Such a clause should be open enough that you can cancel the purchase without needing to provide specific reasons for it.

  Kopiera text
• If the house has already been inspected

  Sometimes a house is marketed and sold “as inspected.” Even if an inspection has already been carried out, you as the buyer nevertheless still have the responsibility and obligation to inspect the house.

  Even though the seller has had a home inspection carried out, you do not have a contract with the property inspector. This reduces your possibilities of claiming compensation if the inspector has missed something that should have been detected.

  It is important to keep in mind that a home inspection ordered by the seller is not aimed at the typical risks a buyer faces, but rather is focused on the seller’s situation. Therefore, it is advisable to hire your own property inspector.

• Sign the agreement 

  Once the property is complete and you have reached an agreement with the owner, it is time to sign the agreement. It is not until you both parties sign the agreement that the sale transaction becomes legally binding.

  When buying a house, a written contract is required for the purchase to be valid. Read the agreement  carefully before signing.