Housing financing practices differ between Finland, Sweden and Denmark in terms of when a housing transaction binds the buyer, how flexible the loan terms are and who ultimately bears the risks. This is clear from a study by Aalto University that compares the financing of housing construction and home purchase in Finland, Sweden and Denmark.
Rising interest rates and costs in 2022 froze housing construction in Finland and other Nordic countries. Sweden and Denmark returned to growth in 2025, but the housing market and construction in Finland are still stuck. The availability and terms of financing are factors affecting the start of housing construction and the demand for apartments.
Financing for housing construction and home purchase in Finland, Sweden and Denmark is based on common European regulations, but the countries' practices differ throughout the entire financing chain. This is evident in Tea Lönnroth, Heidi Falkenbach ja Elias Oikarinen From a study conducted at Aalto University.
Homebuyer loan terms differ from country to country
In the Nordic countries, a large proportion of homeowners are in housing debt, and households typically have high levels of mortgage debt. The availability and terms of financing therefore have a significant impact on households' ability to purchase a home and the functioning of the housing market as a whole.
In Sweden and Denmark, a home is usually the only collateral for a loan. In Finland, the collateral value of a home is typically around 70–75 percent of its fair value, which is why the bank may require additional collateral or a guarantee.
There is more flexibility in Sweden when it comes to repaying a loan. The loan does not have to be repaid at all if the debt is less than half the value of the home. Due to unemployment, illness or other special life circumstances, you may be exempted from repayments.
"In Sweden, both the repayment requirement and the exemption from it, including in the event of a recession, are enshrined in law. A similar general exemption was applied, for example, during the corona pandemic, when banks could grant repayment holidays to all mortgage borrowers. In Finland, there is no similar statutory requirement for household mortgages, but repayment holidays are at the bank's discretion," says Tea Lönnroth from Aalto University, one of the authors of the report.
There are also differences in government subsidies and incentives. In both Sweden and Denmark, mortgage interest can be deducted from taxes, while in Finland the right to deduct was completely abolished in 2023. Finland, on the other hand, has a nationwide ASP system, or the first-time home buyer's housing savings path, while in Sweden and Denmark, the purchase of a first-time home is mainly supported by market-based solutions.
Significant differences between countries in the binding nature of housing transactions
In Finland, construction of new properties is practically started based on advance reservations: the reservation does not bind the buyer, and a binding transaction can also be cancelled before the transfer of ownership of the apartment. In the latter case, the buyer is obliged to compensate the seller for any damage caused by the cancellation of the transaction.
In Sweden, project financing is based on a binding pre-sale, where the buyer commits to the apartment at an early stage. The buyer can only withdraw from the pre-sale agreement in situations specifically provided for by law. In Denmark, the buyer also commits to the apartment at an early stage, but has a statutory right of withdrawal within six business days of concluding the sales contract.
"In Sweden, binding pre-sale eliminates the developer's sales risk early and at the same time transfers the market risk of the construction period to the buyer. In Finland, pre-reservation does not bind the buyer, so the risk remains with the developer and financier for a longer period. In Denmark, risk is managed primarily through requirements for the financier," Lönnroth says.
The implementation of the study was funded by the Construction Industry Federation (RT), whose CEO is Aleksi Randell comment on the results:
"The systems need to be viewed as a whole, but Finland can learn from some of the practices in Sweden and Denmark. For example, these include flexibility in financing, which we believe will ease the situation for the average homebuyer and help kick-start new construction."
The study provides a comparative overview of housing construction and home purchase financing in Finland, Sweden and Denmark: regulation, financing structures and market practices. Document analysis and expert interviews have been used as data. The review is limited to describing and comparing the practices of the countries: the study does not assess the superiority of the systems or make recommendations for changing Finnish regulation or market practices. The study provides information that can be used as a basis for discussion and further review of housing financing. The authors are responsible for the content and conclusions of the study.
Publication information:
- Lönnroth, T., Falkenbach, H. & Oikarinen, E. (2026). Housing construction and housing financing in Finland, Sweden and Denmark. Aalto University publication series, Science + Technology 5/2026. ISBN 978-952-64-3415-5 (PDF).
- Aalto University, Financing of housing construction and home purchase in the Nordic countries – summary
The publication will also be available for reading in the Aalto University publication archive:
Additional information
Tea Lönnroth, university lecturer, Aalto University, tel. 040 748 8282, tea.lonnroth@aalto.fi
Aleksi Randell, CEO, Construction Industry Federation of Finland, tel. +358 9 129 9201 aleksi.randell@rt.fi