In short
- Your mortgage payment depends on the loan amount, rate and term; a typical starting point is a 10% down payment over 30 years.
- Every EUR 10,000 borrowed over 30 years at 4% costs about EUR 48 a month.
- For the bank to lend, your loan payments may not exceed 40% of net income.
- Work from deal prices, not asking prices, because they reflect what people actually paid.
How to calculate the payment
- Price. Take the median deal price for similar flats in your city and room group. Median means half the deals were cheaper and half more expensive.
- Down payment. 10% of the price, so the loan is 90%. That is the most a bank usually lends against a home's value.
- Rate. 6-month EURIBOR plus the bank margin. Latvijas Banka publishes the average margin on new home loans.
- Term. 30 years, the maximum for a home loan.
- Payment type. Annuity: the same payment every month.
The payment does not include insurance, building management or utilities. Those come on top, more in monthly costs.
How to recalculate for your own situation
The payment scales with the amount. The table below shows the payment per EUR 10,000 borrowed. Multiply by your loan amount divided by 10,000.
| Rate | 30 years | 25 years | 20 years |
|---|---|---|---|
| 3% | €42 | €47 | €55 |
| 3.5% | €45 | €50 | €58 |
| 4% | €48 | €53 | €61 |
| 4.5% | €51 | €56 | €63 |
| 5% | €54 | €58 | €66 |
What income you need
Latvijas Banka sets a rule that monthly payments on all loans may not exceed 40% of net income (45% for an energy-efficient home). So the income you need is the payment divided by 0.4.
In the example with a EUR 573 payment you need at least about EUR 1,430 net income a month if you have no other loans. If you do, their payments cut what is left for the mortgage. More in how big a mortgage you can get.
What these numbers mean for you
The median price shows a typical flat. A specific flat can cost more or less depending on the neighbourhood, building series and condition. If the asking price is well above the median, check whether there is a reason: every extra EUR 10,000 means about EUR 48 a month for 30 years.
The rate moves with EURIBOR, so on a variable-rate loan your payment will change over time too. More in EURIBOR.
Common questions
What is the monthly payment on a EUR 100,000 mortgage?
At 4% it is about EUR 477 a month over 30 years, about EUR 528 over 25 years and about EUR 606 over 20 years.
How much is a mortgage on a 2-room flat in Riga?
It depends on the price of the specific flat. Take off the 10% down payment and allow about EUR 48 a month for every EUR 10,000 borrowed (4%, 30 years).
What income do I need for a mortgage in Latvia?
Payments on all loans may not exceed 40% of net income. For a EUR 500 payment you need at least EUR 1,250 net income a month.
Does the payment include insurance?
No. The table covers only principal and interest. Property insurance, building management and utilities come on top.
Sources
- Interest rate statistics · Latvijas Banka
- Euribor · European Money Markets Institute
- Borrower-based measures · Latvijas Banka
This article is for information only and is not legal, financial or tax advice. It may contain mistakes or be out of date, so check it against official sources or with a specialist before you decide. m²cena accepts no liability for any loss or damage arising from the use of the information in this article.