While housing prices stabilize, the spotlight is now on households' biggest expense: mortgages. Heading into 2026, many face the choice of fixing their interest rate or staying variable. At the same time, new data shows that more and more homeowners are discovering the "hidden" income in their home through rentals. Here's the strategy that lowers your monthly cost.
After a year of gradual interest rate cuts from the Riksbank (Swedish central bank), we have reached a new plateau. The policy rate has landed at a level that most experts consider "the new normal." But for you as a mortgage holder in Sweden, the playing field has been redrawn in December. The gap between the variable rate and the fixed rates (3 and 5 years) is now historically small – and in some cases, the fixed rate is even lower.
The new "interest rate window"
During the beginning of December, several major banks in Sweden have adjusted their list rates downwards, in a battle for customers ahead of the new year.
– We are currently seeing a 'window' where banks are willing to haggle considerably on the fixed rates to lock in customers. Many are blindly staring at the Riksbank's policy rate, but market rates have already priced in future cuts. This means that the variable option is not automatically the winner in 2026, says personal finance expert Albin Rännar in an analysis from the week.
Rentals: The new buffer for households
In addition to chasing interest rate discounts, we see a clear trend that households in Sweden are becoming more creative in order to make their housing budget work. Searches for "rent out room" and "second-hand rental regulations" have increased significantly during the autumn.
Renting out part of your home (taking in a lodger) or the entire home for a period has become a crucial strategy for many homeowners in Sweden.
-
Tax-free income: Remember that the standard deduction for renting out a private residence in Sweden is 40,000 kronor plus a deduction for rent/fee. This means that the first few thousand kronor you earn each month are often completely tax-free. This is particularly beneficial for expats who may be used to different tax rules.
-
Second-hand market stabilizes: Although the most extreme rental levels in the second-hand market have subsided somewhat (as we wrote about in "Housing prices are catching their breath"), demand remains high. For those with an attractive apartment or a room in the major metropolitan areas of Sweden, this is a source of income that can cover a large portion of the interest cost.
How to Lower Your Housing Costs in Sweden in 2026: A Checklist
To maximize your personal finances in the coming year, act on these three points before the New Year:
Challenge your bank about the interest rate discount. Many discounts expire at the end of the year. Do not accept the list price. With the more stable market situation, banks are now more willing to negotiate – especially if you are a new customer or threaten to switch banks. As an expat, be sure to compare offers from different banks, including the larger Swedish banks and smaller niche lenders.
Calculate your rental potential. Even if you only rent out your apartment for a few months during the summer, it can provide a significant boost to your finances. Use online platforms to estimate potential rental income in your area. Consider furnished rentals, which often command higher prices, especially in cities like Stockholm, Gothenburg and Malmö.
Review your energy consumption. With rising electricity prices, it pays to review your energy habits. Simple measures such as switching to LED lamps, lowering the indoor temperature a degree or two, and being mindful of water consumption can make a big difference in the long run. Many older apartments in Sweden can be drafty, so consider investing in weather stripping for windows and doors.
Understanding Swedish Mortgage Rates as an Expat
Navigating the Swedish mortgage market as an expat can be tricky. Here are some key things to keep in mind:
Fixed vs. Variable Rates: What's Best for You?
In Sweden, you typically have the option of choosing between a variable interest rate (rörlig ränta) or a fixed interest rate (bunden ränta). The variable rate is usually tied to the STIBOR (Stockholm Interbank Offered Rate) and fluctuates with market conditions. Fixed rates are locked in for a specific period, typically 1-10 years, providing more predictability.
Example: Let's say you're considering a mortgage of 2,000,000 SEK. A variable rate might be 4.5%, while a 3-year fixed rate could be 4.2%. While the fixed rate offers certainty, you'll miss out if variable rates fall further. Conversely, if rates rise, you're protected. As an expat, consider your risk tolerance and how long you plan to stay in Sweden when making this decision.
Amortering: Mandatory Mortgage Repayment
In Sweden, amortering, or mortgage amortization, is often mandatory. This means you're required to pay down a portion of your loan each month. The rules depend on your loan-to-value ratio (belåningsgrad) and debt-to-income ratio (skuldkvot). If your loan-to-value ratio is above 70% or your debt-to-income ratio exceeds 4.5, you'll need to amortize a certain percentage of your loan each year. Understanding these rules is crucial for budgeting and financial planning.
Example: If you have a mortgage that's 80% of the property's value, you'll likely need to amortize 1% of the loan amount per year. This is on top of the interest payments.
Negotiating with Swedish Banks
Don't be afraid to negotiate with Swedish banks for a better interest rate. Banks are often willing to offer discounts (ränterabatt), especially if you have a good credit history and a solid financial situation. Comparison shop and let the banks know you're considering other options. As an expat, it can be helpful to get recommendations from other expats or use a mortgage broker (lånemäklare) who can negotiate on your behalf.
Tax Benefits of Renting Out Your Swedish Home
As mentioned earlier, renting out your home in Sweden comes with significant tax benefits. The schablonavdrag allows you to deduct 40,000 SEK from your rental income. Additionally, you can deduct the portion of your monthly housing fee (avgift) or rent that corresponds to the area you're renting out. This can significantly reduce your tax liability.
Example: You rent out a room in your apartment for 5,000 SEK per month, generating 60,000 SEK in annual income. You can deduct 40,000 SEK plus a portion of your housing fee. If your total deductions exceed your rental income, you won't pay any tax on it.
FAQ: Mortgage Rates and Renting in Sweden for Expats
Q: What is the current average mortgage rate in Sweden? A: As of late 2024, the average variable mortgage rate in Sweden is around 4-5%. Fixed rates vary depending on the term, but are often slightly lower than variable rates. Always check with multiple banks for the most up-to-date rates.
Q: How do I apply for a mortgage in Sweden as an expat? A: You'll need to provide documentation such as your passport, residence permit, employment contract, and proof of income. Some banks may also require a Swedish personal number (personnummer). It's a good idea to start the application process well in advance of your planned purchase.
Q: Can I get a mortgage in Sweden if I don't have a permanent job? A: It can be more difficult, but not impossible. Some banks may be willing to consider your application if you have a stable temporary position or a strong financial history.
Q: What are the regulations for renting out my apartment in Sweden? A: You generally need permission from your housing association (bostadsrättsförening) or landlord (if you're renting). There are also rules about how much rent you can charge. It's important to familiarize yourself with the regulations to avoid any legal issues. Consult with your bostadsrättsförening and research Hyreslagen (the Swedish Rent Act).
Q: Where can I find more information about Swedish mortgages and housing? A: Here are some useful resources:
- The Swedish Consumer Agency (Konsumentverket): Provides information and guidance on mortgages and housing.
- Your bank: Your bank can provide personalized advice on your mortgage options.
- Bolånekalkylen.se: A website for calculating mortgage costs in Sweden.
- Local expat groups: Connect with other expats in Sweden for advice and support.
By understanding the Swedish mortgage market and taking advantage of the tax benefits of renting, you can significantly lower your housing costs and improve your financial situation in Sweden.
