"Already paid 30 thousand for rent". A programmer calculated everything and took out a mortgage in Vilnius

— I decided that mortgage payments made more sense to me than monthly rent payments to a landlord. And I started exploring the issue of buying an apartment.

I searched for information and collected it myself, without agents or other assistants. The main website for finding housing in Lithuania is aruodas.lt; all locals use it, the information there is up-to-date, and I didn't notice any fraud.

Apartments in Lithuania can be sold without land (on a leased municipal plot) or with a share of the land on which the house stands. The latter method often applies to new buildings constructed on redeemed land, and for foreigners from third countries, a transaction involving such an object is problematic, as they are not allowed to own land in Lithuania.

What was bought

I deliberately avoided "apartments with land", so I chose a three-room apartment in a renovated Soviet-era building, which stands on municipal land.

Why a three-room apartment? Well, because I can afford it. Why not a new build? Because the prices there are completely different + the obstacle of land.

This is an apartment in a normal area, with renovations — not super modern, but at a "move in tomorrow and live" level. In the future, modern electrical wiring will need to be installed.

The price is about 160 thousand euros. I tried to bargain with the owner — managed to get a couple of thousand off.

Probably, it would have been possible to get more off, but I wanted to resolve the issue quickly. Jumping ahead: the process still stretched over three months.

During my years of living in Lithuania, I saved money for the down payment; for the rest, I needed a mortgage. I will outline the stages of the mortgage process based on my experience.

You can start writing to banks even before you find housing — just to clarify whether they will give you a loan in principle and what amount you can expect.

I did just that. I wrote to several immediately: Swedbank, SEB, and Luminor. All replied that they agreed, but to clarify the terms, I needed to choose a property and send its appraisal.

Banks also requested the origin of funds. The main part of my savings is my Lithuanian salary, everything is transparent here, but for 1000 euros that I once deposited in cash, they asked for a separate report. Thanks to my former employer in Belarus — they sent me a certificate of earnings for the last year of work, which was enough.

Apartment appraisal

After choosing an apartment, I concluded a preliminary agreement with the owner (I had to leave a small deposit) and ordered an appraisal of the property's value (300 euros). This is a mandatory condition for a mortgage: on the banks' websites, there is a list of appraisers with whom a specific bank works. You can choose one that partners with several banks at once, then one appraisal can be duplicated for all.

An important point: whether the house was renovated affects not only the appraisal and utility payments (they can differ several times), but also the banks' offers. The higher the energy efficiency of the house, the more favorable the terms.

Loan offer

Once the appraisal is ready, you can submit a full application to the bank — in response, they will make a loan offer taking into account the type and cost of the specific property. All loans offered to me were annuity loans.

An annuity loan is a loan repayment scheme in which the borrower repays the debt in equal installments at regular intervals. The amount remains fixed, but within it, the distribution of the principal debt and interest changes. Initially, the larger part of the payment goes towards paying interest.

The maximum term varied from 20 to 30 years. Banks immediately made two offers: with a fixed rate and a floating rate (EURIBOR + bank margin). The conditions at SEB and Luminor were better than at Swedbank. The difference in margin between the best and worst offer was 0.6 percentage points.

EURIBOR (Euro Interbank Offered Rate) is the average interest rate at which European banks provide unsecured loans in the interbank market. Currently, the 12-month EURIBOR rate is 2.755%.

Down payment. The banks I contacted required from 15 to 30% of the apartment's value. But this was preliminary. When I sent them the apartment appraisal, the bank with a minimum threshold of 15% slightly raised it for me, while the bank with a 30% threshold, on the contrary, offered to lower it.

You can bargain with the bank over the margin and down payment, especially if you have several offers and can use them as arguments.

I tried to lower the margin, but I didn't succeed. It remained 1.5%.

The total annual rate at which I repay the loan (EURIBOR + 1.5%) is slightly more than 4%.

Deal at the notary

After the bank finally approves the loan, you go with the seller to a notary and pay your part (by transfer, of course). You and the seller pay for the notary's services equally (but this needs to be specified in the preliminary agreement), plus you cover the costs of re-registering the apartment (the notary submits the documents themselves). These services cost me 300 euros.

Insurance and mortgage agreement at the bank

After the apartment is registered in your name, it must be insured. The cheapest insurance costs about 100 euros per year.

Now you write to the bank again, the bank contacts the notary, concludes a mortgage agreement with you, and transfers the remaining amount to the seller.

Theory vs. practice

Initially, this process was more or less clear to me. Nevertheless, it took significantly longer than it seemed at first.

From the preliminary application to the bank to the final settlement with the seller, about three months passed.

Why so long? Because the bank spends one to two weeks on each approval stage. For example, I submitted the apartment appraisal to the bank, and a few days later, they sent me a mortgage offer. I replied that I agreed. They told me that now the loan needed to be approved, which would take 5-10 business days. A week later, they wrote: the loan was approved, now I needed to open an account from which I would pay the mortgage, after which the bank would send me documents for signing. Then it turned out that, since I am not an EU citizen, another check was required for opening an account, lasting "from 10 business days and longer." And then the manager who handled my mortgage went on vacation for two weeks.

So it's better to factor in extra time for bureaucracy in advance.

Economics of the purchase

My monthly mortgage payment is now 580 euros. Okay, add a trifle for insurance and account maintenance, let's say 600 euros + utilities.

Renting a similar three-room apartment in a similar area (Karoliniškės, Tuskulėnai, Šeškinė, etc.) costs 700-800 euros + utilities.

It turns out I pay even less than for rent, and these are not irreversible losses; every month I buy out my apartment piece by piece. If necessary, it can be sold, even with an outstanding mortgage (although that's more complicated).

The loan is for 30 years. But I can repay it early without penalty.

Future plans

They are, like for many, hazy. For now, I am forced to live in Lithuania. Citizenship is still a long way off, so for now, I will pay the mortgage.

How confident am I in my employer? Like everyone else: I understand that I could be laid off and finding another job would not be easy.

How confident am I that Lithuania will remain a safe place? Not confident.

But what does that change? I still need somewhere to live. I will have to find 500-700 euros to pay for housing in any case. With an apartment in ownership, it's even simpler.

If I'm in financial straits, I can rent it out and move, say, to a one-room apartment in a worse area. That would create a passive income source.

And generally, I've seen all sorts of crap in life. I prefer to solve problems as they arise. In the time I've lived in Lithuania, I've already paid about 30 thousand euros for rent. I could think for another couple of years about how to live next, and pay another 10-15 thousand.

An apartment, even if mortgaged, is still an asset. Even if I leave, it can be rented out. Or sold, albeit at a discount, but at least part of the funds can be recovered. If you continue to live in rented accommodation, nothing can be recovered. That is, it's not a choice between "in five years I have a mortgage around my neck or cash in my pocket", it's a choice between "an illiquid asset in ownership or nothing".

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