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Home loan

General

You can apply for a loan before becoming an LHV customer. But you do have to be a client by the time you sign the home loan agreement.

You can apply for a loan if your income (salary, dividends, rental income) is sufficient to cover the loan payments after covering your daily expenses. If you have previously borrowed from a bank, your repayment history must be impeccable.

Use the maximum loan amount calculator if you are interested in getting an idea of how much your loan payments will be.

A home loan can finance the purchase, renovation or construction of a home.

On our website you will find the terms and conditions for buying a home and for building a house.

To obtain a loan, please fill in a home loan application. We will make the initial home loan offer to you the following working day.

If your salary is not currently deposited with LHV Pank, you can quickly and conveniently submit your account statement for the last 6 months during the application process. We will guide you through each step of the application.

For a home loan, you should factor in the amount of self-financing, the contract fee and the real estate appraisal fee. If you're using a KredEx guarantee, you will also have to pay a one-time guarantee fee upon signing the loan agreement.

Upon concluding a notarized collateral agreement, you pay a notary fee and a state fee. This amount depends on the content of the transaction and the amount of the loan and mortgage. You can calculate the notary fee using this calculator.

The collateral must be insured throughout the loan period, so take into account the insurance costs. We offer LHV Home insurance and you can learn more about it on our website.

You can conveniently submit the account statement via a special link during the application process.

If you want to email us the account statement, please send it bearing the bank's digital signature in .bdoc format. Read the instructions for sending account statements. It is not necessary to send statements for your LHV accounts.

Any information necessary about your data for receiving Kredex guarantee is available at eesti.ee environment. Please have a closer look at how to send various documents to us correctly.

All other necessary additional documents should always be sent as an email attachment. Unfortunately, we do not accept documents sent via links (e.g., Google Drive, Dropbox, etc.).

To use a KredEx guarantee, please first make sure that you belong to one of the groups eligible for the KredEx guarantee. You can find more information on the KredEx website.

If you are in at least one of the target groups, please send a respective document to prove this. If you are in the "Young Family", "Family with many children" or "Young Specialist" group, the information is available at eesti.ee environment.

Target groupDocument to be submitted to the bank
Young family, Family with many childrenExtract from the state portal eesti.ee (see detailed instructions for sending a certificate)
Young specialistExtract from the state portal eesti.ee (see detailed instructions for sending a certificate)
If you have studied abroad, an ENIC/NARIC certificate
Tenant living in a dwelling that has been restored to the original ownerLease agreement or Population Register certificate
Veteran of the Defence Forces or the Defence LeagueCertificate of the Defence Forces Support Services Centre
Person purchasing or renovating energy efficient housingEnergy performance calculation or valid energy label certifying the energy performance class

To use a KredEx guarantee, please first make sure that you belong to one of the groups eligible for the KredEx guarantee. For more information, visit the KredEx website.

The necessary certificate is available for a fee at eesti.ee environment. A digitally signed copy of your child’s/children’s birth certificate is also accepted.

If you are in the “Young Family” or „Family with many children“ group, do the following to send a certificate:

  • Log in to eesti.ee portal: https://www.eesti.ee/en using an ID card, mobile-ID or Smart-ID.

  • From the expand menu on the left select: E-services → Me and my family → Me and my children: data from population register

  • Use an ID card, mobile-ID or Smart-ID to enter the e-population register, where the results of the automatic query and data of your children will be displayed. Scroll down the page until you see the following button:

  • And the button:

  • Then you have to select your name and the selection ‘Extract from population register’, after which you can choose which data will be displayed in the certificate (choose children), and generate the certificate.

To use a KredEx guarantee, please first make sure that you belong to one of the groups eligible for the KredEx guarantee. For more information, visit the KredEx website.

If you are in the “Young Specialist” group, do the following to send a certificate:

  • Log in to the www.eesti.ee portal using an ID card, mobile ID or Smart-ID.

