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What You Need To Know About Getting a Mortgage in Estonia

September 14, 2022
2022-09-14
No matter where you go, real estate is expensive. You're basically buying a brand-new home, after all. It's only natural that it'd cost you more than a few bucks. In fact, there's a good chance you'll need to take out a mortgage loan just to pay for it. Even when it's small! It's the same for when you want to buy a property in Estonia. This country may not be France or Italy, but real estate here is still expensive. You'll need to get a mortgage to help pay for one. So it's better to know the basics behind the process before you do!

What You Need To Know About Getting a Mortgage in Estonia


Will Your Residency Status Matter?

Generally speaking, foreigners, even non-residents, can purchase real estate in Estonia. All they have to do is to get permission from the local authorities and they can buy as many properties as they way. Getting a mortgage, however, is a different story. There's no general rule regarding one's residency status but it will depend on the financial institution you're applying to. Many local banks prefer granting housing loans to residents since they're more assured that the applicant will be able to pay it back. So if you're a non-resident, either you become a resident of Estonia or set up a local bank account to improve your chances of getting that mortgage.


What are The Types of Mortgages in Estonia?

Here in Estonia, they offer up two main types of mortgages. The first one is the loan-to-value (LTV). This type divides the amount loaned to you by that of the final price of the property and uses it as collateral. It has a more insurance-type nature to it and is more common among homeowners in Estonia. The second type is the debt service-to-income (DSTI) ratio. For this one, the lender will divide all the monthly principal and interest payments of the borrower by their net income each month. Though the ratio may not exceed more than 50%.


How Long Is The Mortgage Term?

There is a standard maximum mortgage term in Estonia that most, if not all financial institutions follow: 30 years. This means that more often than not, you have to complete all your mortgage repayments within 30 years after receiving the loan. Of course, this also means that older applicants, especially those aged 70 and above, will have a harder time getting a mortgage. Generally speaking, even the age of 65 is already a stretch for many mortgage lenders in Estonia. The younger you are when you apply for a mortgage here, the better your chances of getting it!

What You Need To Know About Getting a Mortgage in Estonia


Getting a mortgage is your best to have enough money to buy real estate in Estonia. Know a little more about it, from the different types of housing loans here to the specific conditions you have to meet.




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