Step-by-step guide to buying a home
Buying a flat or a house is both a big investment and a complex process. Read the guide to get an overview of the process from decision to buy to moving into your new home.
- 1. How much can you spend on a home?
- 2. Get loan approval
- 3. Find your home
- 4. Bring along a building surveyor
- 5. Remember to take out insurance against hidden defects in connection with a change of ownership
- 6. Understand the property transaction documents
- 7. Choose the right home loan
- 8. Taking possession of the property
- 9. Review your budget
1. How much can you spend on a home?
When you are buying a home, it is always best if you know your financial position and your loan options before you start looking. This makes it much easier for you to find the right home – and you will have some assurance that you will have the money needed for day-to-day spending also after the purchase.
The amount you can borrow depends, among other factors, on how much you earn, how much money you owe and how much you have saved up.
Use the home loan calculator to get an indication of how much you can borrow – or contact Danske Bank for a precise calculation based on your financial situation.
Read more about home financing in Denmark > Link to loan guide
We are happy to help you if you have any questions about buying a home.
2. Get loan approval
How much you can borrow for a new home depends on several factors. Mainly:
- Your income
- Your savings – you must be able to pay between 5-30% of the price of the property yourself
- Your debts
- The lifestyle you want
But the amount also depends on the type of home for which you want to borrow money. If you buy a completely new home, for example, you spend less on maintenance and energy bills than if you buy an older property.
The amount of municipal taxes and property taxes may also influence the cost of living in one particular home compared with another. The property with the lowest purchase price is not necessarily the most inexpensive when all expenses are taken into account.
Your overall financial situation if you buy a specific home therefore determines how large a loan we are able to offer you.
We can help you get approved for a home purchase.
3. Find your home
There are several Danish-language property portals where you can search for homes for sale. Some of them are:
- danskebank.dk/bolig – where you can also draw up a budget and apply for a home purchase certificate.
- Home.dk – a real estate agency chain which, for example, offers buyer advisory services and collaborates with Danske Bank.
home Køberrådgivning (Buyer Advisory Services)
Our estate agency partner ‘home’ offers ‘home Køberrådgivning’ (home Buyer Advisory Services). An adviser can help you review all documents, assess the purchase price and negotiate the price on your behalf.
4. Bring along a building surveyor
Once you have found an interesting home that you are considering buying, you may want to bring along a building surveyor to look at the property. The building surveyor inspects the property – and if it is a house, he or she may, for example, tell you whether it meets the requirements in the home condition report and the electrical installations report. Home condition reports are not normally prepared for flats.
A home condition report contains information about visible defects and deficiencies, and the electrical installations report states whether the electrical installations are functional and meet statutory requirements. A property also always has an energy label stating how energy efficient the property is. The label may also contain proposals for energy improvements, which may benefit the environment and reduce your energy bill in the long term.
A buyer adviser can help you with the questions that arise when you buy a home
5. Remember to take out insurance against hidden defects in connection with a change of ownership
If you buy a house, it is important that you take out insurance against hidden defects in connection with the transaction.
The insurance covers hidden defects and deficiencies in the building not mentioned in the home condition report and that you discover only once you have moved in. Good insurance against hidden defects can save you a lot of money if you subsequently discover serious problems such as moisture damage or defective construction.
The price and quality of insurance policies vary greatly, so remember to check what is and is not covered by the insurance. Note also that the insurance premium must have been paid no later than when you get the keys to the house.When you move into your new home, you must also ensure that you have contents insurance and house insurance.
If you have registered for Danske Bank's customer Programme, you have the advantage of a discount different insurances with Tryg.
6. Understand the property transaction documents
When you have found the right home, you enter into a purchase agreement with the seller. The estate agent draws up the purchase agreement, and the transaction is concluded when you and the seller have both signed the agreement.
Always remember that the estate agent represents the seller. So it is important that you consult your own lawyer or buyer adviser when you buy a home. You can sign the purchase agreement before consulting with your lawyer if you need to act quickly. But if you do so, it is important to have a lawyer’s approval clause or an adviser’s approval clause in the purchase agreement, to the effect that the transaction is valid only if your legal adviser approves it.
If you sign the purchase agreement before the financing is fully agreed with your bank, you must likewise remember to have a clause inserted in the purchase agreement to the effect that the transaction will be valid only once you have final approval from your bank.
Save DKK 1,000 on Køberrådgivning (home Buyer Advisory Services)
As a Danske Bank customer, you can save DKK 1,000 on home Buyer Advisory Services with the estate agency chain home.
7. Choose the right home loan
When the purchase agreement has been concluded, you must arrange the final financing of the purchase with the bank.
You can usually borrow up to 80% of the value of your home in the form of a mortgage loan. In addition, you can take out a home loan with your bank, but you must put up 5-20% of the purchase price yourself, including the costs for a property lawyer and insurance against hidden defects, for example.
There are several types of mortgage loans from which to choose. Here are some questions to consider before you talk to your bank about a loan:
- For how long do I expect to own the property?
- Do I want a fixed or a variable rate of interest?
- Do I want the option of interest-only periods?
8. Taking possession of the property
The seller hands over the property to you on an agreed date. You receive the keys that day, and the property is yours. You may want to go over the property with the seller when you have received the keys to check that all white goods are functional and to read electricity, water and heating meters. The seller is responsible for sending the meter readings to the utility companies and to report his or her change of address.
A completion statement is then prepared. This is an itemisation of the expenses for the property with the date of completion as the cut-off date. The completion statement contains an itemisation of all advance payments made by the seller, for example electricity, gas or oil, water and property tax, which must be paid by you after the date of completion, and vice versa.
You will typically already have made a down payment of around 5% of the purchase price when you signed the purchase agreement. The rest of the purchase price must paid to the seller on the date of completion. The bank will typically handle this transaction for you.
9. Review your budget
Once you have taken possession of your new home, your financial situation will, of course, change. So it is a good idea to review your new budget to take into account all new expenses – in an owner-occupied home, you pay property tax two to four times a year, for example.
Your tax payments will also change when you buy a home. Remember to report expected interest expenses to the Danish tax authorities, SKAT, so that you can benefit from the tax relief right away.
We are happy to help you if you have any questions about buying a home.