Ownership costs (ejerudgifter) are an important part of your budget when buying a home. They cover the fixed costs of owning a home and can be a significant expense.
Understand what ownership costs include and how they are calculated, so you can plan your budget and avoid surprises. Read on and get wiser on how to budget your ownership costs.
What can you afford to buy?
Get a precise overview of what you can borrow, see homes that fit your budget, and get several no-obligation bank offers – easily and quickly.
Get offers from multiple banks
- Get the best home loan
- Collect offers from banks
- Choose the offer that suits you best
Buyer's advisory and legal advisory
- Avoid unpleasant surprises
- Thorough review of relevant homes
- Well-informed decisions in your home purchase
In this buyer's guide you can read about:
- What are ownership costs?
- Are ownership costs important?
- What do ownership costs cover?
- What don't ownership costs cover?
- Who is responsible for the ownership costs?
- Ownership costs when buying a house
- Cash requirement when buying
- Financing costs
- How to calculate your ownership costs
- How you can reduce your ownership costs
- Get buyer's advisory at Bomae
What are ownership costs? First of all, what are ownership costs? Ownership costs are the fixed expenses that a homeowner has in connection with owning and living in their home. This typically includes expenses such as the home loan, property tax, insurance, waste collection, maintenance, heating and electricity.
The term ownership costs was introduced in the Estate Agents Act in 2015. At that time, it became a requirement to disclose the total monthly ownership cost associated with owning the property.
It's important to have a good understanding of ownership costs, as they can make up a large part of your monthly expenses as a homeowner and should therefore be factored into your considerations around buying a home and your finances.
Are ownership costs important?
Considering buying a home? Then it's important to know what the ownership costs are for the property. This is crucial for assessing whether you can afford to live in it.
It's not the deciding factor, but ownership costs are one of the major items that need to be included in the budget. We want our clients to have a sustainable foundation, so it's important to know whether your finances can bear the ownership costs. If your ownership costs exceed your home loan, interest and consumption such as water/electricity in the budget, then you should look for a different home.
What do ownership costs cover? When you plan your budget for buying a home, there are a number of housing expenses you need to include in your budget considerations. What the specific ownership cost covers differs depending on whether it's an owner-occupied flat, a year-round house, or a holiday home.
These expenses typically fall under ownership costs:
- Property insurance (not contents)
- Land tax/property tax (grundskyld/ejendomsskat)
- Owners' association fees
- Current expenses such as waste collection, chimney sweeping, pest control
- Contribution to an antenna association or hybrid network
- Contribution to shared facilities and private road
- Payments on debt taken over by the buyer
- Other expenses imposed on the property in question.
The various housing expenses vary in whether they are to be paid annually or monthly. For example, property tax to the municipality must be paid twice a year, while shared expenses to an owners' association must be paid every month.
What don't ownership costs cover? There are a number of expenses that are not included in the ownership costs. To get an overview of your monthly expenses, you should take the following consumption costs into account:
- Water
- Heating
- Electricity
- Gas
- Oil
- Bank loan
- Mortgage loan
Who is responsible for the ownership costs? The estate agent who prepared the sales listing is responsible for ensuring that the information regarding ownership costs is correct. If it turns out that the information is inaccurate after you have signed the purchase agreement, you can file a complaint against the agent.
The consequence for agents is significant - among other things, they do not receive their commission for the transaction, so it is very much in the agent's interest that the information is correct.
As the owner of a home, however, it will be your responsibility to pay the ownership costs. It's important to note that some of the expenses may be part of the shared expenses in an owners' association if you own a flat or are part of a homeowners' association.
Ownership costs when buying a house Ownership costs when buying a house are the fixed expenses associated with owning a home. These expenses cover a number of different costs, which are typically paid monthly. The most common ownership costs include the home loan, land tax, property tax, insurance, and any shared expenses to, for example, owners' associations or homeowners' associations.
