Having a vision of where you want to get to and being consistent in your work towards that goal is key to being a successful entrepreneur. Sometimes the goal is crystal clear, but you might not have the means to get there, at least not right now. With a business mortgage loan, your company can invest in the future just when you need it.
A well-founded mortgage loan gives you the opportunity to take a strategic step towards accelerating your company’s growth. At the same time, it requires careful decision-making: it’s important to take into account various possible scenarios and accompanying risks when taking out a loan. Let’s take a closer look at what exactly constitutes a mortgage loan, how to use it, and what companies planning to take out a loan should look out for.
What is a mortgage loan?
A mortgage loan is a loan collateralised by real estate. Having collateral gives the lender extra security against potential risks, and lower risk makes for bigger loan offers.
The beneficiary of a mortgage loan can be a private individual as well as a company. When applying for a loan, the bank or financial institution assesses the market value of the collateral (real estate), and then uses that value to determine the amount of the loan.
The flexibility of a mortgage loan, combined with the larger amount it allows you to borrow, makes it an attractive option for businesses: you can use the loan amount for investments, renovations, business expansion, or other major expenses. Speed is another important factor – if you need financing at a critical moment, you want to find the fastest mortgage loan available. With this in mind, we strive to offer loans that are as fast and convenient as possible.
Can mortgages be taken out on real estate other than a home?
Yes! Various types of real estate can be used as collateral for a mortgage loan, including residential properties such as houses or apartments, as well as summer cottages and garages, but also commercial buildings, warehouses and production facilities. You could even use unbuilt plots of land or forest land as collateral for a loan.
Both built-up and unbuilt real estate can serve as collateral for a mortgage loan, but it must meet certain conditions, such as having a minimum value. The exact requirements depend on the service provider.
What percentage of the value of the real estate is taken into account for a mortgage loan?
In Estonia, mortgage loans can amount to up to 85% of the market value of the real estate used as collateral. What this means in practice is that if you have real estate worth, say, €100,000, your lender might give you a loan of around €65,000–85,000, but not for the full amount of the collateral.
The exact loan-to-value (LTV) ratio varies and depends on the financial service provider, as well as the property used as collateral. Our business mortgage loans allow financing of up to 75% of the value of the collateral, or up to 100% if additional collateral is available.
By providing additional collateral, you can even borrow up to 100% of the collateral’s value. While the main collateral for a mortgage loan may already be encumbered by another loan, the additional collateral must be free of any encumbrances.
What is the difference between a mortgage loan and a loan against real estate collateral?
A mortgage loan and a loan against real estate collateral are almost synonymous – a mortgage loan is a loan collateralised by real estate. These two concepts may refer to the same service among different service providers – some use one name, others use the other. Nordic Hypo’s services include both mortgage loans and loans against real estate collateral. The services are similar, but not the same:
A mortgage loan is a loan that Nordic Hypo offers to companies against real estate collateral.
A loan against real estate collateral, on the other hand, is a loan that we offer to private individuals to help them achieve their goals and desires.
Due to the different needs of companies and individuals and the different magnitudes of their activities, the terms and conditions of mortgage loans and loans against real estate are somewhat different in terms of the time period, loan amount, and interest rate.
Mortgage and taxes
Pursuant to the Estonian Value-Added Tax Act, mortgage loans are not subject to VAT. There are no tax incentives for mortgage loans as of 2025 and according to the Income Tax Act, income from mortgages is subject to taxation. Since January 2024, private individuals can no longer deduct home loan interest from their taxable income; no similar tax incentive applied to mortgage loans.
Mortgage repayments
There are different ways to pay your mortgage, depending on the provider. Nordic Hypo’s business mortgage loans are also flexible in terms of payment methods. The different payment schedules under which you can pay are as follows:
Annuity schedule – the amount to be paid is the same every month.
Bullet schedule – the loan principal is repaid at the end of the loan period. Before that, interest is only paid on a regular basis, such as monthly or quarterly.
Flexible repayment schedule – you can also repay the loan amount in instalments, depending on your possibilities.
Early repayment – this option is available if you want to repay your mortgage in full before the end of the payment period.
In addition to the loan amount, factor in the additional costs associated with taking out a mortgage loan, such as notary fees and collateral appraisal costs. These fees also depend on the service provider. We’ve made the process of taking out a loan as easy and convenient as possible – we’ll book the notary appointment for you, offer the option to deduct execution and contract fees from the loan before it’s issued, and appraise your property for free.
What are the conditions for getting a mortgage loan?
To qualify for a mortgage loan, the company applying for the loan must meet certain conditions:
- The company is registered in Estonia
- The company has been assessed as capable of paying taxes
- The company has no active defaults
- Annual report and balance sheet
- When taking out a loan to start a new company or expand business activities into a new field, you will generally also need to present a business plan
Individuals wishing to borrow:
- Must be Estonian citizens or have a long-term residence permit
- Can have no defaults in the last three years
Collateral
The requirements for collateral depend on the service provider you wish to use to take out a loan. Generally speaking, suitable real estate must be located in Estonia and its value must be high enough to cover the risks and costs associated with a mortgage loan. Different requirements may apply to private individuals and companies as to what type of real estate can be used as collateral. Furthermore, the value of the real estate to be used as collateral must be certified by an appraisal report.
Assessment
The amount and interest rate of the loan offered depend on estimates of the value of the collateral and of the applicant’s financial situation. You can provide a previously prepared appraisal report when applying for a loan. While there’s no specific time limit on how old an appraisal report can be, we usually accept documents that are up to 6 months old. If this is not available, the first step is to appraise the market value of your real estate. Nordic Hypo will appraise your real estate free of charge.
A mortgage is a solid foundation to build a springboard for the future. Whether you’re an experienced entrepreneur taking the next step toward expansion, steering your business in a new direction, or just starting a company to bring your carefully crafted business idea to life, a mortgage loan is suitable for all of the above.
We offer flexible loans with secure loan protection insurance. Check out our loan calculator to find the right solution for you and contact our team if you have any questions.
If you already have a plan ready and want to take out a loan, you can do so very easily. First, fill in the application form, which you can submit at a Nordic Hypo office or online. This mortgage loan moves at lightning speed: we’ll send you an offer in a matter of days, and if your application is successful, you’ll receive the amount you need for your next big step by the next business day at the latest.