Are you about to buy an andelsbolig (housing co-operative share)? An andelsbolig often has a lower purchase price than a privately owned flat or other real estate, which makes it popular among first-time buyers, students, or as a parental purchase.
Get help finding the right co-operative housing loan
However, you cannot take out a mortgage credit loan (realkreditlån) to finance an andelsbolig — it must be financed with a co-operative housing loan from the bank. Read more here, so you're best prepared to find the right co-operative housing loan.
Guide: How to buy a co-operative housing share
In this buyer's guide you can read about:
- Financing the purchase of a co-operative housing share
- The cost of a co-operative housing loan
- Interest rates on co-operative housing loans
Financing the purchase of a co-operative housing share with a co-operative housing loan Once you've found your new andelsbolig, the purchase needs to be financed. You cannot take out a mortgage credit loan to finance the purchase of the co-operative housing share — instead you need a specific co-operative housing loan, which may carry a somewhat higher interest rate than a mortgage credit loan.
You must pay 5% of the purchase price yourself as a down payment; the remaining 95% can be financed with a co-operative housing loan.
The co-operative housing loan must be taken out through the bank — and it's a good idea to approach the bank once you have a specific andelsbolig in hand.
In that case, the bank will review both the co-operative association's finances and your own finances in order to assess the size of the loan. If you get a "yes" from the bank to lend for the home, you'll also need to jointly assess which type of loan to take out.
After that, the loan agreement can be signed. In this process, it's important to remember that the bank doesn't necessarily always have your interests at heart — which is why it's also important to obtain several different offers from several different banks. That's why it can be a very good idea to use a financial adviser who has your back throughout the process.
The cost of a co-operative housing loan What it will cost you to buy a co-operative housing share varies widely. It's typically a personal calculation based on your financial situation. At some banks you can use a loan calculator for co-operative housing, which can give you an indication of how much you can borrow for a co-operative housing share.
When you apply for a co-operative housing loan, the bank will often ask for a certain disposable income.
Before you find your new andelsbolig, it can make good sense to get a general financial overview of your total income, expenses, savings and debt. That way you can quickly work out how much money you want to spend on your co-operative housing costs each month.
When looking at co-operative housing shares, you should first and foremost pay attention to the monthly housing fee (boligafgift) — it gives an indication of what you'll be committing to. The housing fee depends on the co-operative association's debt, savings, maintenance and property taxes. So you should look closely at the association's finances before deciding to buy a co-operative housing share.
Interest rates on co-operative housing loans When taking out a co-operative housing loan, you can choose between a fixed or variable interest rate. Each type has a number of advantages and disadvantages. The advantage of a fixed rate is, for example, that your housing costs won't rise during the loan period — the disadvantage being that the rate also won't fall if the interest rate market falls. In that case, you might consider refinancing (converting up or down) your loan to a higher or lower rate.
Get help refinancing your loan
With a variable rate instead, you can get the cheapest loan based on what happens in the interest rate market. The downside is that if the interest rate market rises, your rate will rise too — which can be somewhat uncertain.
Does it seem overwhelming? Get help from a financial adviser at Bomae, who can help you find the best loan for your co-operative housing share. Or fill in the contact form and we'll call you back within 2 hours.
