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The process of buying real estate in Denmark

Buying a home is probably one of the biggest investments you will make in your life. There are many things to consider and the process can be stressful and overwhelming. In this guide, Help to buy a house will give you an overview of the process.

The housing market in Denmark works in such a way that the seller has assigned an estate agent to sell the house. As a buyer, you have the opportunity to choose your own adviser wherever you want in the process. Many choose to get advice when they have found the house of their dreams and signed the purchase agreement.

 

Did you know that you can advantageously connect a buyer's adviser before you have found your dream house? At Hjælp til huskøb, we offer help with the negotiation. Either by us equipping you to negotiate with the seller's estate agent or by us taking over the negotiation for you.

1) Find your new home

When you have to find a new home, it is important to be thoroughly prepared before you look at the first home. It may therefore be sensible to consider what your new home should be able to do and discuss it in the family.

However, many people find that they only get really clear about what they value most in a new home when they have experienced a few different homes. It can therefore be a good idea to look a little broadly at the start, until you find out what is decisive for choosing a home.

 

Find potential housing items on one of the nationwide housing sites such as Boligsiden or Boliga. Here you can form an overview of the housing market in a certain city/area or based on certain criteria.

 

You have the opportunity to order sales material at different houses, to participate in open houses or to book showings of potential homes.

Some criteria that should be included in your considerations:

  • Size and layout - can we be there?

  • Architecture and choice of materials - will we be happy to come home to and stay in the home?

  • Is it possible to change the size and floor plan of the home so that it meets our needs?

  • The location of the home in relation to shopping, schools, traffic, public transport, nature, workplaces?

  • Price.  Do you expect the home to be a positive / neutral investment within the time horizon in which you expect to own it?

  • Do we agree with our criteria? If you are a family that is going to buy a home, then it is extremely important to coordinate your wishes and hopes with each other. It's important to be honest about what matters most to you and why. You must agree 100% on what your future home should be able to do - otherwise you risk that the home purchase will be a negative process.

Many estate agents work with "drawer cases". These are houses that are for sale, but where the sellers do not want them to be advertised publicly. Therefore, it may be a good idea to contact the estate agents in the area you are looking for a home in, in order to be kept up to date on the drawer cases the estate agents have for sale.

2) Get the financing under control

In order not to be disappointed by what you can borrow money for, it is a good idea, early in the housing search, to get an indication of what your financial situation is and what your bank will lend you money to buy.

You should therefore contact your bank to get an indication of how much you can borrow and thus how expensive a home you can buy. Even if you had a calculation done at the bank ½ or 1 year ago, it is far from certain that that calculation is still valid.

 

The banks' calculations are based on the current interest rate. The interest rate fluctuates from day to day, and therefore the calculation can easily be based on a different loan than the one that was the basis for the calculations last time. If your private situation has changed since the last calculation, this must also be taken into account.

 

If you already own a home that is to be sold in connection with your purchase of a new home, the bank will also include this in the prerequisites. Therefore, it is a good idea to have your current home appraised, so that you can form an overview of what your current home can be sold for.

 

Therefore, contact a couple of estate agents to get an idea of what your home can be sold for and what it costs to sell it. The estate agents offer to create a sales budget (a calculation of what income and expenses are in connection with the sale of your home), so that both you and the bank can see how much money you are left with when the home is sold.

 

The bank also asks you for a budget for your daily finances. If you don't already have a budget lying around, it's a good idea to get one made. Most banks have a budget tool in their online banking. If you create your budget here, it is easy to share with the bank advisor.

 

Your bank cooperates with a mortgage institution which specializes in offering loans​ for the purchase of real estate. In the mortgage, you can borrow up to 80% of the value of a house. For holiday homes and plots of land, the rate is lower (75% and 40%).

 

When you borrow money from the mortgage institution, it is done on market terms, which ensure you a low price and transparent terms. If the bank can approve you for a loan, you can get the same loan terms as everyone else.

When the bank adviser has reviewed the finances, you will receive feedback on the rent at which the home must cost.

 

The banks do the calculations in slightly different ways, but you can count on the maximum that you can buy a home with a debt ratio of 3.5 – 4.5. (Debt factor covers how much you can borrow in relation to your household income. If, for example, you have a household income of DKK 500.00, then you will have a debt factor of 4 if you borrow DKK 2 million).

3) Get professional help!

