One of the best decisions JoEllen and I made was renting a house in the center of Stockholm. Living in the heart of the city helped us to connect and fall in love with our new country. We absolutely loved being surrounded by shops, restaurants, bars, parks, public transit stops, and iconic landmarks. Though our rent was higher that we could have found elsewhere, we have cherished our two years on Kungsholmsgatan.
However, after two years in Sweden, we were ready to begin investing in our future here. So as our lease was ending, we began looking into buying a permanent home with a little more space. After calling House Hunters International and finding out it is completely staged (boo!), JoEllen and I got to work on the enormous task of buying a home in a foreign country.
First a little information on the housing market in Stockholm: It is booming! Stockholm is one of the fastest growing cities in Europe and has one of the fastest growing economies. A guy I worked with recently sold a home that he bought a few years ago in Sweden. For each year that he owned the home, the value increased in an amount equal to his entire yearly salary. Needless to say, the current market is highly competitive.
Step One: Lånelöfte
In order to begin looking at potential homes to purchase, you must first receive a lånelofte (loan commitment) from your bank. This is an official document which states that the bank is willing to grant a housing loan to an individual up to a certain amount of money. To be granted a lånelofte, a few important requirements must be met. You will need to give the bank a complete overview of your financial situation so that they can determine if you can afford the loan. Typically the bank will require you to have a permanent job contract in Sweden so they can be more sure of your stability. Most importantly, the bank will need assurance that you will be able to immediately put down 15% of the home’s value upon purchasing the home. That is correct, for the bank to sponsor you for a home loan, you must be able to put down 15% of the total loan amount! So plan accordingly for this: save up, borrow money from a loved one, or adjust your expectations.
Step Two: Hemnet.se
Your one stop shop for house hunting in Sweden is Hemnet.se. This website lists all homes that are on the market, provides pictures, and breaks down all of the information that you need. Spend a lot of time on this website and get a solid idea of what you are looking for. When it comes to the listed price, keep in mind that it is only a starting bid and will almost certainly go up, and by quite a bit. JoEllen and I allotted for around a 20% increase from the listed price to the final sale.
Typically each home will have two viewings, usually on Sunday and Monday, that last around 30 minutes – that’s it! You get a 30 minute window to look around the house (alongside all of your competitors) to decide if this is a place that you would like to permanently move into. Each showing will have a realtor to answer any questions, take your contact information, and hand out a booklet of details about the property. JoEllen and I went to over 20 of these showings so that we could narrow down our idea what we wanted in a home and in a neighborhood.
Step Three: Bidding
If you attend a house showing and decide that you like a particular home, it may be time to put in a bid. The morning after the showing, the bidding begins. Once a bid is placed, all potential buyers are sent a simple text saying that the first bidder has placed a bid along with the amount. If you would like to place a bid, you simply reply to the text with your offer. This continues for a few days until a certain bidder has won.
JoEllen and I only bid on two houses. The first had 11 bidders fighting it out for the property and quickly went out of our price range. For the second property there was one other bidder. After 24 hours of back-and-forth, slowly increasing the price, we decided we would put in one final offer to try to seal the deal. Minutes later, the realtor called to congratulate us on our new home!
Step Four: Paperwork and Rates
After winning the bid on a home, it is time to contact the bank who issued your lånelöfte and give them all the details of the purchase. The most important thing to begin considering here is your interest rate. In Sweden you can lock in a rate for different time periods; the shorter the time period the lower the rate. Check out the averages from particular banks here. You can also divide your loan among different time periods to spread out the risk.
Once you have worked out the specifics from your loan and signed off on it from the bank, you will sit down with the realtor and the previous homeowners. Several documents will be signed and a move in date will be set. The realtor will also get in touch with your bank, so that you can say goodbye to the 15% down payment.
On the date of the move in, you will meet briefly one final time with the realtor and previous owners to collect the keys. The realtor will call the banks to make sure that funds are properly transferred. It’s also a good idea to arrange with the previous owners to have a walk-through of the space and get a quick tour of the building’s facilities, such as laundry, storage, trash and recycling. Don’t forget to ask for the door code, too!
Buying a home in Sweden is a fast-paced, expensive and exciting endeavor. It can be unnerving to realize that you need to make a life changing decision based on the 30 minutes you spend in a single house viewing. Our advice: set a budget and go with your gut!
Now, checkout some photos of our new home!
And you can’t have a new home without a housewarming party!