Considering buying your own home or apartment? Then you need home savings to cover the down payment on a home. Here you'll get good advice on how to save up for buying property.
How can I afford my dream home? It's especially worthwhile to have solid savings if you're a first-time buyer. But savings are always good to have on hand if the home you want to buy requires a large amount that exceeds what you'll get from selling your previous home.
If you want to be able to afford your dream home, you're better off if:
- You have substantial savings
- You have healthy finances
It can be a good idea to start home savings well in advance - even before you have concrete plans to buy. Does it all feel overwhelming?
It can be hard to make sense of financing a home purchase, which is why at Bomae we make home financing manageable with our financial advisory service.
You can get help financing your home purchase from the bank or from a buyer's advisor, who is on your side from start to finish.
How much can I borrow for a home? When you borrow money to buy property, you can borrow a maximum of 95% of the home's value - and the remaining 5% must come out of your own pocket, at minimum. Here we're talking about taking out either a mortgage loan (realkreditlån) or a bank loan, where the interest rate varies. It's recommended that you take out the majority of your loan as a mortgage loan, since the interest rate there is lowest - however, you can only borrow up to 80% of the home's value through the mortgage loan itself.
Try our loan calculator and see what you can afford.
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If, for example, you need to borrow 1 million kr. to buy a home, you would as a starting point need to be able to put down 50,000 kr. yourself. That's why it's a good idea to have solid savings ready - but it can take time to build up solid savings from scratch.
Can you buy a house without savings?
No, you can't buy a house without savings - that is, money you pay yourself. In the past, home buyers could borrow the entire purchase price - 80% through a mortgage loan and 20% from the bank. However, new rules from the Danish FSA (Finanstilsynet) dictate that, as a home buyer, you must be able to make a down payment of at least 5% of the total purchase price. This is done, among other things, using your home savings.
The rule works like this: the more money you can put down, the more you can afford to buy. That's why it's a big advantage to be able to put down more, because a large down payment shows the bank that you both have your finances under control and have a good ability to save.
How do you save up? It can be hard to get solid savings off the ground. That's why it can be a good idea to first draw up a budget, so you have a better overview of your monthly income and expenses. Once you have the full picture, it's also easier to cut your spending right down - so you can save up faster. That might mean quitting smoking or dropping a subscription or two.
After that, you can set a realistic goal: how much do you want to save - and how quickly? It can also be a good idea to open an account solely for your home savings. In connection with this, you can set up a fixed transfer of money into that account.
How much should I save each month?
It depends a lot on what your monthly expenses look like - and how large your disposable income is. If you can set aside 1,000 kr. each month, solely for your home savings, you'll have saved 50,000 kr. in 4 years.
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