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Now is a good time to think about getting your first home loan and buying your own home

If you’re dreaming of owning your first home, this could be the ideal moment to take out a loan and step onto the property ladder because:

  • first-time home buyers are now in a good position in the housing market, as homes are currently cheaper than they have been in years
  • the costs of owning your home are roughly the same as the costs of renting one – and remember that repaying a home loan helps you build your wealth
  • interest rates have fallen from their peak levels and stabilised.

Protect yourself from rising interest rates with an interest rate cap

Fluctuations in interest rates are perfectly normal, and in recent years we’ve seen quite a bit of volatility.

However, rising rates don’t need to have a major impact on your day-to-day life, as you can protect your home loan interest rate with options like an interest rate cap. An interest rate cap sets a maximum limit for your reference rate while the cap is in force.

“Thanks to the interest rate cap, your loan payments can’t go above a certain level, making it easier for you to plan your finances,” says Jussi Pajala, CEO of Nordea Mortgage Bank. 

“This year, the number of people who have chosen to hedge their home loan interest rate has doubled from last year.”

What kind of experiences have our customers had with the interest rate cap?

“I bought a home in 2021 when interest rates were at zero. Thanks to the interest rate cap, the interest rate of my home loan has stayed below 2%, even though the Euribor rate was over 4% at some point. I will also know for several more years how much my monthly home loan payments could be at most,” says our customer Linnea.

“I bought my first home in the autumn of 2021, and despite my adviser’s recommendation, I didn’t choose an interest rate cap for my home loan. A year later, my reference rate had already risen to over 2.5% and hit 3.9% at its highest. I had to cut back on my other expenses to keep up with the interest payments. I learnt my lesson and wanted an interest rate cap when I turned my first home into a buy-to-let property in 2025. With the interest rate cap, I now know the maximum amount I’ll pay in interest over the coming years, and I’m also better able to manage the risks of my investment,” says our customer Sara.

Benefits of an interest rate cap

If Euribor rates rise, an interest rate cap will stop your loan interest from going above the agreed maximum. Your loan interest will never exceed this level even if overall rates go higher.

  • With an interest rate cap, you’ll always know the maximum amount your loan payments can rise up to.
  • You’ll still benefit from falling interest rates until they reach zero.
  • A loan with an interest rate cap is as flexible as any other home loan, and by using FlexiPayment, for example, you can increase or decrease your monthly payment without asking us first.

Frequently asked questions about the interest rate cap for first-time home buyers

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