Annuity, equal principal or fixed instalment? Mortgage repayment types in Finland

Updated 23 October 2026

A Finnish mortgage is repaid in one of three ways: annuity, equal principal or fixed instalment. All three are used with a variable rate that follows a reference rate such as Euribor. They differ in what changes when that rate changes: the monthly payment or the loan term.

The "fixed" in fixed instalment means the payment, not the interest rate. If the rate is fixed for the whole loan, an annuity and a fixed instalment loan are the same.

Annuity

The monthly payment is the same each month until the rate changes. At first most of it is interest; over the years the share of repayment grows. When the rate changes, the bank recalculates the payment so that the loan is paid off on time.

Annuity is by far the most common type. At the end of February 2026 it covered 80% of the euro amount of owner-occupied housing loans in Finland, according to the Bank of Finland.

A €250,000 loan over 25 years at 3.24%, the average rate on new housing loans in August 2026, costs €1,217 a month.

Equal principal

You repay the same amount of the loan each month, and interest comes on top. The first payments are the largest, and the payment falls as the loan shrinks. A change in the rate changes the payment; the loan term stays.

The same €250,000 loan starts at €1,508 a month: €833 of repayment and €675 of interest. By the last year the payment is about €850. Equal principal covered 3% of the loan amount in February 2026.

Fixed instalment

The monthly payment stays the same, and the rate decides how long the loan lasts. When the rate rises, more of each payment goes to interest and the loan runs longer. When the rate falls, the loan is paid off sooner. The payment is always at least the interest due.

Fixed instalment covered 16% of the loan amount in February 2026. Some banks call the annuity tasaerä, which is easy to confuse with fixed instalment (kiinteä tasaerä), so check what the loan offer means.

Repayment calculator

When the rate rises

Take the €250,000 loan at 3.24% and let the rate rise by 2 percentage points at the start of the third year:

• Annuity: the payment rises from €1,217 to €1,477 a month. The loan is paid off in 25 years.
• Equal principal: the payment rises from about €1,460 to €1,838 a month, and then keeps falling. The loan is paid off in 25 years.
• Fixed instalment: the payment stays at €1,217, but the loan runs for 38 years and 2 months, more than 13 years longer.

The maximum term of 40 years applies when the loan is granted (Act 354/2026). How far a fixed instalment loan may stretch later depends on the loan agreement, and the bank may ask you to raise the payment.

The rate rise of 2022

Rates rose fast in 2022 and 2023. Take a €250,000 loan over 25 years drawn in January 2022, with the rate reset once a year to the average variable rate on new housing loans: 0.78% in 2022, 3.01% in 2023 and 4.15% in 2024.

• Annuity: the payment rose from €917 to €1,317 a month in 2024, 44% more.
• Equal principal: the payment rose from €996 to €1,629 a month.
• Fixed instalment: the payment stayed at €917, and the end of the loan moved from 2046 to 2061.

Interest in total

At a steady rate, equal principal costs the least interest because the loan shrinks fastest. For the €250,000 example the interest comes to €101,600 with equal principal and €115,100 with annuity or fixed instalment.

When the rate rises, a fixed instalment loan costs far more interest, because the loan is repaid more slowly over more years. With the 2-point rise above, interest comes to €154,700 with equal principal, €186,800 with annuity and €307,000 with fixed instalment.

Choosing a repayment type

• Lowest first payment: annuity or fixed instalment.
• Least interest: equal principal, if you can manage the larger payments at the start.
• Same payment every month: fixed instalment, with a loan term that can grow a lot when rates rise.

The bank tests your ability to pay at 6% whichever type you choose. How the test works and how much you can borrow is in How much mortgage can I get in Finland?

Sources

• Asuntolainojen takaisinmaksuajat ovat pidentyneet (housing loan maturities have lengthened), Bank of Finland, 27 March 2026: repayment types and their shares of owner-occupied housing loans at the end of February 2026, read 23 October 2026.
• Annuiteetti, tasaerä ja muut lainan lyhennystavat (repayment types), Nordea, and Lainan takaisinmaksu ja muutokset (loan repayment and changes), Danske Bank, read 23 October 2026.
• Act 354/2026 amending the Consumer Protection Act, chapter 7 a, section 14 a (longest repayment period 40 years from 1 June 2026), Finlex, read 23 October 2026.
• Interest rates on new loans to households for house purchase, Finland, all loans and variable rate up to one year, ECB Data Portal. Source: ECB statistics.
• Payments, terms and interest are calculated with the Asumisvalinta scenario engine.