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Home construction loan

Build a home with flexible loan
1

Flexible loan

We can customise our home construction loan to your needs.

2

Repayment holiday during construction

You can pay only interest on the loan during construction and start repayments when the building is completed.

3

Owner-customer benefits

As an owner-customer, you will receive a discount on banking services and OP bonuses.

What is a home construction loan?

It is a normal home loan but, as distinct from a normal home loan, the plot and the house to be built on it usually serve as the primary collateral for the loan. The collateral value of the building increases as the construction progresses. During construction, you can pay only interest on your loan, say, for a year, and your will begin repayments once the building is completed.

Instant cost calculator helps you to get an idea of your construction costs.

Go to calculator*

(*Rakentaja.fi)

You can negotiate a home construction loan online, too – easily, say, at the comfort of your home!
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How can I obtain a home construction loan?

Start the planning of your building project by drawing up a cost estimate and send a loan application conveniently online.

Contact us for financing as soon as your start planning. We can agree on a home construction loan that suits your needs and on the repayment method, and check that your insurance cover during construction is in order.

Apply for home construction loan and sign the loan agreements digitally

You can fill in a home construction loan application conveniently at op.fi. Mention in the additional information field that your are applying for a home construction loan. After you have sent your application, we will contact you the following day.

Fill in a loan application

You can now sign the agreement on a new home construction loan digitally - even sitting on your sofa at home! If you wish, you can handle the loan negotiation and signatures entirely online. For the digital signature, you need your online user identifiers.

You can fill in the loan application online even if you are not yet our customer. When you fill in the loan application, you do not yet need to know the exact price of the new home or other such details. The loan application is nothing more than an invitation to make an offer ‒ it does not bind you to draw down the loan.

In the loan application, we will ask you the following information:

  • your income, expenses and debts and their monthly charges, and those of other loan applicants, if any
  • information on your wealth.

After you have sent your application, we will contact you the following day.

Sufficient repayment capacity is required for granting the loan. We will check your credit history from the credit information register of Suomen Asiakastieto Oy when you apply for the loan.

Collateral

The collateral for a loan for building a detached house is usually the property being built, or the lease on the plot and the detached house located on the plot.

Although the collateral value of the property being built increases as the construction work progresses, you will initially usually need other collateral too, such as your current owner-occupied home, investment assets or other assets. You can apply for the bank's loan guarantee or a government guarantee as side collateral.

You can apply for OP’s credit guarantee to be used as side collateral for your home loan. The maximum amount of the credit guarantee is 25,000 per applicant. Alternatively, you can apply for a government guarantee to be used as side collateral.

Peruskorjaukset ovat rakentamis-, parannus- tai uusimistöitä, jotka muuttavat esimerkiksi perustuksia ja kantavia rakenteita, vesikattoa, lämmitys- ja ilmanvaihtojärjestelmää, vesi- ja viemärilaitteita, kiinteistön sähköjärjestelmää tai tilojen käyttötarkoitusta (esimerkiksi vaatehuone muutetaan saunatilaksi).

Remontoinniksi katsotaan esimerkiksi maalaaminen ja tapetointi, kodinkoneiden ja asunnon varusteiden uusiminen (esimerkiksi jääkaappi, wc-kalusteet ja keittiökaapit).

Tarvitsetko lainaa peruskorjaukseen ja remontointiin?

Hae ensin asuntolainaa peruskorjaukseen (oman asunnon, vapaa-ajan asunnon tai sijoitusasunnon). Voit hakea sen lisäksi remonttilainaa, kun otamme sinuun yhteyttä lähetettyäsi lainahakemuksen.

The act governing the loan-to-value ratio came into force on 1 July 2016. The ratio applies to loans granted for the purchase or renovation of a home for which the home is lodged as collateral. The purpose of use of the home is of no significance, i.e. the law applies not only to loans taken out to buy one's own permanent home but also to those taken out to by a buy-to-let home and a holiday home.

The loan-to-value, or LTV, ratio means the ratio of the loan to the current value of the collateral lodged as security for the loan at the time of its granting. In calculating the LTV ratio, all real security placed by the debtor or another person, such as homes, deposits and securities, can be taken into account as collateral. A personal guarantee, for instance, cannot be taken into account.

The LTV ratio is a macroprudential instrument that helps the authorities to curb excessive household leverage and to prevent an increase in home prices and mortgage lending considered excessive, or other risks threatening the stability of the entire financial system.

