A government guarantee can be obtained either for an ASP loan granted on the basis of ASP savings or for an ordinary housing loan. The government guarantee for a housing loan is intended for all home buyers, not only for those buying their first home.
As a rule, the collateral value of a home does not cover the whole loan amount required for the purchase, and thus the government guarantee provides the collateral for the housing loan. The purpose of the government guarantee is to encourage people to buy a home as with the government guarantee, the amount of the required as additional collateral or equity is lower.
A person purchasing a home does not need to apply for the government guarantee separately from the State Treasury. Instead, they can agree on the guarantee with their bank when negotiating a loan.
The government guarantee is a deficiency guarantee, which means that the home purchased with the loan or other real security (such as another dwelling) provides the primary collateral for the loan. Compensation based on the government guarantee will only be paid to the bank if the primary collateral is insufficient to cover the loan after its sale and the borrower has been found insolvent.
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Amount of the government guarantee
The government guarantee may account for up to 20 per cent of the currently remaining loan capital. In the case of an ASP loan granted on the basis of ASP savings, the government guarantee may not exceed 25 per cent of the loan capital. The amount of the guarantee in euros will decrease as the loan is repaid in instalments. The percentage of the guarantee remains the same at all times.
The government’s liability for capital allocated to the same home does not exceed EUR 60,000. If a housing loan of more than EUR 300,000 is granted and the government guarantee is used for the maximum, EUR 60,000, the guarantee’s share of the loan will be less than 20 per cent. The actual percentage of the guarantee is used to determine the remaining amount of the government guarantee in euros.
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Guarantee fee
A guarantee fee for the government guarantee is charged in connection with withdrawing the loan or the first instalment of the loan. The fee is 2.5 per cent of the amount of the government guarantee. A guarantee for an ASP loan granted on the basis of ASP savings is free of charge.
Example of the guarantee fee: Purchase price of the home EUR 100,000 Amount of housing loan (85% of the price of the home) EUR 85,000 Amount of the government guarantee (up to 20% of the amount of the loan) EUR 17,000 Guarantee fee (2.5% of the amount of the government guarantee) EUR 425 -
Conditions for a home purchased with a loan guaranteed by the government
A home purchased with a government-guaranteed housing loan must be located in Finland (excluding Åland).
A home refers to at least half of the shares or stakes entitling to the possession of an apartment, a residential property or a residential building located in an area under the right of use of the dwelling.
A government-guaranteed housing loan can also be used for acquiring a home that is currently under construction or for building a new home.
Please note:
- The home to be purchased may only include living quarters and facilities directly related to living there that are reasonable considering the home size. In addition to a residential building, such facilities include for example parking spaces, garages and saunas as well as storage buildings.
- The home to be purchased must be suitable for permanent and year-round residential use, so it cannot be, for example, a leisure home or a commercial space.
- A condominium loan share can be included in the purchase price, as long as it has been valued and verified per apartment, or is otherwise known, and it is paid off as soon as possible.
- A part-ownership home can be bought if at least 50 per cent of the shares will be owned by the borrower and at least 50 per cent of the shares or stakes are being traded. Also, the remaining share of a home of which one has inherited or been gifted partial ownership can be bought from the estate (at least 50 per cent).
- loan guaranteed by the government cannot be granted to cover costs related to right-of-occupancy housing.
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Purchase of a shared home
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Loan period and instalment-free periods
The maximum loan period for a housing loan guaranteed by the government is 25 years from the date on which the loan or its first instalment was withdrawn. A later extension of the loan period is possible.
During the loan period, the borrower and the lender may agree on instalment-free periods totalling no more than four years. However, continuous instalment-free periods may be granted for a maximum of two years at a time. Instalment-free periods can therefore extend the loan period to a maximum of 29 years.
If the loan’s repayment method is equal instalments, i.e. the monthly instalment of the loan includes both the repayment of the loan capital and interest costs and remains the same throughout the loan period, the loan period may also be extended to more than 29 years as interest rates increase.
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Collateral
The shares or stakes entitling to the possession of a dwelling or a mortgage on the property for which the loan is granted or some other equally valuable physical collateral must be the primary security for a government-guaranteed housing loan. The collateral must have higher priority in the housing loan than any other liability of the borrower.
The collateral must cover the entire loan amount. If the collateral is insufficient to cover the whole loan, the exceeding part must be broken down into a separate loan without a government guarantee.
If the assets pledged as collateral of the loan are capitalised, the bank must protect the interest of the state. The proceeds from the sale with necessary costs deducted must first be used to cover the government-guaranteed share of the loan. This must be indicated in the loan agreement.
