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Saving goal
Saving for a down payment
Housing prices often make the down payment the biggest hurdle to buying a home. With a long enough time horizon, ten years or more, an equity fund can be part of the solution. If the goal is closer in time, a savings account or fixed-income fund is a better fit.
When the horizon is long enough
Buying a home takes time
A home purchase ten, fifteen years or more away is far enough out for equity market swings to even out. Closer to the purchase, that advantage shrinks, and the risk of having to sell at the wrong moment grows.
- Long horizon, a higher equity share
- With ten years or more left until the purchase, there is time to ride out downturns and let compounding do its work.
- Short horizon, a different solution
- Closer to the purchase, within five years, a savings account or fixed-income fund is a better fit. The money needs to be there when it is time, regardless of the market.
- Stepping down risk in time
- The closer the purchase gets, the more reasonable it becomes to gradually move the capital to lower risk.
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Guide
How to save for a down payment
A down payment in Sweden typically requires 10 percent of the purchase price, an amount that takes many people several years to build up.
- How large is the down payment?
- Under Swedish mortgage rules, at least 10 percent of the purchase price must be paid in cash. On a home costing 3,000,000 SEK, that is 300,000 SEK.
- An equity fund for a long horizon
- If the purchase is ten years or more away, there is room to let the capital sit in an equity fund for most of the savings period. Historically, equity funds have delivered higher returns than a savings account over comparable periods.
- Stepping down risk in time
- With two to three years left until the purchase, it is common to gradually move the capital into fixed-income funds or a savings account, to avoid having to sell during a downturn right before the purchase.
- If the horizon is short from the start
- If the purchase is planned within five years, a savings account or short-term fixed-income fund is a better fit than an equity fund. In that case, the certainty that the money is there outweighs the potential return.
Worth considering
Three things to keep in mind
Saving for a home differs from other long-term saving in that the goal, and therefore the timing, is clearly set in advance.
01
You can put in more
The mortgage cap requires at least 10 percent in cash, but a larger down payment lowers your loan-to-value ratio, and with it your interest costs.
02
Step down risk in good time
Start moving the capital to lower risk a few years before the purchase, not the same week the contract is signed.
03
Account for the down payment rule
At least 10 percent of the purchase price must be paid in cash under current mortgage rules.
Available platforms
Amos Value is now open for investment, on platforms you may already use.
Amos Value A (Acc)
ISIN: SE0029302199
Returns are automatically reinvested in the fund. The unit's value grows instead of being paid out, with nothing for you to do.
Not sure which suits you? Read more about the share classes →
More platforms will be added continuously
Past performance is not a guarantee of future returns. The money invested in the fund may increase or decrease in value and you may not get back the full amount invested. Read the fund's key information document and prospectus before investing.
Common questions about saving for a down payment
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