  • From the menu on the left, select: E-services → Education

  • This will bring up a new screen. Select ‘Data from the Estonian Education Information System’..

  • After you select this option, the system will make an automatic query and show you information on your education. Scroll down the page until you see the following buttons:

  • Click the ‘Send’ button, which will bring up a new small window:

  • Enter the e-mail address of the loan manager in the line ‘E-mail’. Then click the ‘Send’ button again.

Unfortunately, we are unable to offer you a loan during the probationary period. However, we can review the request for a home loan and make a loan decision on the assumption that after the probationary period you will continue in the same job. By the time we start concluding a home loan agreement, you must have successfully completed the probationary period and you continue to work in the same job.

In general, we take into account the average income for the last 6 months. If your salary has recently increased, please send us the amendment to your employment contract showing the new salary. Then we can take that into account.

If you have applied for a home loan for one property, but now choose another, you only need to send a link to sales ad for the new property or a price offer to the loan manager you communicated with on the subject of the home loan. You can also email information to kodulaen@lhv.ee.

If more than 2 months have passed since the previous loan application was submitted, please submit a new loan application.

Yes. If you are applying for a home loan and are not yet an LHV customer, please fill in the account opening form, authenticate your identity and then enter into a customer agreement.

You can authenticate your identity at the nearest identification point. Please bring with you a valid identity document. After identification, you can enter into a customer agreement conveniently in the Internet bank.

If the real estate secured by a home loan is damaged, the bank – just like you – has an interest in the insurance covering the losses incurred.

We offer LHV Home Insurance, which is total risk insurance with a number of possibilities. Read more about the advantages and conditions on our website.

However, if you decide to take out an insurance contract with another insurance company, choose a policy that covers all the most common risks. In any case, the insurance must cover the risk of fire, water, natural disasters and vandalism.

The real estate used as collateral for the home loan must be insured throughout the loan period. In the insurance contract, mark LHV Pank as the beneficiary.

You can see your valid insurance policy information in the Internet bank under contract view.

The following can be viewed:

  • policy number,
  • policy validity period,
  • the insurance organization,
  • insured property.

A mortgage means that if the loan is not repaid, the bank can foreclose on your apartment or house (including the land). The mortgage is set at 1.3 times the secured loan amount to cover possible additional costs related to the sale of the property if you have difficulties repaying the loan and the bank must realize the loan collateral.

Before you give consent to mortgaging property...

  • carefully consider whether you are willing to take a risk and potentially forfeit your apartment or house if you have problems repaying the loan.
  • decide whose obligations and what obligations you are prepared to secure.
  • you have the right to ask the notary and bank to see the draft versions of contracts to be concluded, and upon receiving them, carefully read through the content of the contracts.
  • you should feel free to contact both the bank and the notary's office to get answers to any questions you may have.

Use legal assistance if necessary.

Right before signing a notarial contract

  • listen very carefully to the notary's explanations.
  • don't be afraid to ask if you don't understand something.
  • check that the agreement contains exactly what you have agreed with both the borrower and the bank.

Once the contracts have been signed

  • take the initiative and take an interest in how the loan agreement is being fulfilled.

If the borrower does not answer your questions, be sure to contact the bank.

  • always give notice of any changes in your contact details (address, telephone number, e-mail address). Only in this way can you be sure that the necessary information will reach you.
  • carefully read the messages sent by the bank and be sure to claim any registered mail.

If the borrower fails to fulfil its obligations, the bank will contact you and give you the opportunity to do so.

By fulfilling the borrower's obligation, you can prevent the sale of the apartment or house and also avoid incurring additional costs and litigation.

You have the right to demand that the borrower reimburse you for amounts paid by you on their behalf.

What are the general terms and conditions of a LHV home loan?

The interest on a home loan depends on each individual loan applicant, and we take into account a wide variety of different factors (e.g. length of employment and profession, amount of income and liabilities, payment history, desired loan amount and amount of self-financing, etc.). In addition, we also take into account the location, condition and other related factors of the property to be purchased.