Buying a home can be a stressful and overwhelming process, but it doesn't have to be. With the help of a buyer's advisor, you can save time and effort, make better decisions and get professional support throughout the transaction.

As a home buyer, you most often meet the seller's estate agent, who is employed by the seller to sell the home as best as possible. The estate agent is the seller's professional adviser, who exclusively looks after the seller's interests.

 

Most home buyers usually apply too late in the process, as many mistakenly believe that the estate agent is helping them with their home purchase. This is completely wrong!

As a home buyer, you should get your buyer's adviser involved in the purchase as early as possible in the process. You can get help and sparring from a buyer advisor, who has an overview of the entire process and can advise you from start to finish.

Your buyer's adviser should preferably have a background as a real estate agent. If your buyer's adviser is a former broker, he/she knows everything about the housing market and knows how a housing transaction works. If your buyer's adviser has a background as a real estate agent, you can expect much more detailed and broad advice on all the topics in your home purchase.

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4) Buy your new home

When you have found your new home, you must have bought the home. You can either choose to do this yourself or you can get professional help.

At Help to buy a house, I offer to help you with the price negotiation in 2 different ways:

  • I am responsible for the price negotiation on your behalf

  • I dress you up with arguments that you yourself are responsible for the negotiation with the seller's estate agent

Once the price and terms have been negotiated, the seller's estate agent will ask you for your information so that they can draw up a purchase agreement. The information the estate agent must use is:

  • The names of all the buyers

  • Address, telephone number and e-mail

  • Cpl. number (Must be used to register the deed)

  • Who your buyer adviser is (here I would recommend using Help for house purchases)

  • Who your bank is and who is your contact person at the bank

The purchase agreement is the most important document of the transaction, so it must be signed by the seller and you, of course. Today, this signature usually takes place online. In some cases, the seller's realtor will review the purchase agreement with you and in some cases, the realtor will not review it with you.

If you are in doubt as to whether you should sign the purchase agreement, you can send the purchase agreement to Hjælp til hushkøbvia this link. I then review the agreement and return within 2 hours on weekdays with an analysis of whether it is safe to sign the agreement.

If the seller's real estate agent has inserted a reservation for my approval of the deal, you can safely sign. You can see what should be written and where it should be written by reading more onthis side.

When the purchase agreement is signed by both parties, your statutory right of withdrawal. It lasts for 6 working days after signing the purchase agreement. In parallel with this, your advisor's approval deadline runs. If you regret your home purchase based on your advisor's advice, it will often be free for you to regret the home purchase.

When you have signed the purchase agreement, your adviser reviews the property and the property's conditions with you, so that you are completely clear about what it is you are about to buy. You can read more aboutreal estate documents by clicking here.

If there are conditions in the material or properties that your adviser cannot accept or that require clarification, you have the option of getting the seller and the seller's estate agent to clarify these or change the agreement. With this, you are sure to avoid unpleasant surprises with the purchased home.

 

​When your bank and your advisor have approved the transaction, they say that the transaction is final. This means that you have now bought the property. Until the day of the takeover, there are a number of matters that you, as the buyer, have to manage.

5) Attention points when buying a house

The seller hands over the property in a tidy condition on the takeover day or on the disposition day, if such has been agreed. Clean condition means that the seller must take care to remove all effects that the seller has left on the property.  

As a buyer, you assume the risk for the property on the day of acquisition or on the disposition date, if this is earlier than the acquisition date. This means that you must take out various insurance policies before you can be given the keys to the property. As a buyer, you must take out change of ownership insurance and fire insurance on the purchased property.

 

Before you get the keys to your new house, it is also important to have some of the following under control:

  • You must have made an agreement on the supply of electricity with an electricity supply company

  • You must have signed the deed.

  • You must have transferred the registration fee to the seller's estate agent (Your bank usually does this for you)

6) Sign the deed

It is usually the seller's estate agent who prepares the deed and ensures that it is signed by the seller and buyer. When your buyer's adviser has approved the contents of the deed, you will be asked to sign the deed digitally.

You must use MitId and below you can see a guide on how to sign the deed:

Image of Zhangs house

Nicolai is professional and patient and he speaks very good English.
Buying a house in Denmark as a foreigner, there are many facts that are obvious to Danes but totally unfamiliar to me. Thanks a lot for totally Nicolai's patient explanations.

wt Z, Risskov

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