Mortgage loans are a whole special type of loan you typically occupy when you buy an owner’s residence. However, it may also be for the financing of construction projects.
Where normal loans are admitted to a bank and are so-called cash loans, a mortgage lends something different, namely by means of the so-called bonds. A bond is a debt certificate where it is agreed when and how the debt is to be paid back. When you raise a mortgage, the mortgage credit institution (also called the credit association) issues these bonds, or debt securities, on your behalf and sells them on the financial markets.
Finish your home with a mortgage
Popular, you can say that the company sells your debts to them on to others. The money that comes in from the sale allows you to buy housing for when there are deductions for the credit association and a registration fee to the state. It will therefore say that it is supply and demand in the financial markets that determine how much it costs you to borrow money for your new home.
Read more about interest rates and rates on mortgage bonds , and when to convert your loan.
If you need a new mortgage or a review of your existing mortgage, contact the Consultant . Mortgage Consultant is an impartial counselor working for you, and not for the bank.
What and how much can you finance with a mortgage?
As mentioned above, mortgage loans are used for housing financing. There is an upper limit to how much a part of the value of the property is to be financed by a mortgage. For ordinary homes such as villas, terraced houses, apartments, etc., a maximum of 80 percent of the value of the housing must be covered by a mortgage loan. The rest of the value must either be paid as a cash payment or taken into the bank as a mortgage that is typically more expensive for you. For holiday homes the ceiling is 60 percent and for empty buildings it is 40 percent.
If you want to improve your home with eg. new roof, extension or renovation, it’s quite common to record a new mortgage or convert the old one. However, this can only be done if there is so-called voluntary value in the home, as you still have to stay within 80 percent.
What types of mortgages are there?
There are really many different mortgage loans today and they can be very difficult both to overlook and to choose from. Basically, however, you can categorize most mortgage loans in two different types:
Fixed rate bond loan
A fixed-rate loan is for the conservative types who want peace of mind in their finances, knowing exactly what they are going to pay each month and do not dare to gamble with their mortgage for possibly getting cheaper. When you raise a fixed rate bond loan, the interest rate will be fixed once and for all at the time of taking up the loan and remains the same throughout the term of the loan. In other words, regardless of how the interest rate will fluctuate up or down the next many years, you will always have to pay the same interest rate month after month and year after year.
Fixed rate bond loan
The floating-rate loans are for you who are either a little brave or maybe have more space in the economy for fluctuating benefits. There are a variety of variable rate loans – also called flex loans, but common to them is that interest rates are not fixed throughout the term of the loan, but must be renegotiated after a period. You can get anything from F1 to F10 loans. F1 loans get new interest rates each year, F2 each other, and so on. The most recent loan type is called CITA Loans and is financed with a 3-year bond, where the interest is negotiated every six months. The advantage of this type of loan is that they are cheaper for you when the interest rate is low and since interest rates have been low for a long time, there are many who have earned money on variable rate mortgage loans. Conversely, this type of loan may prove to be more expensive in the long run if interest rates rise once in the future. This makes the variable loans more uncertain. As a kind of golden middleway, there has been a third type of mortgage on the market: variable loans with interest rate ceiling. These are typically slightly more expensive than the variable loans, but still cheaper than the fixed-income. The interest rate ceiling ensures that you can not fully fall if interest rates rise a lot.
A mortgage lends over a period between 10 years and 30 years. It is not a merchant loan here, but a financing that lasts for a long time. There are individual loans that last up to 50 years, but the most normal maturity is 30 years.
Regardless of which of the two types of loan you choose, you also have the option to choose between deduction or not. A mortgage-free mortgage is a loan where you pay only the interest and thus do not pay off on the loan itself. This naturally provides a lower monthly benefit than otherwise. There may be several reasons for choosing a mortgage-free mortgage loan. For example, be creating greater air in your finances here and now. It may also be that you have a more expensive bank loan and take advantage of the savings from the mortgage loan to get more paid on the expensive bank loan. Whatever, then a loan is not deductible forever. Typically, it may be for up to 10 years. Then you have to pay off on the loan or, if necessary, take up a new loan-free loan. This can only be done if housing prices are the place in the meantime, so you have some freedom to take off as you can only borrow a house by 80 percent. If housing prices have fallen, you may risk getting a very high monthly income and you become what you call technically insolvent.
Which loan should I choose?
Which of the many types of mortgage you have to choose and which mortgage lending can be a very clear choice. Especially if you, like most, are not special in the financial world. In the above, have tried to outline the most important choices you should take in connection with the admission of a mortgage. It is whether you want to borrow at a fixed rate or with a variable rate (and if so, for how long a period), what maturity you want and whether the loan will be deductible for a period or not. But there are more choices and decisions than them. Among other things. whether you want to freeze your interest rate or not to just take an example. advice, if you are not completely in these complicated matters, is that you advise you before you borrow. And remember that both real estate broker and bank consultant are not impartial advisors, but sellers with their own interests.
A good place to get advice about mortgages is at the Consultant . Here you can get advice when buying a house and thus need a new mortgage, but you can also get advice about your current mortgage. If you already have a loan it may be a good business to get it reviewed. Typically you can save between DKK 10,000 and DKK 50,000 in your current loan.
Mortgage Consultant compares the various mortgage loans and through discount agreements with credit unions, they ensure that you get the cheapest loan on the market. Should you buy new housing, you can start here .
How do I raise a mortgage?
To enter a mortgage, you must first be credited to the credit association. In practice, it’s not your self that addresses you; It happens as part of the entire purchase process between real estate brokers, banks and mortgage banks. Today, all real estate agencies and banks have a particular mortgage lending institution they collaborate with. Just keep in mind that you are actually free to choose and that it often pays to shop around and compare prices. Credit approval is done by submitting a number of papers to testify to your creditworthiness and help the credit association decide whether they believe in your finances to grant the mortgage to you. These papers can range from payrolls and annuities to a budget for your private economy. You must have room for a certain amount of available funds to be considered as sound to borrow as much money as a mortgage often consists of. Million Amount. If you are approved to borrow, you will receive an offer for your mortgage, which you may choose to accept or not.
Security in the home
When you raise a mortgage, the credit association takes security in your home. That is, if an unfortunate situation occurs when you can not pay your term, the home will probably end a forced action, so the credit association can get as much of their money back as possible. This is what they need because their business is based on lending of very large amounts of money. Unfortunately, this process leaves you with a huge debt, which can be more than difficult to get rid of again. Therefore, it is of utmost importance that you take the entire loan process very seriously and only borrow a mortgage if you have enough air in budget and economy for it. Are you going to sit too hard in that, you are in a very fragile situation if the wind turns and you lose job, for example, divorce or similar life-threatening. In such a situation, it is essential to be able to keep their homes. Therefore, you can only borrow if there is enough air, otherwise it is better to live for rent.
Find further information
If you need to borrow a mortgage, you can contact one of the mortgage banks or possibly. have a chat with your own bank. Here you will find an overview of the Danish mortgage banks . Here you will find an overview of the Danish banks .
Instead of going directly to the bank or mortgage institute, advice can be a good idea. The consultant then contacts the bank and mortgage bank. You can also use the bank and the adviser in parallel. When the bank calculates a loan for you, you can let the counselor review the loan. This gives you greater security, since you know the loan is right for you. An impartial advisor such as Mortgage Consultant does not work for the bank but for you.
advice is that you (or an advisor) examine all the different options and then decide on the offers. There is a big difference between which solution is the best, as this depends on many factors. So, getting some specific offers for your needs makes the decision much easier.
If you would like to find other types of loans, you can find overview of consumer loans here and here overview of micro loans .