In a normal situation, a loan may account for a maximum of 90% of the collateral's current value. For a home loan taken out by a first-time home buyer, the maximum is 95%. The Financial Supervisory Authority may reduce above maximums by no more than 10 percentage points to limit an exceptional increase in risks to financial stability. As of 1 July 2018, the Financial Supervisory Authority has decided to tighten the LTV ratio for loans granted for other than first-home purchases by five percentage points from the normal 90% to 85%. The LTV for loans granted for the purchase of a first home was maintained at the normal level at 95%.

For example, if a home buyer secures his/her home loan only with the home to be bought, he/she must now have saved at least 15% (5% for first-time home buyers) of the purchase price. It is possible to reduce the need for personal savings by providing other real security in addition to the home.
 
Nevertheless, the LTV ratio is based on the law and thus binding on banks – it can be exceeded only in cases specifically permitted by the Financial Supervisory Authority, such as temporarily in situations where homes are exchanged. In addition to the LTV ratio, the bank’s own collateral requirements may affect the amount of collateral needed for the loan.
 
Example of calculating the LTV ratio: The home sales price is 100,000 euros. The home buyer's self-financed amount is 20,000 euros. He/she needs a home loan worth 80,000 euros. In this case, the LTV ratio is 80% (80,000/100,000 *100), which is compatible with the law.
 
As the bank normally accepts 70% of the home’s current value as collateral, the collateral shortfall after pledging the home is 10,000 euros (80,000-70/100* 100,000), which usually has to be covered with additional collateral. OP’s loan guarantee, for example, could be used as additional collateral in this case.

Loan costs consist of the reference interest rate, the bank's markup and service fees related to loan repayment. In addition, the loan is subject to a processing charge when it is drawn down.

A portion of your home loan interest is tax-deductible, which reduces the amount of taxes you pay.

When you think of the amount of loan you wish to raise, you should reckon with not only the purchase price but also any other costs that you may incur, such as moving costs and transfer tax related to home buying. For instance, home buying is usually subject to such a tax (2% of the purchase price on shares in a housing cooperative and 4% of real properties).

We agree with you on a suitable monthly instalment and repayment method for your loan. The recommended maximum loan term is 20 years. The monthly loan repayment instalment should account for a maximum of 35% of your monthly net income and your repayment capacity should also tolerate a rise in interest rates. It is advisable to determine the size of your monthly instalment in such a way that you can also save some money for your future needs. If needed, you can also have a repayment holiday during which you will pay only interest on your loan.

The total home loan interest rate is made up of the reference interest rate and the bank's markup on the loan (margin). If you choose, say, the 12-month Euribor as the reference rate for your home loan, you will always know your total loan interest rate for the next 12 months.

OP-prime is another option for your loan's reference rate, the changes of which we announce to our borrowers at least 14 days before the change takes effect.

The most common loan repayment methods are equal payments and variable annuities.

Securing loan repayment

Anything unexpected can happen during a long loan term. Loan payment protection insurance is the most important insurance for home loan borrowers.  You can take it out for both a new or an existing loan – as individual cover or joint cover together with your co-borrower.

The insurance helps you cope with paying monthly loan repayment instalments if your fall ill or lose your job. The insurance pays off the outstanding loan if the insured person dies.

Owner-customer benefits

  • As an owner-customer, you get 45% off on a current account, OP eServices and OP-Visa card. For owner-customers, the cost is €2.95/month (normal charge €5.45/month). If you are under 26 years of age, you receive our daily banking services free of charge.
  • As our owner-customer, you can choose a long-term fixed interest rate for your new home loan throughout the loan's term, up to 25 years. This is how you can ensure that your interest charges for your home loan will remain unchanged throughout the loan term.

OP bonuses

As an owner-customer, you will earn OP bonuses for example from:

  • loans
  • savings and investments
  • funds in accounts
  • purchases you have paid for with OP-Visa credit
  • insurance premiums for home, family and motor vehicle policies

OP bonuses are used for the bank’s service charges and insurance premiums.

Make sure you are properly insured before construction begins. For a house kit, a turn-key house delivery, or a DYI solution, you should immediately take out a home insurance policy that includes general liability and legal expenses insurance. If you hire a construction firm to build your home, make sure they have valid liability insurance coverage.
Take a look at the terms and conditions governing loans, pledges and guarantees, and forms. You will accept the terms and conditions of the loan and collateral agreement at the time of signature.
The loan is granted by the OP cooperative bank.