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Changes during the loan period
Transfer of the loan to a new bank
A government-guaranteed housing loan may be transferred during the loan period to another bank. The borrower will agree on the transfer of the loan with the new bank. The loan must be transferred to a new bank as such, meaning for example that the amount of the loan may not be increased in connection with the transfer. Even after the transfer, the loan period is calculated from the time the original loan was granted.
At the time a loan is transferred, the bank that previously granted the loan is obliged to provide the new bank with the necessary information to enable the loan to be transferred unchanged.
Transfer of the loan to a new home
A government-guaranteed housing loan can be transferred to a new dwelling and used to finance its acquisition if the borrower wants to move but still retain their government guarantee.
If a home financed with a government guaranteed loan is sold, the new owner-occupied home must be purchased within two years. If a new home is not purchased by the deadline, the loan must be repaid, and the borrower loses the government guarantee (does not apply to loans for homes that have been sold before 1st of June 2026).
A new government guarantee may also be granted for a new housing loan or for a loan for which the state has not previously been liable when a person sells their old home and purchases a new one.
Changes to borrowers
During the loan period, there may be changes in the borrowers of a government-guaranteed loan.
A shared housing loan can be divided into two separate loans. The loan amount is divided between the borrowers in half or into other shares agreed by the borrowers.
One of the borrowers of a shared housing loan can redeem the other share of the purchased home and take over the loan alone. The bank must ensure that the person taking over the loan alone has sufficient solvency to pay back the loan.
A new borrower may also be attached to a government-guaranteed loan after it has been withdrawn, provided that both borrowers will own a 50% share of the home.
A government guarantee is a secondary collateral security, which means that the bank or its representative may apply for a guarantee compensation once the collateral for the loan has been sold and the borrower has been found insolvent. The government is liable for the loan’s capital to the extent that the payment has not been received from the collateral, however, up to the maximum guarantee amount. The government is also liable for the interest and interest on late payments that apply to the capital share covered by the government guarantee.
The application for the guarantee compensation must be submitted no later than three months from the maturity of the guarantee. If the application for the guarantee compensation is submitted later than three months from the maturity of the guarantee, the penalty interest will only be paid after the deadline has expired from the date on which the application has become pending.
Please see the Instructions and Forms tab (In Finnish or Swedish) for more detailed instructions on how to apply and the application form. You can also apply for guarantee compensation to the State Treasury with a free-form written application, which must include all the data requested on the application form and in the instructions. The application must be filled in carefully and all necessary additional clarifications must be attached to it.
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Payment of compensation and the bank’s obligation to refund payments
The maximum amount of guarantee compensation paid is the sum applied for, and the compensation may not exceed the amount of the bank’s actual credit loss.
Compensation may be waived or reduced if, when granting a housing loan or during the loan period, the bank has failed to comply with law, the statutory good lending practice or good banking practice or otherwise acted in a manner that may increase the government’s guarantee compensation risk.
If the bank receives instalments and interest from the borrower after the payment of guarantee compensation, it is legally obliged to pay the State Treasury the portion corresponding to the government guarantee. The lender must contact the State Treasury before payment: takauskorvaukset@valtiokonttori.fi. The State Treasury will provide payment instructions.
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Right of recourse
The State Treasury has the right to recover from the borrower the compensation paid to the bank on the basis of the government guarantee and the interest for late payment on this retrospective receivable pursuant to the interest rate referred to in section 4, subsection 1 of the Interest Act from the time compensation was paid. The right of recourse must be entered in the loan agreement.
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Waiving a recourse receivalbe
Upon application to the State Treasury, a claim for a recourse receivable based on the guarantee compensation paid to the bank may be waived for anyone who cannot reasonably be considered to be able to pay due to their state of health, incapacity for work, unemployment, or other comparable reasons.
State of health, unemployment or incapacity to work referred to in the Act does not, as such, exempt a person of the payment of a recourse receivable. Instead, the applicant must provide evidence that they cannot reasonably be considered to be able to pay due to a reason specified in the Act or other comparable reason. The State Treasury shall decide based on overall consideration.
The borrower can apply for the waiving of a recourse receivable using the form available in the Instructions and forms section (in Finnish or Swedish) or a free form written application that must include all the information requested in the application form. The State Treasury must have at its disposal the necessary data on the applicant’s financial situation for the processing of the waiver application. The applicant must therefore submit evidence that supports the facts presented in the application.