While home loan offers shouldn't be compared only on the basis of interest rate, it is a good idea to choose a bank you would like to do business with as a whole. A loan is a long-term obligation, so it is worth considering the total value: customer service and attitude, convenience and efficiency, product selection and other similar arguments. In more trying times, it is much easier to negotiate with a bank that is the home bank for all your banking products and services.

When choosing a home loan provider, be aware of other fees that may be incurred during the home loan agreement period. For example, in LHV, early repayment of a loan is free of charge. This is also the case even for partial repayment. Not having to pay early repayment penalties can represent a significant financial gain in the case of sale of the asset.

The interest on a home loan can also depend on what kind of home you plan to buy. We want to encourage the purchase of the most energy-efficient homes and offer a home loan interest rate from 1.49% + 6-month euribor for the purchase of an A-energy class home. Interested? Read more on our website.

The contract fee depends on the amount of the loan: the larger the loan, the higher the contract fee. As a rule, the contract fee for a home loan is in the range of 0.5-0.9% of the loan amount (a minimum of 300 euros).

You can conveniently calculate the home loan amount yourself using the maximum loan amount calculator. The loan amount can be higher if your income increases or liabilities decrease. For example, if you get a second job and your monthly income increases or you repay a loan or leasing or give up your credit card.

As a bank, we must follow the principles of responsible lending and various regulations. As a general rule, a maximum of 50% of your income can be spent on monthly loan payments. If a loan applicant also has dependents (such as minor children), the share of income allowed to be spent on loan payments may be smaller.

It is worth knowing that under a Bank of Estonia regulation, we factor in an interest rate of 6% on payments on monthly new home loan payments when calculating the applicant's solvency. This is necessary should the 6-month euribor linked to the interest rate on the home loan increase significantly, resulting in a corresponding increase in the monthly payment on a home loan. Don't be offended if, in our loan offer, we ask for additional collateral, or a larger down payment or recommend considering finding a co-signer. We are only following the above mentioned principle of responsible lending. It is in no one's interests if the loan taken exceeds the customer's ability to pay, running the risk of difficulties in making loan payments later on. Therefore, it is always worth thinking carefully about taking out a loan.

Self-financing is your own financial contribution to buying a home. This is necessary both to reduce potential risks and to demonstrate your contribution in taking out the loan. The higher your down payment, the lower your monthly home loan payment.

The amount of self-financing depends on both the loan applicant and the assets to be purchased. We consider the loan applicant's solvency and sometimes we may ask for higher self-financing in order for the monthly payment to be compatible. In the case of a real estate purchase, we take into account the condition of the property and also how well it will maintain its market value over time.

For new developments, the minimum self-financing is in the range of 15–20%. In the case of older assets, it is 20–30% of the value of the property and in the case of houses, the down payment averages 25%. Using a KredEx guarantee, the lowest possible self-financing is 10%, and with additional collateral it can be 0%.

For an apartment, we can also offer you a home loan without an appraisal report. However, an appraisal is necessary once we start concluding a loan agreement. It is a good idea to order an apartment appraisal after we have pre-approved you for a home loan. You can also ask your loan manager for a recommendation of a real estate appraiser. LHV's own in-house real estate appraiser conducts the fastest and lowest-cost appraisals on the market.

If you are building a house, though, we will need an appraisal report before we extend a home loan offer. The appraisal report must state the current market value of the house as well as the future market value of the house when the house is completed. You can also ask your loan manager to recommend a real estate appraiser for a house appraisal.

I received a home loan offer...

By extending the loan period, the monthly payments decrease because the amount of the home loan is spread over a longer period of time. If we offered you a longer loan period than you requested in your application, it is probably because the monthly payment is too high for your solvency for a shorter period. In order for you to qualify for the desired amount of home loan, we made you an offer with a longer loan period.

