Some new rules in Sweden

They plan to create new amortization requirements for mortgages on real estate. The proposal is intended to apply from August 1st this year, but mus be released for consultation before that.

This is was the requirement looks like:

– All new mortgage should be paid off down to 50 per cent of the property value.
– Mortgages on more than 70 percent has to be paid off by at least 2 percent of the original loan amount each year.
– Below 70 percent, the amortization rate should be at least 1 percent of the original loan amount each year.
– The rules apply only to new mortgages.
– It is possible to make exceptions to the rules, for example in case of unemployment, death or illness.

Since the loan to value ratio is calculated on the property’s market value there is opportunitys to revalue the property to current market value and then get down to the 50% needed to avoid amortization. However that can only be done once every fifth year unless there has been major restorations or similar.

To me this is fine. It’s good for the majorety to get more solid. It’s socialistic rules and another socialistic mess which means we can easaly avoid them if we want, so for all of us a bit more educated real estate owners and investors, it won’t have any effect.

Now I’m of to have a look at Nasa’s Space Center in Houston before hitting the Swamps :)