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Danish loans and mortgages – an overview

Have you delved into the Danish real estate websites, found your dream home and now want to finance the house with a loan? Understanding the many loan options in Denmark is important when buying a home because it can help determine the financial feasibility of the purchase.

Different loan options offer varying interest rates, repayment terms, and down payment requirements. All of these factors can greatly impact the overall cost of the home and your ability to make monthly payments. By understanding the various loan options available, you can make informed decisions and find the best fit for your financial situation.

In this article, we will discuss the different types of loans in Denmark and which one you should choose if you are looking to buy a property. Or you can turn directly to us at Bomae. As one of Denmark’s most experienced Buyer’s agencies, we can help you with every step of the purchasing process – from finding the right property to negotiating the best loan offer.

Different types of loans in Denmark

As in similar countries in the West, the Danish loan market offers a wide range of loans. In this section, we will give you a short runthrough of the most common types of loans. 

Mortgage loans in Denmark

In Denmark, mortgages work similarly to other countries. A mortgage is a loan that you take out to purchase an apartment, a house or another type of property. The property then serves as collateral for the loan. As a loan taker, you make monthly payments to the bank, which include both interest and amortization, until the loan is fully paid off. 

When applying for a mortgage, you have the option of choosing between a fixed and floating interest rate. The fixed-rate remains the same throughout the loan (or for a specified period of time). The floating rate, on the other hand, changes based on the development of the market. 

Which rate type you should choose depends on which one you predict to be the cheapest over time. To lower the risks, some house buyers have chosen to have half their loan at a fixed rate and the other half at a floating rate. 

In Denmark, it’s common to make a down payment of at least 20% of the house’s value. However, you can find banks that have lower down payment requirements. 

Home equity loans

The home equity loan (A.K.A second mortgage loans) allows homeowners to borrow against the equity they have built up in their property. Home equity is the difference between the property’s market value and the outstanding balance on any mortgages or liens against it. Unless you already own a house or apartment in Denmark, this is not a suitable loan option for you. 

In Denmark, people commonly use home equity loans to finance home improvements and property investments. Typically, the loan is structured as a separate loan from the original mortgage and secured by a second lien on the property.

Home equity loans typically have a fixed interest rate and a set repayment term.

Personal loans

Personal loans in Denmark are unsecured loans that allow you to borrow a specific amount of money for a set period of time. Due to the lack of collateral, there are no restrictions on what you can use the money for. 

In Denmark, personal loans are typically offered by banks and other financial institutions. The loan amount and interest rate are based on the creditworthiness of the borrower. However, most banks have a limit between 350 000 and 500 000 DKK. Personal loans may have a fixed or floating interest rate, and the repayment term is usually between 1 and 10 years. 

To apply for a personal loan in Denmark, you need to provide proof of income, employment, and a good credit history. The bank will assess your creditworthiness and ability to repay the loan before approving or denying the loan.

Compared to credit cards or other forms of borrowing, Danish personal loans usually have lower interest rates. However, they also typically have stricter repayment terms.

How to apply for a loan in Denmark

Applying for a loan to buy a house in Denmark is not always a straightforward process. However, there are some steps that are most likely to be the same regardless of which loan type you choose. If you would like to have someone else handling your loan application process, we are more than happy to be of assistance. Read about our services here

Gather documents

Once you have done your research and found the best bank in Denmark, it is time to gather all the documents for the upcoming application. In order to apply for the loan, you will need to provide proof of income, employment, and a good credit history. Furthermore, you may also provide other documents, such as identification, bank statements, and tax returns.

Submit your loan application

When you have all your documents in order, you can move forward to submitting your loan application. This could either be done online, over the phone or at your bank’s local branch. When the bank has received your application, they will assess your creditworthiness and ability to repay the loan. This may take a while, depending on what bank it is. 

Review your loan offer

Suppose the bank approved your application. Then the next step is to review the offer. Typically, the loan offer includes loan amount, interest rate, repayment plan and other conditions. Now, it’s important to carefully go through the offer to make sure that the offer corresponds to what you and the bank have agreed upon.

Sign the loan agreement

If you are happy with the loan offer, all that remains is for you to sign the loan agreement. The agreement usually contains an outline of the terms and conditions. Good to know is that when you finance a property purchase by loan in Denmark, the amount is usually transferred directly to the seller, without making a stop at your account. So, don’t be scared if your balance doesn't change as expected. 

Naturally, the loan process can look very different depending on what loan and bank you have chosen. That is why we always recommend you to consult a professional agent with expert knowledge in Danish real estate law.  


Applying for a loan in Denmark is not always easy. Due to an abundance of loan options and many loan givers, proper research and comparison are crucial. This is where Bomae comes in. As one of Denmark’s most experienced buyer’s agencies, we are 100% committed to assisting you with everything related to property. Our agents will not only find and present to you the most attractive property on the market. They will also help you with the whole process of bidding, financing and navigating Danish laws and regulations. 

Are you planning to relocate to Denmark? Reach out to us and we will help you find the perfect property for you. Read more about our services here or fill out the contact form below. We get back to you as soon as possible.

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