Hey!
In order to be precise, I preferred to write this message in English as my Swedish level doesn’t allow me for great financial discussions. I hope that’s OK
I bought my first apartment, a studio in Stockholm, in March 2022, when housing prices were close to their highest. I took a mortgage (started in May 2022), with a loan to value ration of 85% at Swedbank with a floating rate and a 1.2% discount.
No I will lose my discount and have to renegotiate my loan in a couple of months. I see a few potential problems for this:
Since housing prices have decreased by about 15%, it’s likely I would be in negative equity, or really close to it, if I were to value my apartment today.
I have resigned from my stable, but toxic, job. My last day is in April and I will not take a new permanent employment right away, as I want to travel in April-May. I am likely to create my own consulting company instead. Long-term it should be a good plan financially, but it does mean that I will have no stable income when the days for renegotiation come.
This situation is making me a bit stressed, although I have reasonable savings on the side (to allow for this break and a much longer one if I’d like!).
What would you do reg. your mortgage in this situation?
Will I be able to negotiate the rate, and how?
Would it be reasonable to ask to stop paying the amortisation while I’m unemployed, or is it actually more likely for the bank to put me in the category of “risky customers they don’t want to do business/discounts with in the future”?
Or on the other hand… my savings are in Lysa and saving accounts like Qliro, but at 2%… I also have some savings in France, and with the weak krona I could transfer some here. Would it be a good idea to reimburse part of the mortgage?
A lot of questions, but if you have any advice, I’d love to read it
Have a good weekend!
A frenchy trying to get by in Sweden
PS: I’m renting out this apartment. In the beginning, I had a net positive cashflow monthly from it, but at the moment it’s negative, the rent doesn’t cover all my costs if I include the amortisation.
I bump the thread if / as others probably have more comments and suggestions.
Well, I’m not an expert but I guess you’d be in a pretty crappy (sorry) negotiating position for you mortgage interest rate - unemployed, travelling (meaning you can’t take unemployment benefit / a-kassa which otherwise would be counted as an income) and going into being self employed. I think you would have to take the interest rate the bank would give you more or less. You could try shop around to get best possible terms.
You could apply for amortization pause but again that would be up to the bank. I guess if you were in an economic crisis the could grant you that not to aggravate the situation. However, travelling probably doesn’t count as economic crisis.
On the other hand, the sky probably won’t fall, I seriously doubt they would actually revoke the loan, repossess the apt and sell it on your behalf (with you stuck to repay the balance). That would only happen if you stopped paying on the loan, and you sound to be far from that situation.
Here’s what I would do, either
Go ahead with my travel plans but scrape up all my savings and try to repay the loan, in full or in such a large part that the bank feels safe anyway. And go ahead full steam on the return to start my business.
Or. Delay my travel plans, go on a-kassa and get a new job as soon as possible for the renogotiation. Possibly negotiate with the new employer if you could take unpaid leave to do the trip later on in the year (if you are hot on the job market that might be accepted). Once the situation stabilized, I’d go ahead and start my own business.
Or. Since you don’t seem to need it, bite bullet and sell it and clear the loan. And then go on your trip
PS: You shouldn’t include amortization in your cost. Interest yes, but amortization no. Also check how long you can keep it rented out. Swedish “bostadsrättsföreningar” can be pretty strikt and usually don’t allow it more than 1-2 years. Not sure how well versed you are in such Swedish rules so worth checking before setting your plan.
Hope that give you some input and hope that others have more creative ways for your situation.
I definitely won’t bite a bullet worth 450,000 SEK by selling the apartment now. I can rent it out probably for a long time, friends and I have bought units in the same building, and it’s a small brf.
But 1 and 2 are options! I can’t pay out the entire loan at all and I don’t know if that would make sense, but I could pay 20 or 30% of it, or get on a job earlier but negotiating unpaid holidays.
Note that in any case, I will not get a-kassa for 45 working days since I’m the one who resigned, so until mid-June…
I took a bit of a bad decision by resigning while I could have gone on sick leave or try to ask for an agreement since I was in a bad mental state at my current job (mostly because of my employer), but too late for regrets.
Money is nothing when it comes to health! No regrets please
Ok, got it, then I’d go on the a-kassa and try to get a new job asap, provided you’re up for it. Travelling would be secondary, other than usual holiday as employed and possibly with unpaid leave (but might be risky to negotiate unless you are really sought after).
I am not sure how the bank sees the waiting period for a-kassa but don’t think that would be too much of a problem. At least you can show income from mid June and that at least you’re active job hunting. Amortization pause might be possible in that period
You could perhaps accept the best possible (least bad) rate you get and then renegotiate when you get a new job. You can alway do that. A shorter period with higher rate might do less damage to your savings.
Hope that someone here can give you input on the best way to handle mortgage when starting a new business. I guess the bank (again) only looks on your income and it can take while to get business and your salary from your own company going. There might well be a few tricks. Eg taking a longer fixed mortgage (1-2 yr) as employed and then start up the business and be all set for the renewal. Probably others with that experience here.
Well, just explain to the bank that you have gathered (most) of your banking business with them and ask for what rate they can offer. You probably wont get the best discount but surely something. You can remind them that your business is a long term one albeit a bit shaky right now.
Sudden drops in income is a good reason for the bank approving a break in paying back the loan.
And enjoy your vacation. Fill up your energy and apply for a new job when you get back. It is one of these occasions when you actually can take a longer period off in life.
Don’t tell the bank!
Most major banks have retention strategies when dicounted rates terminate, and you will most likely be rolled into a new (perhaps somewhat smaller) discount.
I don’t think the bank will know that you are not employed anymore? And as long as you pay the bill every month they can’t revoke the mortgage (by law). I would just “negotiate” carefully, without bringing up any changes since you took out the mortgage. That will probably give you a reasonable, maybe the same, discount as before.
Really hope I can get the same discount 