Credit guarantees for you as a developer

It is the bank that applies for a credit guarantee. However, as a developer you may obtain a preliminary assessment of taking out a credit guarantee before the building project starts. A preliminary assessment can be important for arranging financing, both for loans during the construction period and final financing.

A credit guarantee gives the lender protection against losses and reduces the need for final borrowing or own capital, for those building housing/borrowers.

When you as a developer apply for a preliminary assessment, Boverket only looks at the project as it will be when it is completed. It is above all the property's long-term sustainable market value which is estimated, to determine the levels for which a guarantee is possible.

Credit guarantees may only cover a maximum of 90% of the market value of the completed property, which is assessed without regard to speculative and temporary conditions. In areas with low market values, the amount of the credit guarantee may correspond to a standard calculated amount. For new construction or conversion to cooperative tenant-owner apartments, the figure is maximum 95% of the market value.

To obtain a preliminary assessment of your application, you must submit the following:

  • a project description
  • a market valuation of the property, if possible
  • a cash flow calculation.

If your project is owner-occupied housing, we only need a market valuation. It is possible to submit the application via e-mail.

Boverket can give a preliminary assessment within approximately 1-3 weeks of receipt of the application.

Fee

Boverket charges a fee for the guarantee. The fee is based on Boverket's risk assessment and is established when the lender and Boverket sign an agreement for the guarantee. Boverket does not charge any fees for an application for a preliminary assessment.

There are six factors which affect the fee:

  • Region
  • Location in the area
  • The guarantee's proportion of the value
  • Borrower's credit rating
  • Security for the loan
  • Guarantee period/credit transfer plan

Examples of fees

Guarantees during construction period Guarantees after completion
University area
B location in the area
Guarantee within 0-90% of the market value
Borrower assessed as strong
Mortgage deed as security
-> Fee 1.10%
Large growth area
A position in the area
Guarantee within 70-90% of the market value
Mortgage deed as security
Guarantee 10 years
-> Fee 1.10%
Large growth area
A position in the area
Guarantee within 0-75% of the market value
Borrower assessed as medium strong
Mortgage deed as security
-> Fee 1.22%
University area
C location in area
Guarantee within 70-90% of the market value
Mortgage deed as security
Guarantee 10 years
-> Fee 1.45%
Larger growth area
C location in area
Guarantee within 0-82% of the market value
Borrowers newly formed company
Mortgage deed as security
-> Fee 1.47%
Small area in weak region
B location in the area
Guarantee within 70-104% of the market value
Standard value used
Mortgage deed as security
Guarantee period 10 years
-> Fee 2.53%
Small area in weak region
B location in the area
Guarantee within 0-104% of market value
Standard value used
Borrower assessed as medium
Mortgage deed as security
-> Fee 2.79%
 

A government guarantee gives the lender cover against losses and should also affect the borrower's conditions.

Compensation from the guarantee

The credit guarantee takes effect if the borrower does not fulfil its commitments to the lender and the property must be sold as a result. In some cases, compensation may be provided without the property being sold, but Boverket's approval is required for this. As the guarantee is discharged, Boverket will take over the lender's claims on the borrower and the borrower will now be liable to repay Boverket instead.

Framework agreement

In order to sign a credit guarantee, the lender must have a framework agreement with Boverket. According to the framework agreement, before an individual guarantee agreement is signed the lender must make an independent assessment of the borrower's ability to pay and the value of the property, among other things.

Who does what?

Boverket

Boverket makes available credit guarantees, which are agreements between Boverket and the lender. Boverket may also provide a preliminary assessment. Boverket examines all cases and carries out a valuation of the object, assesses the borrower's ability to pay and the project's market conditions etc.

The lender

The lender grants a loan for the construction period and/or final financing after one single credit rating, regardless of whether a guarantee is taken out or not. The lender may apply to take out a credit guarantee for the loan. It is always the lender who applies for a credit guarantee.

The developer/borrower

The developer/borrower may apply for a preliminary assessment of the possibilities for a credit guarantee. The application is made to Boverket. The developer/borrower then applies for a loan with the lender as usual.

Updated: Page owner: Webbredaktionen
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