Housing company financing: how does your company look to a bank?

When a housing company needs a loan for a pipe renovation or facade repair, the bank assesses the finances of the company, not those of individual shareholders. A housing company has no official credit rating, but the lender always makes an overall assessment of it. If you know what the bank looks at, you can start preparing for financing years before the loan application.

How repairs are financed

A major repair project can be financed from the company’s own funds, by collecting money from shareholders in line with the articles of association and the decisions made, with a bank loan or with a combination of these. The interest, loan term and other terms of the company loan usually show up for the shareholder as a financing charge. Shareholders can often also pay off their own share of the loan in one go.

Financing is not an automatic right. A bank makes its credit decision on the basis of its own credit policy and risk assessment, and it has no obligation to finance a project. The bank may also require part of the costs to be covered by self-financing, in which case shareholders pay their share before the loan is drawn down. So a necessary renovation is not necessarily financeable as it stands.

What the bank looks at

In a financing comparison published in 2024 by the Finnish Association of Property Managers (Isännöintiliitto) and Suomen Rahatieto, banks named the following as factors that generally affect their credit decision:

• the location of the housing company
• the age of the housing company
• its repair history
• the distribution of ownership
• the cost of the upcoming major renovation relative to the value of the apartments, in other words whether the collateral is sufficient, and liquidity.

The banks also mentioned, for example, the outlook for the local housing market, the company’s current level of debt, its past payment behaviour, how carefully the maintenance needs report has been prepared and the absence of unpaid charges among shareholders. A resident sees a tidy stairwell and a reasonable maintenance charge, whereas a lender sees debt, collateral, upcoming repair needs and the ability to pay.

Location and collateral value

A pipe renovation costs roughly the same in Helsinki as in a smaller town, but apartment values can be at a completely different level. If the cost of the repair is high relative to the value of the apartments, the collateral may not be enough and arranging financing becomes more difficult.

The housing finance working group appointed by the Ministry of the Environment published its report on 8 April 2026. It recommended swiftly changing the terms of the state guarantee for housing companies’ renovation loans, so that financing for major renovations, especially outside growth centres, would be easier to obtain.

The size of the company also matters. In a small housing company, each shareholder’s share of the costs is large, and if one shareholder cannot arrange their share, the whole project may run into difficulties.

What the law says

A limited liability housing company is a legal person separate from its shareholders, and the shareholders are not personally liable for the company’s obligations (chapter 1 of the Limited Liability Housing Companies Act). The company’s bank loan is therefore not the shareholder’s personal loan. However, the shareholder is obliged to pay maintenance charges in line with the articles of association, and the charges cover, among other things, expenditure on maintenance, renovations and the company’s other obligations (chapter 3). Legally the distinction is clear, but in practice the bill ends up with the shareholder either way.

Measures that are unusual or far-reaching given the company’s size and activities, or that significantly affect shareholders’ charges, require a decision of the general meeting. The financing of a major repair project is therefore typically decided by the general meeting.

When repairs can no longer be put off

A building does not stop ageing just because the bank does not grant a loan. If several major projects pile up in the same decade, financing needs grow rapidly, and an accumulated repair backlog can at the same time weaken the lender’s assessment. If the planned financing is not obtained, the company has to reconsider the scope, phasing and schedule of the project and the shareholders’ self-financing.

The amount of debt alone does not say much. A company may have a lot of debt because the major repairs have already been done. Another may be almost debt-free even though it faces several repairs costing millions.

How the board can prepare

The conditions for financing are built up years before the loan application. When a company knows the condition of its building, plans repairs in good time, keeps its repair history and documents in order and deals consistently with unpaid charges, it can give a lender a clear picture of its situation. That does not guarantee a loan, but it does reduce uncertainty.

It is worth putting together a financing outlook of around ten years alongside the long-term maintenance plan: current loans and when they end, estimated major projects with their cost ranges, any saving in advance and significant uncertainties. It is not a forecast but a snapshot that helps plan financing before the need becomes urgent.

It is worth talking to the bank in good time. A preliminary discussion does not commit the bank, but it tells you what information the lender considers essential. When putting a loan out to tender, compare not only the margin but also the loan term, repayment method and repayment holidays, arrangement fees, collateral requirements, drawdown terms and the arrangements for shareholders to pay off their share of the loan.

Unpaid charges should be monitored as part of financial monitoring, because they affect the company’s cash flow and the bank’s assessment. Read more in the article on unpaid charges in a housing company.

Questions for shareholders and buyers

1. How much debt does the housing company have and when do the loans end?
2. What major renovations are coming up and how much money are they estimated to require?
3. Has the company prepared for upcoming repairs?
4. Does the company have unpaid charges?
5. Have there been discussions with banks about future financing?
6. What happens if the bank does not finance the whole project?

When buying an apartment, people usually look at the price, the charges and the company loan. It is just as important to assess whether the housing company is likely to be able to finance its upcoming repairs.

Sources

• Limited Liability Housing Companies Act 1599/2009, Finlex (in Finnish) (opens in a new tab)
• Isännöintiliitto and Suomen Rahatieto: financing comparison – green loans and EIR guarantee (2024, in Finnish) (opens in a new tab)
• Finnish Government: housing finance working group proposes measures to ease renovations of housing company buildings (8 April 2026, in Finnish) (opens in a new tab)

This article provides general information and does not replace case-specific legal or technical advice.