Things to Consider When Wanting to Buy a House in Copenhagen, Denmark

Different municipalities equal different regulations and policies

Copenhagen City consists of several municipalities, each with different rules and regulations. The same applies for the municipalities that constitute the greater Capital Region. Anything from elder and childcare policies to taxes can vary, depending on where you have chosen to settle down.

Take, for example, the Municipality of Copenhagen and the Municipality of Frederiksberg - two popular municipalities located right next to each other. Despite their similarities, the tax in the Municipality of Frederiksberg is lower than that in the Municipality of Copenhagen.

The conclusion is that postal code and property price aren't the only factors you should be looking at when wanting to buy a home in Copenhagen.

Buying a house gives you better insurance opportunities

Have you thought about buying a house or apartment in Copenhagen? Because there is more to this decision than first meets the eye.

The thing is that when you buy a house in Denmark, you are eligible for a change of ownership insurance. A change of ownership insurance is a type of property insurance that covers property defects not mentioned in the home condition report. The change of ownership insurance is not only convenient for buyers but for sellers as well, as it waives the latter's obligation to compensate the buyer for any unforeseen property defects.

But when you buy an apartment in Denmark, on the other hand, you are not eligible for insurance. Because to obtain it, you would need a home condition report. And if you want to make a home condition report for an apartment, you are required to inspect the whole building – not just the housing unit you are interested in. Consequently, only property companies deal with home condition reports for apartments - it just isn't feasible for the everyman.

Because you won't be able to get a home condition report, the seller is respectively liable for property defects discovered within 10 years. But before you get too excited, be aware that it is highly difficult to recover claims for concealed damages. Some choose to go to court to make claims, but the trouble might not be worth it unless you deal with injuries for DKK 50,000 – 70,000.

Learn more about buying an apartment in Denmark here.

Variable interest on a house mortgage

Today, several types of loans with variable interest exist. Like them, you only know the interest rate for a small period – typically 1-5 years at a time. A loan with a variable interest where you lock the rate for 1-5 years is called an F1-F5 loan.

Unlike a loan with a fixed interest rate, a loan like this is always taken out at a price of 100. This means that if you have a loan with a variable interest rate, your total loan amount (the principal) will often be lower than in the case of a loan with a fixed interest rate because you avoid the exchange loss. On the other hand, you should be a bit more aware of the repayment terms on loans with a variable interest rate.

Here you can pay back the loans at a price of 100 at the time of the mortgage rate adjustment. So, if you have chosen an F5 loan, you will not be able to pay back the loan at a price of 100 until after 5 years.

If you need to pay back the loan before the deadline, it will typically happen at the market price, which will often be under 100. If you want to pay back the loan after three years, you can expect to pay more than what you owe.

The variable interest rate is often lower than the fixed interest rate. On the other hand, the contribution rate will often be higher on loans with a variable interest rate than on loans with a fixed interest rate. So, some of the savings on the lower interest rate are reduced due to a higher contribution rate. However, a loan with a variable interest rate will often still have a lower price at the moment than a loan with a fixed interest rate.