Buying your first property can be challenging especially if you need to do that in a new city. At the end of the day it is one of the larger financial decisions. Process has many steps, tasks and requirements and no one wants to make an expensive mistake. Estonia is no different, but the key difference is that most of our documentation can be signed digitally from all over the world. Even going to the notary can be as easy as logging in to your computer with an ID card and completing the transaction on a live video call.
Where to start?
A lot of people’s first step in buying a property is looking online for offers. We recommend starting with financing. So before you start, ask yourself these questions…
How much have I saved up for down payment?
The minimum down payment for a home loan in Estonia is 10%. However, in most cases, banks would like 15-30% as a downpayment for a home in the bigger cities (Tallinn, Tartu, Pärnu). The down payment amount depends largely on your income, employer, your credit score, and the liquidity of the property you want to buy. However to be considered for a home loan the bank wants to make sure you have a real need for a home loan in Estonia and you have had min 6 months of stable employment and income here.
What is my price range?
It is important to find out what your budget is before you even start looking at properties. If you need a loan, you must ask for a loan and get approved by the bank. Getting approved can be a little more time-consuming to a foreigner than it is to a local.
If you fill out a loan application the local banks will give you their answers in 1-10 business days. It’s important to know that banks will never finance 100% of the purchase price of the home. Usually, they will finance 70-85% of the total purchase price. If the property is old and needs a lot of renovations to be livable, the bank may only finance 50% of the deal.
Tip: It is also possible to get a home loan together with your spouse. Since it is considered a lower risk the bank will often make better terms and will possibly raise the loan amount.
However, if you plan to finance the total amount of the property yourself, then you can move straight on to looking for properties.
What features do you want the future home to have?
It’s important to separate the want-s from the need-s. There is a chance that at this moment there isn’t a perfect home on the market and it’s good to retain some flexibility on your list.
Think about what neighborhoods you would like to live in, how old can the building be, what educational, health, and free time facilities have to be near your property. How many bathrooms, bedrooms, etc. Do you need a private parking space, balcony, or storage space in the basement?
Who will help you find a home and guide you through the process?
Synapse Real Estate Brokerage has a special buyer program where we help people to find their perfect home without the hassle. Once you find the perfect home we assist you in negotiating the entire purchase process. Including finding the perfect place, assessing the pros and cons, making an offer, getting a loan, and completing paperwork. We may also have more information about suitable offers that are not yet on the market.
Closing
You just have to set up a notary time to complete the transaction. If you finance the purchase with a bank, the bank will offer notary times. If you do not need a bank then the notary time can be set by you, the seller, or representing real estate agent. However even if you have the necessary finances you must be ready to explain to the notary how, when, and where you acquired the sum.
Fees
There are closing, register, and notary fees. If you are taking a loan then you can also expect to pay the appraiser’s fee and bank contract fee. On an average property, all of these can add up to be approximately 1% of the average home’s total purchase price.
