Real estate loan – find the best option for your business

The interest rate on property loans for businesses is typically significantly higher than for a mortgage. Large banks do offer favorable terms for larger property companies, where the interest rate is only 1 - 2% above the central bank rate. However, the loan-to-value ratio is usually limited to 50%.

Niche banks and financial companies offer property loans with an interest rate starting at 8%, which is around 5% above the central bank rate. Shorter bridge loans and loans with loan-to-value ratios up to 80% typically have interest rates around 10 - 14%.

The cost your business needs to pay monthly is driven by the interest rate and amortization. In our property loan calculator, you can calculate the monthly cost for different loan structures and loan-to-value ratios.

How much you can borrow against the property depends on the type of property and the stage of the project.

On today's market, the loan-to-value ratio is rarely above 75% for existing properties. In exceptional cases, a higher loan-to-value ratio of 80-85% may be possible. If you own multiple properties through a group, there's also a short-term opportunity for a higher loan-to-value ratio through refinancing equity.

For rental properties, major banks typically offer a loan-to-value ratio of only 50-60%. Additionally, a secondary loan may be relevant for increased leverage, but currently, this is capped at around 75% for rental properties. The loan-to-value ratio also varies depending on:

• The type of property and its geographical location. Central locations and major cities generally offer better opportunities for higher loan-to-value ratios.
• Number of transactions in the secondary market or the liquidity of the property. For example, the market for office properties was nearly halted in 2023, which typically lowers the possible loan-to-value ratio.

For land acquisitions, banks usually only apply about 50% financing. There's a bonus if the developer has financed the land purchase themselves, significantly increasing the chances of obtaining a construction loan.

The exact requirements from banks and lenders vary between different institutions.

Fundamentally, there needs to be cash flow capable of covering interest and amortization. For properties, cash flow consists of gross rental income minus operating expenses, also known as net operating income (NOI).

Depending on the interest rate environment, different banks impose varying requirements on the maximum loan-to-NOI ratio that can be approved. Typically, it needs to be at least 6-8% for residential properties with major banks, and significantly higher for more economically sensitive properties.

In addition to repayment capacity, there are also various formal requirements, such as the company needing to be registered in Sweden.

In property financing, there are three common types of amortization:

• Bullet loan: A property loan where the entire amortization is paid at the end of the loan term, typically after 12-24 months. This is common for bridge loans or loans during construction. Crowdfunding lenders in Sweden, such as Funding Partner and Kameo, primarily offer bullet loans.
• Bottom loan with a term of 10-25 years: Bottom loans are typically obtained from the property developer's house bank. Only major banks offer terms of 10-25 years for property loans, such as Swedbank, SBAB, and Handelsbanken.
• Repayment schedule over 20 years: Instead of a long loan term, companies can also arrange for a lower repayment schedule over a 5-year property loan. This means the company amortizes 1/20th of the loan each year. They must repay the loan or extend it after 5 years.

Krea lets more than 30 banks and lenders compete for your business. The following lenders are able to give you proposals for real estate loans:

Kameo, Svea Bank, Froda, Aros Kapital, Corpia, Euro Finans, Froda, FundingPartner and IMH Finans.

In addition to the property loan, your company can also receive proposals for business loans, business credit, invoice financing and/or leasing with the same application.

The following actors are able to give you suggestions for other financing solutions: Marginalen Bank, Capcito, Fedelta, Mynt, Qred, Bizcap, Realkredit, Terox Finans, SBL Finans, Treyd, Ikano Bank, A.B.S Global Factoring, Invoier, Alfa Finans, Billecta , CapIQ, Finansia, FINQR, OPR, Capitalbox and Finly.

For larger financing solutions, Krea cooperates with all relevant banks, including most major banks, for example Nordea and SEB.

Yes, as long as the basic requirements are met, it is possible to create an application even if a partner is resident abroad.

To create an application at Krea, it needs to be signed via BankID by a company signatory, so the person creating the application must have a Swedish BankID.

If the person is to be listed as a guarantor in the application, it is also important to think about where they have their income, the assessment of a guarantor is made based on the person's taxed income in Sweden. If the person has no income in Sweden in recent years, the lenders usually cannot accept that the person pays for the financing.

Yes, we have a wide range of providers who can offer proposals for property loans with collateral in land/plot, construction loans, or bridge loans during property construction.

The longest repayment period with our lenders is 10 years (120 months). In most cases however the repayment period is around 2-4 years where the user case is for either short liquidity or for after completed construction.

For Real-Estate loans it is also possible to have proposals for amortization-free loans, where you only pay the interest each month. This is a great alternative for financing during the construction, where monthly payments are held as low as possible.

Yes, we have a wide range of lenders that can give amortization-free proposals for Real-Estate loans.

The repayment plans for these loans are usually between 2-4 years and the current interest rates are around 12-16%.

At Krea, you can apply for real estate financing between SEK 1-100 million. It is usually possible to borrow up to 85% of the property's value. At Krea, we always offer competent advice in real estate loans, which means that we help our customers compile the right documents. You don't need to understand all the financing details. Krea's advisers take care of it.

There is nothing statutory or pre-determined regarding cash investment for real estate loans for companies. Cash investment in real estate loans depends on the project, type of property and other circumstances/conditions that exist.

Yes, however, only one UC is registered for your company and one UC for you if you are a guarantor.

Please note that lenders may conduct additional credit checks within the framework of loan mediation on behalf of Krea Technology AB, but these checks are NOT considered separate UC checks and do not affect your creditworthiness. This is because Krea has a partnership with UC that allows multiple lenders to access the same UC.

Lenders may sometimes obtain information from other institutions (e.g., via CreditSafe or Bisnode), but these do not impact the creditworthiness of the company or individuals listed.

A single UC does not significantly affect your company's creditworthiness. It is only if multiple UCs are taken within a short period that it may have a negative impact on creditworthiness.

A real estate loan can be used for the vast majority of property types:

Loans for premises and warehouses: Do you need part of a property for your main business? It can for a premises to open a shop or restaurant; purchase of business and office premises to be able to open an office; or a warehouse as part of the distribution chain.

Loans for rental apartments: Many developers take out short-term real estate loans while building new rental properties. These are refinanced into a down payment when construction is complete.

Loans for industrial property: Many industrial companies own, rather than rent, the property in which they conduct their business. This has the advantage that you get a better return on possible renovations and costs can be lower in the long run than renting a non-adapted property.

Loans for forestry and agricultural property: A business loan for the purchase of land or a farm property is also called a property loan. As these investments have a permanent value, they can also be used as collateral in the loan. The majority of the value can be mortgaged (up to 80% of the property's value with some banks).

And also other properties such as:

• Loans for commercial properties
• Loans for condominiums
• Loans for workshops
• Loans for land acquisition