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Sweden Cuts Maximum Mortgage Term To 105 Years (The Average Is 140)

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I keep the radio tuned in to the World Service throughout the night and I thought I heard something mentioned about this when I was half awake at some point in the night... but when I recalled it in the morning I thought it can't possibly be right and it was just some weird dream I'd had!

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Sweden is the biggest basket case in the EU as far as housing is concerned. When it hits the fan, they'll have the biggest crash. Ironically, their banks already got burnt in the Baltics lending to people on stupid valuations up to 2008, but clearly learnt nothing. Norway isn't much better.

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So, we have no intelligent government anywhere in the world?

We can accept the banks doing this on account of we know what they are and they barely pretend otherwise.

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Mortgage terms of any length of more than 25 years are criminal. It's so sad to see even intelligent people clamour to buy a dwelling at any cost.

The financial industry is a cancer on society.

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The 100 year mortgage is common in Switzerland, although partly because there is a tax on the amount of the loan you have payed off (sorry for waffling, I know that there is a correct term for this, just cant remember what it is).

So most Swiss don't fully pay off there mortgage.

Edited by reddog

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Yeah this isn't what you think it is. There's a favourable tax treatment on mortgage interest (probably like MIRAS) so Swedes have this forever mortgage and a shorter one on the same property they pay off in a fashion we would recognise.

The govt limiting the term is effectively trying to stop them getting so much tax relief l would guess.

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The 100 year mortgage is common in Switzerland, although partly because there is a tax on the amount of the loan you have payed off (sorry for waffling, I know that there is a correct term for this, just cant remember what it is).

So most Swiss don't fully pay off there mortgage.

Swiss mortgages don't get paid off past 65%, they don't have a fixed term of 100 years.

In Switzerland your taxed on the notional rent you would have paid, you can offset interest charges & some repairs.

Edited by Fatmanfilms

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Yeah this article is a poor attempt at explaining important recent changes to the Swedish housing market. There's been a number of steps taken recently to cool it, the article failing to explain any.

Interest-only ('amortisation-free') mortgages have been the norm for a long time in Sweden. They used to be available at essentially 100% LTV. A few years back it was decided that a 15% deposit is needed but it was still optional to amortise (he market dropped somewhat but quickly recovered). From the starting 85% LTV some people choose to amortise, some don't, which is presumably how you get the eye-catching but arbitrary 140 year average mortgage term.

Now with NIRP and stupidly cheap mortgages, housing is near enough free (the only hurdle being the 15% deposit) and the market is overheating. The authorities have sensibly decided to implement a requirement for amortisation. This goes in force 1 May and will require 2% annual repayment of principal for LTV in the bracket 70-85% and 1% in 50-70%. Below that it remains optional to make further repayments, which I suppose is likely to translate to a lower average mortgage term.

The new amortisation requirement is fairly strict, especially considering a normal repayment mortgage pays very little principal back initially. So it will be interesting to see what this does the housing market in a few months. Fingers crossed!

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Also in a nod to UK housing policy existing homeowners are spared, even for remortgaging. Newbuilds are exempt for the first 5 years of the mortgage term to 'promote construction industry' but I prefer to think if this as a HTB-style negative equity trap for FTBs.

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