WHAT IS A HOUSING COMPANY LOAN?
In contrast to the personal bank loan, a housing company loan does not require any personal loan arrangement nor any pledge. A housing company loan is a loan that is the liability of the housing company but not direct liability of the shareholder personally. It comes automatically with the apartment purchasing and is fixed in the purchasing agreement.
For the foreign buyers a housing company loan is often an efficient tool for the apartment purchasing, as they do not have any bank relationship in Finland. For the investor this loan is an efficient financial leverage, as the loan interest and principal are often deductible from the rental income.
Based on the recent practice, the initial stage (1-3 years) of the housing company loan repayment consist of only interest payments, while the loan principal will be due few years later after completion of the apartment building.
A housing company loan is divided between its shareholders in accordance with the quantity of shares owned by each of them (usually proportional to the number of square metres of each apartment).
The share in the housing company loan and related interest are to be paid by the shareholder of the housing company in the form of monthly payments (see below Charge of financial costs) in line with other instalments (management/maintenance charge, charge for plot rent). The loan can also be paid off in full at any time in accordance with the housing company regulations regarding the date of acceptance of repayments.
In newly-built apartment blocks, the loan amount provided by Lehto Group Oy is usually up to 75 percent of the price of the apartment.
Charge for financial costs / charge for capital costs (Rahoitusvastike / Pääomavastike) is a monthly payment to be made by housing company shareholders. The payment applies to the both the principal and the interest on the housing company loan. When the housing company loan is paid in full, the charge for financial costs does not apply any more.
Maintenance / Management charge (Hoitovastike) is a monthly payment to be made by the housing company shareholder. The payment applies to housing company management, maintenance, utilities, waste management, cleaning, real estate tax and insurances.
Charge for plot rent is a monthly payment to be made by the housing company shareholder. The payment applies to the costs arising from the lease payments for the plot of land rented by the housing company.