The loan amount is based in part on your solvency. If we offered you a smaller loan amount than requested, the reason is probably that, unfortunately, your current solvency is unlikely to allow you to repay a larger loan amount. In order to receive a larger loan amount, it is possible to apply for a home loan together with a co-signer or to terminate existing loan obligations prematurely.

In addition, the lower loan amount offered could also be due to the fact that assets to be purchased require a higher down payment than the one you requested. In this case, it may be helpful to use a KredEx guarantee or pledge additional collateral.

In calculating the loan amount, we consider your solvency, i.e., your financial ability to meet the new loan obligation. Unfortunately, the existence of additional collateral does not affect the loan amount.

If you use a KredEx guarantee, the lowest possible self-financing is 10% of the sale price/market value of the purchased property. In this case, the loan amount can be a maximum of 90% of the sale price/market value of the property you are looking to purchase. However, the loan amount offered also depends on your solvency, and the location and condition of the property.

With suitable additional collateral, it may be possible to enter into a home loan agreement even without self-financing. The market value, condition and solvency of the loan applicant are very important.

It is also good to know that KredEx's guarantee and additional collateral cannot be added to the home loan agreement at the same time.

If you do not want to end your current obligations, one option is to take out a home loan with a co-applicant. The co-signer can be a member of your household: a civil-law partner or a spouse. In this case, we take into account both individuals' monthly income and loan obligations.

You can use the money from the sale of your current home to self-finance a new home loan. If you do not have the necessary self-financing before selling your current home, you must wait until the home is sold and only then can we conclude a new home loan agreement.

Property owned by the borrower or the borrower's relatives is generally accepted as collateral. The additional collateral must be unencumbered and, if necessary, several such items of additional collateral can be included.

We take into account the market value of the additional collateral. The potential loan amount is generally in the range of 50-70% of the market value of the additional collateral. For example: the price of an apartment to be purchased is 140,000 euros, so the down payment should be 20% or 28,000 euros. If real estate with a market value of 28,000 euros is offered as additional collateral to cover this down payment, we will consider its value as collateral at a maximum of 70%, i.e. 0.7 x 28,000 = 19,600 euros. However, this is significantly less than the required 28,000 euros. In this example, there are two solutions: a) the loan applicant would have to find additional self-financing of 28,000 - 19,600 = 8,400 euros, or b) the market value of the additional collateral needed to cover the self-financing of 28,000 euros should be at least 40,000 euros (0.7 x 40,000 = 28,000 euros).

Property belonging to parents is suitable as additional security for your home loan if the parents are not yet of retirement age or they own other real estate in addition to their own home. Our principle here is that we do not want to be in the position of having to foreclose on a home owned by pensioners to cover a loan in the event of possible payment difficulties. Therefore, we do not accept collateral pledges where the property is the sole home for retired persons.

Unfortunately, we cannot take future rental income into account, because there is no way to prove it without a lease agreement. We only take into account income from rentals of property owned by the client. In the case of a valid lease agreement, we calculate the rental income at the rate of 70% to hedge against possible fluctuations in rental prices. If the lease states monthly rent of 500 euros, we will count 0.7 x 500 = 350 euros as supplementary income.

In case of new developments, we can make a loan decision and enter into a loan agreement with you before the property is completed. To do this, send us a price offer or sale offer for the property. If our loan decision is positive, we will also ask for a property appraisal report. It is not necessary to submit a new appraisal report once the property is completed. When entering into the loan agreement, you will have to pay a contract fee and if you are using a KredEx guarantee, you will also have to pay a one-time guarantee fee when concluding the loan agreement.

The concluded home loan agreement has pending status until the development of the property is completed.

If you have selected the property but it has not yet been completed, the client enters into a reservation agreement with the developer at a notary's office. We recommend that you do this after the home loan agreement has been concluded with the bank and you have certainty about obtaining a loan.

