Mandatory Amortization Requirements
Financial Supervisory Authority regulations FFFS 2016:16 and FFFS 2018:10
What does it mean?
The amortization requirements are the Financial Supervisory Authority's rules governing how much you must pay off your mortgage each year. The first requirement (2016) states that you must amortize at least 2% per year if the loan-to-value ratio exceeds 70%, and at least 1% if it's between 50% and 70%. Below 50%, there is no requirement.
The second requirement (2018) means that borrowers with a debt-to-income ratio exceeding 4.5 times gross income must amortize an additional 1% per year on top of the first requirement. This means that with high leverage and high debt-to-income, the requirement can be a total of 3% per year. Exceptions can be made for special circumstances like unemployment or illness — contact your bank if you find yourself in that situation.
Key Points
- Above 70% LTV: at least 2% amortization per year
- Between 50–70% LTV: at least 1% amortization per year
- Debt-to-income above 4.5x gross income: additional 1% per year
- Exceptions possible for special circumstances (unemployment, illness)
- Requirements reduce debt levels but increase monthly costs
Practical Tip
Think of amortization as savings — you're building equity in your home. If possible, amortize more than the minimum. During financial hardship — contact your bank to discuss a temporary amortization pause.
Legal Basis: Financial Supervisory Authority regulations FFFS 2016:16 and FFFS 2018:10