The home loan is one of the largest ownership costs when buying a house. This is the loan you have taken out to finance the purchase of the home. Instalments and interest on the home loan must be paid monthly. Land tax and property tax are also fixed expenses that you as a homeowner must pay. These expenses go to the municipality and depend on the value and size of the home.
Insurance is another important ownership cost when buying a house. It's important to have good insurance that covers damage to your home and its contents. The insurance typically also covers liability insurance and legal expenses cover. Shared expenses are costs shared by the owners in an owners' or homeowners' association. This can include maintenance of common areas, heating, water and waste collection.
It's important to have an overview of your ownership costs before you buy a home. It can help you assess how much you can afford to buy for, and whether you can handle the fixed expenses that come with being a homeowner. It can also be a good idea to explore ways to save money on your ownership costs, for example by comparing insurance prices or looking into alternative financing options for your home loan.
You can read more about the costs of buying a house here.
Cash requirement when buying Remember to also take a look at the cash requirement when buying - there can be several costs in your home purchase that are not included in the purchase price.
This is, for example, the cost of:
- Land registration fee (tinglysningsafgift).
- Processing and insurance costs.
- Any debt on shared loans.
There can be many ways to put together the financing, so that the best solution can be found for you and your finances.
If you want more input on exactly how your financing could look, you can contact our skilled financial advisors. With an independent legal advisor by your side, you avoid pitfalls that can have long-lasting and costly consequences.
Read more here
Financing costs The cost of financing naturally depends a lot on your finances and the home you buy. The standard financing (standardfinansiering) is a tool used to give insight into what it costs to finance the property in question, including making it possible to compare the financing costs to a potential alternative home. However, you should be aware that the standard financing is fixed by law (the Estate Agents Act), and is far from the best financing for all home buyers.
The standard financing is the cash price minus the down payment, which amounts to 5% of the purchase price rounded up to the nearest 5,000. The standard financing is split between 80% mortgage loan and the remaining 15% bank loan – both over 30 years and at a fixed rate.
Since the estate agent is not allowed to advise you further on financing your home, and it can be difficult to get a quick answer from your bank – our financial advisors are ready to help you move forward from here.
Meet our advisors here.
How to calculate your ownership costs To calculate your ownership costs, you first need to know your household income, the purchase price of the home, and any loans you have taken out in connection with the home purchase. From there, you can use the typical ownership cost for similar homes in the area as a starting point.
You can also calculate your ownership costs using an ownership cost calculator, which is an online calculator that takes into account the various factors affecting ownership costs. This way you can get a more precise estimate of what your ownership costs will be.
It's important to remember that your ownership costs can change over time, for example if you take out a new loan, or if there are changes to the land tax or property tax. It's therefore a good idea to keep an eye on your ownership costs and regularly adjust your budget plan if changes occur.
How you can reduce your ownership costs There are several ways you can reduce your ownership costs. For example, you can:
- Choose a home with a lower price: If you choose a home with a lower price, you will typically have lower expenses for both loans, insurance and property tax.
- Pay down your loan: If you pay more than the minimum amount required on your home loan each month, you can reduce your total expenses for interest and fees on the loan.
- Get offers from multiple insurance companies: When insuring your house and contents, you can save money by getting offers from multiple insurance companies and comparing prices and coverage.
- Improve your home's energy efficiency: By improving your home's energy efficiency, you can reduce your expenses for heating and electricity. You can do this by insulating the house, switching to energy-efficient windows, or installing an energy-friendly heat pump.
- Pay attention to your consumption habits: By paying attention to your consumption habits and cutting down on unnecessary expenses, you can reduce your total monthly expenses. This could, for example, be turning off electronic devices when you're not using them, or taking shorter showers to save on heating.
Get buyer's advisory at Bomae Considering buying a house? With Bomae's buyer's advisory, we guide you all the way through the home-buying process.
Our skilled buyer's advisors are ready to help you find the right home at the right price, whether it's a house purchase, a flat purchase, or something else entirely.
Fill out the contact form so we can have a chat about how we can help you with buying and financing your home.