In the notarial contract concluded with the developer, the terms and conditions of purchase and sale of the property are agreed upon and the client pays a down payment (home loan self-financing) to the developer. The bank is not yet involved in this transaction, as the loan will not yet be disbursed.

When the property nears completion, the developer will notify the customer. An inspection period of the property will be agreed so that the buyer can make sure that everything is suitable. If the property has been inspected and is suitable, the developer will notify the client of the time of the appointment at the notary’s office for concluding a property law contract. The bank is also one of the parties to the transaction in connection with the establishment of the mortgage, and therefore it is necessary to inform us about the notary time.

In the case of developers that are relatively little known to us, we recommend concluding a property law contract only once the property use permit is available in order to mitigate the client's risks. The risk is that a small and inexperienced developer is significantly more likely to run into difficulties. Another risk is that the local government cannot get the necessary documents in order. You can do research on the developer through the real estate agency or broker who is selling the new development. In the case of a new development, we can notify you of the need for a user permit once you have sent us the price offer for the property.

The home loan is disbursed only when the property is ready (up to 18 months starting from the conclusion of the home loan agreement).

You can choose between an annuity and a schedule with equal payments of principal.

According to the annuity schedule, the loan payment is the same every month until the end of the loan period. In the initial period of the loan, it consists mostly of interest, but with each subsequent monthly payment, the share of the principal increases. We calculate interest on the loan balance.

In a schedule with equal principal payments, the principal of the loan is divided into equal parts, plus interest. Because we calculate the interest on the loan balance, your repayment becomes smaller every month.

Thus, the annuity schedule is characterized by uniform payments throughout the loan period and, in general, a higher amount of interest. According to the fixed principal schedule, repayments are higher at the beginning of the loan period, but they decrease steadily and ultimately a lower amount of interest is charged.

In the loan application, you can specify the date on which you want to start making monthly loan payments. Based on the loan agreement, we prepare a loan schedule, which shows all repayment dates and amounts.

It is your responsibility to ensure that your LHV bank account has sufficient funds on the monthly payment date. The amount will be automatically deducted from your account and you will not be invoiced separately.

The loan manager recommends a renovation loan if the property you want cannot be bought with a home loan (e.g. the loan amount is too small or the property to be purchased is in poor condition). You can fill in a home renovation loan application on our website.

KredEx guarantees

The KredEx guarantee is intended for people who want to take a loan to buy a home or renovate an existing one and reduce their down payment on a home loan. In order to receive a KredEx guarantee, it is necessary to belong to at least one target group:

  • Young Family
  • Young Specialist
  • Acquiring energy-efficient housing or renovating energy-efficient housing
  • Veteran of the Defence Forces or the Defence League
  • Tenant living in a dwelling restored to the former owner

A KredEx guarantee can be used to buy an apartment, house or summer cottage. In this case, the purpose of purchasing the plot must be the construction of a residential building and, in the case of a cottage, the renovation of the cottage for year-round living. Read more on KredEx's website.

The self-financing requirement for a home loan is at least 15% of the cost of the home. Using the KredEx guarantee, it is possible to get a loan with 10% self-financing. KredEx guarantees the bank the remaining risk (up to 24%, but not more than 20,000 euros). The amount of the guarantee depends on the applicant's target group. It is usually 20,000 euros, but in the case of an A, B or C energy label, KredEx can guarantee up to 50,000 euros.

If you would like a KredEx guarantee, send us proof that you belong to a target group.

Once we can know that a KredEx guarantee is possible, a one-time KredEx guarantee fee of 3% of the guarantee amount must be paid upon concluding the home loan agreement. For example: real estate costs 150,000 euros and a down payment of 30,000 euros is required. The applicant has 15,000 euros and KredEx guarantees the remaining 15,000 euros. In this case, the one-time KredEx guarantee fee is 0,03 x 15,000 = 450 euros.

