If you’re looking into mortgages in Denmark there’s good news: getting a Danish mortgage is fairly straightforward, and buyers enjoy a market that’s supported by one of the best models for property financing globally.
We get lots of enquiries into how to access the best overseas mortgages in niche markets, and although some lenders may decline if a buyer doesn’t tick all the traditional boxes, there are plenty of options available for a Danish mortgage.
Foreigners interested in purchasing property are entitled to the same rights as Danes. That said, there are a few key criteria those looking into getting a mortgage in Denmark need to meet.
As an EU/EEA citizen:
You have to have lived in the country for a total period of at least five years
Be in paid work, or have a business in Denmark
The property you want to purchase must be intended for use as an all-year living space or be needed to carry out business in the country.
If you don’t meet these criteria you’ll need to send an application to the Danish Ministry of Justice, which will place importance on any other ties to Denmark you may have.
All those who don’t hold an EU/EEA passport will need to apply to the Ministry of Justice and state that their property will be used as their personal residence.
How do mortgages work in Denmark?
So how do mortgages in Denmark work?
Well, most people in the country find a property through an estate agent. A solicitor will help with legal paperwork, and a broker with specialist knowledge of the country can help you get the best possible mortgage deal. The process usually takes several months.
If you prefer to work with a UK based estate agent or lawyer, it’s essential that you first check they are:
Qualified to practice in Denmark
Have significant experience in Denmark
Are registered with the UK Law Society
Specialise in international transactions
Have professional indemnity insurance
Mortgage loans in Denmark are up to 80% of the original purchase price. However, you can make a down payment of just 5% of the purchase price and take out the remaining 15% in the form of a bank loan.
The mortgage-credit institute in Denmark will hold a charge over the property purchased so they can use it as security for the money borrowed until your loan is settled.
It can be challenging for first time buyers and borrowers with a poor credit history to get a mortgage in Denmark, but this doesn’t have to get in the way of a mortgage.
The good news is that the advisors we work with are experts when it comes to helping people find the right mortgage for a property overseas - contact us today for the right advice.
Apply for a Danish mortgage through a broker who can give you expert advice and help you find the best lender for your needs and circumstances.
How do I get the best mortgage interest rates Denmark?
Denmark’s seven major mortgage banks are the most common providers of mortgages, but with the help of an expert, you will be able to explore all options and get access to the best Danish mortgage interest rates available.
At the time of writing, Denmark mortgage rates have fallen to record-low levels in recent years.
The mortgage interest rate you get will typically be agreed on the same day your Danish mortgage is issued and you can choose between a fixed or a variable rate.
If interest rates were to drop further after your purchase, it is easy to refinance your mortgage, so it’s worth keeping abreast of any market changes that could lead to favourable refinancing options.
Danish mortgage bonds
Danish mortgage bonds have long since held a reputation as being a safe haven for investors. Most mortgages in Denmark are financed by bonds issued in the capital market. However, only mortgage banks can grant loans against mortgage on property in the form of a covered Danish mortgage bond.
Mortgage interest rates in Denmark are directly connected to the price of these mortgage bonds. When bond prices go up, your interest rate will drop. This has kept mortgage interest rates low, since there is high investor demand for these secure bonds.
Know the risks when buying property abroad
In addition to your mortgage there will be other costs and risks to consider, from taxes and paperwork, to how exchange rate changes could affect your repayment plan.
Fluctuations of the Euro against the Pound could add an additional risk of higher repayment interest rates. This means a small change to the exchange rate could affect the value of your purchase and even make mortgage repayments or your property unaffordable.
If you are repaying a mortgage in a foreign currency, the lender must tell you if exchange rates fluctuate by more than 20%. They also have to offer you the option of repaying in another currency.
Make sure you double check which taxes you may be liable to pay both in the UK and in Denmark and have all necessary documents and paperwork in order before signing any contracts.
All Danish properties and their ownership and mortgage details have to be registered with the Danish Land Registry before any sales or transactions can take place.
Additional costs, taxes, and paperwork
Fees for arranging a mortgage in Denmark are fixed at 0.1% of the mortgage value and there’s an additional fixed opening fee of about 300 Euros. As a property owner you will need to pay a fee to register your new home and the mortgage you’ve taken out at the Land Registration court.
Other costs could include:
Annual property tax
Refuse collection fees
Bank admin fee
Property register inscription fee
Mortgage broker fee
International bank transfer fee
Get independent legal and financial advice
It’s important to seek out independent legal and financial advice when getting a mortgage in Denmark. Find lawyers and translators who are licensed to practice in Denmark, experienced in property sales, and who are independent from your estate agent or developer. This will ensure you are well-informed with reliable, unbiased advice.
A broker can help you find and compare best Denmark mortgage rates, select a repayment plan that’s right for you, and advise on the specifics of early repayment and cancellation fees.
Expats buying a property in Denmark
If you have been living in Denmark for at least 5 years you have a right to Danish mortgages, but expats with under 5 years residence will have to first apply to the Danish Ministry of Justice. Permission is more likely to be granted to those with family ties to Denmark, previous periods of residence, and any other special cultural ties.
An option for expats who don’t fulfil the residence requirements is to consider opening their own limited companies in Denmark. The vehicle of a limited company can be useful as resident legal entities have a right to buy property.
Buying a holiday home in Denmark
If you’d like to buy a holiday home in Denmark, you will have to apply to the Ministry of Justice. Your application should include proof of any previous holidays in Denmark as well as other ties you may have to the country.
To support your application you can offer evidence by providing contact information for a Danish reference and including copies of travel documents. From the point of submission, your application with the Ministry of Justice should take about 8-10 weeks to process.
Get the right advice on mortgages in Denmark from one of the expert advisors we work with
Want more advice tailor-made to your Danish mortgage needs and situation? Speak to an expert by calling Online Mortgage Advisor on 0800 304 7880 or make an enquiry here.
We will do the work of connecting you to a broker with the right expertise for your circumstances. Our services are free of charge and there’s no further obligation or impact to your credit rating.
*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA.Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes.
The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete's presence in the industry as the 'go-to' for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Read more about Pete here...
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