Compare mortgage interest rates
Here on the page we give you information on mortgage loans. The article here is for you to stand and be to buy a home. We compare Denmark’s lowest interest rates, right now 4 mortgage loans.
Find Denmark’s best interest rate with our comparison tool at the top of this page. In the following guide we will review the most important thing to know when it comes to choosing the right mortgage.
Compare mortgage interest rates and choose size
In Denmark, it is possible to finance 80% of its housing with a mortgage loan. There is actually no ceiling on how much a mortgage you can take. It is the value of the home and your own economy that determines how much money you can borrow.
Most people choose to borrow as much as they can. Just keep in mind that your debt will be less if you make a larger deposit yourself .
How to do this with the deposit
When signing the purchase agreement for its new home, you normally pay 20% of the value of the property in deposits yourself. At least 5% of these must not be borrowed money. This is not something that even the home loan covers.
To pay the deposit , you can do the following:
- Use your own savings (recommended)
- Ask the bank if you can take an extra loan to pay the deposit.
- Take a consumer loan from an independent lender.
The most optimal is if you have a savings that can cover up to 20%. The minimum percentage your own savings should be able to cover is 5%. If you don’t have a savings that can handle the entire deposit, you can actually take a consumer loan to cover the 15% of the deposit.
Remember, it is always better to pay with savings because a loan always costs more in interest.
Get a better rate
There are some tricks that you can use to get a better interest rate on your mortgage.
- Compare mortgage rates before taking the loan. It is not smart just to go to his normal bank, without looking at what the other banks can offer in relation to interest
- Bargain about the price. It’s actually not quite impossible to get a lower interest rate on your mortgage if you’re just trying. A customer who wants a mortgage is in high demand, as a mortgage is a big loan. That is why the banks are fighting a lot about these customers. Play the banks against each other by referring to banks that have a lower interest rate.
- Become a full customer at the bank. If you have a salary account and a card attached to the account, you are usually considered a full customer. If you are a full customer, you usually have better opportunities to get a low mortgage rate.
- Renovation and maintenance. If you recently renovated your home, your home will increase in value. Even if you have already taken out your mortgage, you may well have lowered the interest rate. Contact your home broker and arguments for a lower interest rate.
- Be sure to renegotiate regularly. Try to get used to renegotiating your loans once in a while. Every second or third year is just fine, as price changes in the market can make the home rise in value.
Deposits for mortgages
Mortgages are paid for monthly or quarterly, and the most normal is that you pay off on your home loan for 20-50 years. If you take a mortgage late in life, the bank rarely accepts that you pay off for so long.
If you take a home loan consisting of a base loan and a top-down loan, you typically pay off on the top-down loan for 10-15 years and the basic loan 20-50 years.
Mortgage loan repayments
Once you have taken out a mortgage loan, you must pay it back monthly. These payments are your installments.
However, you have different options to choose from when it comes to the installment.
- Non-repayable mortgage loans . In Denmark, it is possible to obtain a so-called mortgage-free mortgage loan. This means that there are periods of loan term that you do not pay off. During the grace periods , you still have to pay interest and contributions . This means that your short-term expenses will be significantly reduced, but as the loan does not decrease, interest expenses will always increase. This means that the loan will become more expensive in the end.
- Annuity loan . If you choose an annuity loan, you pay exactly the same benefit every month or quarter, whether interest rates go up or down. It is thus a number of equal payments. Today, there is almost no home loan, which is repaid with annuity, it is largely only private consumer loans .
What is a mortgage?
A mortgage loan is based on mortgage bonds . There are some investors who invest in these bonds. This means that you borrow the money from the mortgage bank, but in principle your provider will only find an investor who would like to invest the same amount that you would like to borrow.
If you want to borrow DKK 1,000,000, your mortgage credit institution will find one or more investors who would like to invest one million.
The more investors and borrowers there are, the lower the interest rate on your loan will be. So it is about supply and demand. The interest rate on mortgage loans is usually somewhat lower than other loans, which do not rely on these bonds.
Should I Choose Variable Rate?
Actually, there are no mortgage loans that have a completely variable interest rate that changes from day to day.
The variable mortgage rate changes interest rates every 3 months. In practice, the variable interest rate is thus fixed for 3 months at a time.
Benefits of variable interest rates
- If you are dissatisfied with your bank’s interest rate, you can easily switch banks. You just need to find a bank that offers a cheaper mortgage and then contact them. If you are accepted as a customer, move the loan to the new bank.
- You can pay out the loan at any time or make a larger repayment.
- The variable rate on mortgage loans is almost always lower than the fixed rate when the contract is signed.
Disadvantages of variable interest rates
- You risk becoming a victim of tough economic times if interest rates are to rise. A home loan is a big loan, so if the interest rate is high, it will also hit the economy hard.
- Planning your economy is harder as interest rates can both go up and down. You never know exactly how high or low your expenses will be more than 3 months ahead
Should I Choose a Fixed Rate?
You can tie your interest rate anywhere between 1 and 10 years. You can even tie it for 3 months, but then it’s the same as taking a variable rate loan. How many years should you have a fixed rate? There is no single answer, since it is only after a certain period of time you know what had been best from an economic point of view. Here are Clyde Griffith’s recommendations.
Benefits at fixed interest rates
- You can plan your finances better as you know exactly how much you have to pay off on your loan every month. It is really good if you like to plan and can put a good budget.
- You will not be a victim if interest rates rise, which is of course an advantage. This means that you don’t suddenly get a surprise over the service and can’t pay the required amount.
Disadvantages of bottom rate
- If you want to change bank, you have to break your old loan. It also involves paying a relatively large sum of money in redemption deductions.
- You can change the bond period or change to variable rate before the current contract expires.
- Choose a variable rate if you have the economy to cope with higher interest rates. You will probably save money on it.
- If your economy cannot cope with a large increase in interest rates, then choose a fixed interest rate.
- Choose fixed interest rates if you want to keep track of your long-term expenses.
- You should not have fixed interest rates for longer than you expect to live in the home. If you tie in for example 5 years and sell your property after 3 years, you must pay the redemption deduction to break the loan.
- Do not bind the interest rate for 10 years, as many things can happen over such a long period. Do it only if the interest rate is record low, which a 10-year rate rarely will be.
Mortgage despite RKI
If you have a payment note, it may well be difficult to take a mortgage of any kind. That’s something you need to talk to your bank about. If you have an old payment note but have been a good payer many years ago then you may well be able to take a mortgage, but it is not safe.
You should not set your hopes too high, but it is worth a try anyway.
Tips for choosing mortgage loans
- Choose a variable rate if you have the finances for it. There is a chance that your loan will be cheaper by it.
- Choose a bottom rate if your finances are not so stable. That way, you know exactly what to pay each month.
- Keep track of the papers when you talk to the bank. Keeping track of your income and expenses is always a good idea so you know exactly what you can afford. This also gives you a good basis for negotiation.