A home loan applicant and co-applicant may have only one valid KredEx housing loan guarantee in any credit institution. If the KredEx guarantee has been used for the first loan, but its validity has expired, then a KredEx guarantee can also be used for taking a new loan. The condition is that when taking a new loan, the applicant and/or co-applicant must still meet the conditions of the KredEx guarantee.

You can check the balance of your current KredEx guarantee from your loan manager or by writing to kodulaen@lhv.ee.

Amending and terminating a home loan

Yes, at LHV you can terminate your home loan agreement ahead of time free of charge. In order to terminate a home loan prematurely, you must transfer to your LHV account by the agreed date an amount that covers the unpaid principal of the loan and the interest accrued by that date. Send us a request to repay the loan amount via the Internet bank or write to kodulaen@lhv.ee.

If you want to repay part of the loan amount before the due date, please send us, via the internet bank, an application to change the loan agreement. There is likewise no penalty at LHV for partial repayment.

If you need a payment holiday, please send us, via the internet bank, an application to change the agreement. It is important that the request for the payment holiday reaches us before the debt has been incurred. To extend a current payment holiday, please contact your loan manager.

Declaration of home loan interest

As of 1 January 2024, private individuals will no longer be able to deduct housing loan interest from their taxable income. This means that the interest on a loan or lease taken for the acquisition of a house or apartment for housing could be deducted by private persons for the last time on the income tax return submitted for 2023.

As a private person, you can get tax advice on the Tax and Customs Board information line 880 0811 and by e-mailing eraklient@emta.ee.

Euribor

The Euribor is the average interest rate for money lending between European banks. For banks, this means interest on the money they lend to each other without guarantee. In addition to interbank lending, clients who take out a home loan with a bank are also linked to the Euribor. For them, the Euribor starts to affect the amount of the loan payment from the moment it rises above zero, as the Euribor is added to the bank’s margin. If the Euribor is negative, it is equalised with zero.

It is difficult to predict how the Euribor will move. It is influenced by different monetary policy decisions and market conditions. Historically, the six-month Euribor has peaked at nearly 5.4% in 2008.

Although the Euribor has been stable below zero for the last few years, when taking out a home loan, it is important to bear in mind that it is a long-term loan, during which increases and decreases in the Euribor are very likely. For example, while the Euribor has remained steady below zero in recent years, the average over the last 20 years is close to 2%. This is why banks recommend calculating monthly repayments with a higher interest rate, such as 6% (2% + 4% Euribor), so that you can be sure you will be able to meet the repayments, even with a higher Euribor. Banks do the same when calculating the maximum loan amount for their clients, to ensure that the loan is given responsibly. Ideally, loan obligations should make up 40% of your income, so that you have enough for everyday expenses.

You can see the current Euribor rate linked to your loan agreement in the home loan agreement view in the LHV mobile app as well as in the Internet Bank. Clicking on the number of the loan agreement will open the details of the agreement, including the current interest rate. The current Euribor can be followed on the Euribor website. The value of the Euribor on a given date is the same for all banks.

You can see the date on which the Euribor, or base rate, will be updated both on the mobile app and in the home loan agreement view in the Internet Bank. The six-month Euribor is determined on the day the agreement is signed and is renewed every six months. It is a good idea to find out when the Euribor will be updated in your loan agreement, so you are not surprised due to a higher monthly payment. You can calculate the new monthly payment yourself using a home loan calculator before the Euribor is renewed, by adding the new Euribor to the bank’s margin, which can be found on the Euribor website.

If you want peace of mind and to be sure that you will be able to pay exactly the same amount every month for the repayment of your home loan in the years to come, you can also consider fixing the interest rate. The interest rate is fixed for a period of five years, and the proposed fixation rate is reviewed on a weekly basis in line with Euribor movements and forecasts. It is worth noting, however, that the five-year fixed rate offered is higher than the current Euribor.

If you have any questions or would like more information about your home loan, contact your loan manager who will answer your questions and explain the different options.