Sooner or later, a lot of people realize that the rent you pay in Copenhagen is equivalent to the EMI and other expenses you would pay for owning the property (unless you are a part of housing schemes paying lucrative rent). Add the attractively low interest rates on home loan on top of it and you almost make your mind to buy a property. But where to start from?
If you are dealing with above question, let me share our story with a hope to ease your process:
Know your ‘worth’
While it is always good to know your worth in various ways, this one is precisely about how much loan your bank would be ready to grant you given your monthly income and expenses (unless you are a rich dude or dudette without any need for loan). An expat friendly bank should be ready to offer you loan for 80% of the property price, meaning that you need to contribute the 20% down payment (while in some cases the ratio is 60:40).
There is also a possibility to finance your down payment as well in case you do not have funds available immediately but for this portion, the interest rates are considerably higher than the remaining loan.
Further, you can also negotiate interest rates with your bank or compare between two or more banks. You can choose between various fixed and floating options for interest rates available at different banks. Going by its name, fixed rates of interest remains constant throughout the loan period, floating remains fixed for 5 years (as an example) and then has to be re-negotiated.
You can also change these options at a later stage by paying a (hefty) fee to the bank after doing ‘cost benefit’ analysis of your decision.
Apart from the interest rates, make sure to check the processing fees for loan which could be another heavy amount even if it is 1-2% of the total loan amount.
Hunt your home
By this stage, you may have some preferred locations in the city you would like to have your new abode at. While there are various popular estate agents like Danbolig, Nybolig, Home etc., the one website that we used which combined all the properties for us in one application was boligsiden.dk.
Further another interesting link which you may already be aware of is boligejer.dk, which gives you some interesting details like property size, owner details etc if you insert the address.
Be prepared to go for several open houses almost every weekend. Tip: it will be a great time saver to give a closer look to all the details listed on the website to avoid getting disappointed when you physically visit the property.
Permissions and legalities
As you get closer in the process, try to find a lawyer who would facilitate your dealing with the seller and also help you with the permission you need from ‘Ministry of Civil Registration’ if you are from outside EU.
We bought an apartment only to realize it is too small for us and had to buy a house later. For apartment, we did not hire any lawyer at all. We dealt with the ministry ourselves however when buying a house, we wanted to be very careful with regard to clauses contained in the contract and thus hired one solely for this purpose. This means second time also, we sought the permission from ministry ourselves.
Know that the permission is granted to you based on the several factors such as your monthly income, duration of your stay in Denmark, the property in consideration, your intention of buying the property etc.
Bid and win
You may come across a lot of interested buyers for the property you are eyeing at and it is always tricky to maintain the balance between offering too much or too less. As we heard, the standard negotiation range is 10-15% of the asking price, some properties are so hot that the seller is not ready for negotiate for a single penny.
And now that you have chosen a property and your bid is accepted it is time to inform your bank which will then assess the property with regards its condition, location etc. and will finally approve or deny the loan to you.
Note that first 3 steps above, run simultaneously in some cases depending on how much time you are giving yourselves in this process. But the fact remains that the bank and Ministry of civil registration will approve or deny your request taking into consideration the property you have chosen (for which your bid has been accepted by seller).
Once you win the above battle, a very important step here is to get the inspection done of the property you are considering to buy. If it helps, it costed us around 3,000 DKK for inspection of our house and a further 1,000 DKK for drafting the inspection report.
But again we did not take this service while buying an apartment but it looked like a ‘must’ when buying a house. I also learnt only later that we could have got a lot of information at least in case of our apartment from bolighed.dk. If you search the address on google combined with this website, it will give you interesting details like value development, sales history, monthly expenses, health, safety & risk, risk of radon, flooding, cloudburst, storm, burglary, traffic noise, soil contamination, hardness of drinking water, risk of PCBs etc. While there is a disclaimer that all the information is only indicative, there is no harm in checking it out. Tip: open this on Google Chrome to be able to translate the summary in case your Danish is as bad as mine.
If you have read my previous article on 9 important links that made my life easier in Denmark, then you have already heard the praise of this website in it.
While it is compulsory to take certain kind of insurance in case of a house, we never took any insurance for our apartment. My knowledge is quite limited in this area but I highly suggest you to talk to your agent about this, followed by a talk to one of the insurance providers.
Seal the deal
Once the ministry approves of you to buy this property, your bank should be ready to shoot the funds on your instruction. You will get some online agreements to sign through net banking and taadaa!!! You are the owner of a property in Denmark!
Possession is fairly easy and the date of it is usually agreed around the time when you agree on a price for it.
I am no expert in this process but I have tried my best to recall and pen down our journey in this direction. Hope you find it useful and if there is anything you feel is missing, please write it in comments.