As a non-Danish national it can be quite a challenge to buy real estate in Denmark. There can be many pitfalls and a lot of buyers may not quite know where to start.
Minkøbermægler.dk has made a list of some of the most important things you should be aware of when buying property in Denmark.
1. Make sure that you have talked to a few different banks and that at least one bank has pre-approved you for the buy. It is a good idea to get some different offers, so you can see where you can get the best deal. The banks will most likely ask you about your financial situation, income, savings, job situation, life insurance, your thoughts about your stay in Denmark etc. The bank will then give you a spending frame and “credit score,” i.e., how much money the bank is willing to lend you. You are now ready to go out and explore the Danish real estate market.
2. In Denmark it is possible for Danish and EU / EEA citizens to finance up to 80 % of their DK property with a mortgage through a credit institution such as Realkredit Danmark, Totalkredit, Nordea Kredit etc. These are the “cheapest” loan options which have a term of up to 30 years. You can get the mortgage loans with fixed interest rates or variable interest rates, depending on your appetite for risk and time horizon. The next 15 % will typically be financed with a bank loan (this is the “expensive loan”), whereas the last 5 % is the minimum down payment required. You can put more if you can or wish, but it is not possible to put less. The 5 % needs to come from your capital – your savings, family money, etc.
It is important to be aware, that there can be quite a big difference in how you can finance your future home, depending on your citizenship. If you are neither a Danish nor an EU / EEA citizen, the down payment will be higher and typically varies from 10-40 % of the purchase price, depending on which bank you are in a dialogue with. When the bank has approved you for the buy, you are now ready to move ahead.
3. When buying property in Denmark as a foreigner / expat, you might have to obtain permission from the Department of Civil Affairs (Civilstyrelsen), depending on your citizenship, your length of stay in Denmark and the type of property you wish to buy (a permanent dwelling or a second residence). Be aware of the 5-year rule. If you buy a property before living in DK for five full years, and you then move out of the country (for whatever reason), you will then be obliged to sell the property within six months. In other words. You can’t keep the property unless the Department of Civil Affairs (Civilstyrelsen) has granted you a dispensation. The 5-year rule counts for everyone (EU / EEA citizen and of course for all other non-Danes). When the Department of Civil Affairs assesses whether you have resided in Denmark for at least 5 years, they use the information from the Central Person Register (CPR). It is not a requirement that you have resided in Denmark for 5 consecutive years. It also does not matter how long it has been since you lived in Denmark, or how old you were when you lived in Denmark.
4. Have you decided where you would like to live? The prices of property vary greatly depending on location, size, and quality. A good place to start your search is on Boligsiden.dk. Here you can see all the properties which are listed for sale in Denmark. Be aware, not all properties are listed for sale on the internet. Some properties are sold before they are listed for sale on the internet, which is why it can be important to align with an agent to help you, if you are looking for property in a very competitive area. Like many other places, there is one important key factor when buying property in Denmark. Location, location, location. Is the apartment / house close to the metro or other key public transportation? Is the apartment / house in walking distance from major parks? How is the neighborhood and if you have kids, how are the institutions?
5. The purchase agreement should always be conditioned on the approval of your bank and adviser. (bank- og rådgiverforbehold). This way you can always free of charge withdraw from the transaction, if your bank and buyer’s agent cannot approve your financials or the agreement.
6. When buying property in Denmark you have some fees for registration of the mortgage and for registration of the deed. Registration of the mortgage has a general cost of 1,45 % of the granted loan + DKK 1.730 (this fee will vary depending on how many and how large loans are taken out in the property you wish to purchase). Registration of the purchase deed has a general fee of 0,6 % of the purchase price + DKK 1.750.
7. If you find that the Danish real estate market is a bit of a mouthful, or if you are just short on time to do your own research, Minkøbermægler.dk can help guide you through the entire buying process from start to finish. Minkøbermægler.dk is on your side while the real estate agent is on the seller’s side. Many foreigners / expats are of the perception that they must use a lawyer when buying real estate in Denmark. This is a misconception. In Denmark you can either use a lawyer or a certified real estate agent / buyer agent specializing in property law.
Note, the real estate agent is hired by seller and represents seller’s interests throughout the whole process, while the buyer’s agent exclusively represents the interests of the buyer.
Remember that Minkøbermægler.dk is always ready to guide you through the purchase process.
If you think this article might be useful for other people you know, please feel free to share it.