Home loan

You can fill in a loan application online even if you were not yet our customer. When you fill in the loan application, you do not yet need to know, for example, the exact price of the new home. The loan application is nothing more than an invitation to make an offer ‒ it does not bind you to raise the loan.

In the loan application, we will ask you, for example, about:

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

After you have filed 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

Collateral is needed for a loan that secures repayment to the bank. The home you buy covers the majority (usually 70%) of your loan. Side collateral may be needed for the residual amount.

You can apply for OP’s loan guarantee or a government guarantee to be used as side collateral or utilise other assets, for example collateral provided by your close relatives, such as a house or an apartment.

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.

Interest rates are exceptionally low for the moment. You can prepare for a rise in interest rates in advance by setting, for example, an interest-rate cap for your loan.

Long-term fixed interest rate

A Long-term fixed interest rate provides unequalled protection for your home loan interest throughout the loan term, up to 25 years. It is only available to OP’s owner-customers. If you wish, you can repay your fixed-rate home loan early without additional charges.

Interest rate cap

If you adopt an interest rate cap for you loan, you ensure that the the borrowing rate will not exceed above an agreed limit. The borrowing rate will, however, decrease if interest rates begin to decrease. The interest rate cap is available for both new and existing Euribor-based loans. When establishing an interest-rate cap, the bank will charge you a one-off amount determined by the loan principal, the level and the duration of the interest-rate cap as well as bond market conditions.

Loan costs consist of the reference interest rate, 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.

When you compare loan offers made by other banks, please note that our home loan may generate OP bonuses that are used, for example, for loan service charges and the payment of home insurance premiums.

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

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).

You can apply for a repayment holiday for your home loan on OP eServices, during which you will pay only interest. You can also apply for a change to the repayment instalment and date. Such changes are subject to a charge based on the bank's list of service charges and fees.

Extra repayment

You can amortise your loan in addition to your normal monthly instalment. This extra repayment does not defer the next instalment or payment date. The extra repayment is not subject to a charge.*

To make an extra repayment, you need the number of your loan  that you can find in the Loans section. After that, go to "New payment" under the Daily banking services section and enter your loan's number in the "Payee's account or IBAN" field. Then proceed as instructed. The amount of your extra repayment is debited to your account on the same day.

* If you have a fixed-rate loan, please contact the bank that has granted the loan because extra repayment may be subject to a charge under the general loan terms and conditions.

The ASP scheme (housing saving and support scheme) is a scheme established by the Finnish government aimed at encouraging first-time home buyers and make it easier for them to buy their first home. Through the ASP scheme, you get a good interest on your home saver's account and a loan on favourable terms.

You are entitled to a 10-year government interest subsidy on your ASP loan or part of it. If the borrowing rate exceeds 3.8% during the interest subsidy period, the government will pay 70% of the interest above that rate. The interest subsidy loan has its maximum amounts by locality.

In many cases, a home and government guarantee are eligible as ASP loan collateral.

We provide a flexible and customised home construction loan.

It is a normal home loan but, as distinct from the normal home loan, the plot of the house to be built is usually the primary collateral for the loan.  The house's collateral value increases as the construction work progresses, and the loan is drawn down in portions. During the construction project, you can pay only interest on your loan, for example, during one year, in which case costs do not increase too high.

We agree with you on a suitable monthly instalment and repayment method for your loan. The maximum recommended home 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, a 12-month Euribor as the reference rate for your home loan, you will always know your total borrowing rate for the next 12 months.

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

Securing loan repayment

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

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

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.

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 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.

Owner-customer benefits

• As owner-customer, you enjoy a higher current account interest rate: 0.10% (normally 0.00%).
• 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.
• As owner-customer you can get a student loan with no service charge in case your loan application is filed at op.fi.