It can be hard to make sense of home financing, so we've put together a guide to make things clearer.
Financing your home purchase Get answers to the following questions:
- How do we afford the dream home?
- How much can we borrow?
- The advantages of putting more into the down payment
- How do we make the right choice?
- Is the first offer the best one?
How do we afford the dream home?
It depends a lot on what you want. But if you want to hold the best cards, you should get help from professionals in the industry. That could be a buyer's advisor who's on your side from start to finish. Some even call them your right hand.
You'll also be better positioned if...
- You have substantial savings
- You generally have healthy finances
Then you should be able to afford the dream home!
How much can we borrow?
This is very individual. Some can borrow several million kroner from the bank, while others have to settle for less. One important thing to remember is:
Household's annual gross income x 4 = Potential purchase price.
The average income for a Danish household is:
DKK 676,000 x 4 = DKK 2,704,000 + savings (though at least 5% as a down payment)
Remember: if you have debt, for example a car loan or a student loan (SU-lån), this needs to be deducted from the above amount.
This can seem a little complicated.
The parties that review your finances will also look at your monthly disposable income and how your overall financial situation looks.
If it's healthy, they'll also be more inclined to lend you money – possibly more than initially calculated.
The advantages of putting more into the down payment
A home purchase typically consists of:
- An 80% mortgage-credit loan (realkreditlån)
- A 15% bank loan
- A 5% down payment, paid in cash by the buyer
This also means there are major advantages to putting a larger amount into the down payment. A high down payment shows that you have your finances under control and a good ability to save.
The more money you can put down, the more home you can afford.
How do we make the right choice?
There's always endless advice coming from family, friends, and acquaintances when it comes to buying a home. It's not advisable to seek guidance from friends and acquaintances unless they actually know something about buying a home. There's really only one piece of advice for that: talk to professionals in the field who know the process inside and out – and especially the financing.
Their expertise and help can guide you through a home purchase easily and simply, so you get through your home purchase safely and confidently.
Is the first offer the best one?
The short answer is no. You should always make sure to get several different offers on home loans. Even if your relationship with the bank is good, it will always be an advantage to receive other offers so you can compare different options. A buyer's advisor can help with this, which has its clear advantages. The cost of a buyer's advisor is a good investment, since the collaboration always pays off in the form of advice, time, and much more. They can be a huge help in the home-buying process.
- In other words, a buyer's advisor is: A good investment
Other questions? What is financing? Financing means securing capital or money for a given investment, activity, or something else entirely.
How much do I need to put down?
You need to pay at least 5% of the total purchase price yourself. In concrete terms, this means: if you buy a house for 2 million kroner, you need to put down DKK 100,000 as a down payment plus external costs. You can pay more, but you must pay at least 5% of the total purchase price.
Fill in the contact form so we can have a chat about how we can help you buy and finance your home.
