An Overview on How to Buy Property in Denmark as a Foreigner
There are many reasons to want to live in Denmark. We have a vibrant city life, a beautiful countryside, a proper healthcare system, great infrastructure and mild weather. Oh, and we are also consistently listed in the top happiest countries in the world!
However, when looking to buy property in Denmark you can be in for a roller coaster ride, as the Danish real estate market can be quite fast paced at times.
The process of buying real estate in Denmark
Buying real estate without any prior experience is like putting together an intricate puzzle: you kind of know what you are doing but most of the time it is hard to see the whole picture.
However, a lot of unnecessary stress can be avoided by taking the right approach.
This mini guide is for foreigners interested in buying real estate in Denmark. It is a general and not a comprehensive overview, as the real homebuying process is unique to every situation and far more complex.
Nevertheless, we still hope to help shed light on a confusing and challenging topic.
Step 1: Get approved for a mortgage as quickly as possible
Apply for a mortgage as soon as you have decided on purchasing your next home instead of renting it. The reason for this is that the mortgage approval process can take weeks. And you don’t have this kind of time when you have found your dream home and there are several other potential buyers interested in it as well.
By starting your homebuying journey with a visit to your bank, you get to know exactly how much you can borrow for. Moreover, you can continue the home hunting process with the confidence that the bank has greenlighted your mortgage application. This means you can skip directly to negotiating with the real estate agent once you have found your new home.
Be aware that there are differences in how you can finance your property, depending on your citizenship.
If this seems like a mouthful then we at Bomae can help you obtain your financing and negotiate with the banks. This will also ensure you the right counseling across all products available with the different banks.
Danish and EU/EAA citizens
The law in Denmark dictates that Danish and EU/EAA citizens can finance up to 80% of their property with a mortgage. The next 15% can be financed with a bank loan, and the final 5% is the down payment, i.e., your savings.
Non-Danish and Non-EU/EAA citizens
If you are neither a Danish nor an EU/EAA citizen, then the down payment varies from 10-40% of the purchase price. You can still finance up to 80% of your property with a mortgage but how much you can really borrow is determined by your bank.
Also, non-Danish citizens might have to obtain permission to buy property from The Department of Civil Affairs under the Danish Ministry of Justice.
Step 2: Find the right home
This is without doubt the most fun part of homebuying. In this step, you search for your future home – or at least your home for the next 5 years (any less might negatively impact your investment).
Make sure you choose a home that fits your current and future needs. A penthouse apartment in a trendy downtown neighborhood might sound tempting at first, but if you dream of expanding your family within the next few years then perhaps a home in the suburbs will be a more suitable choice.
Other things to take into consideration when house browsing include:
- Daycare opportunities
- Grocery stores
If you have not decided exactly where to buy or do not know what sort of property your budget will yield in different areas, we can help you shape your brief.
Once the ideal property has been found we undertake detailed price comparison research using Land Registry data and on-market comparables to establish what we believe to be fair market value. We will then agree a negotiation strategy with you and work to secure the most favourable terms with the selling agent. Simultaneously to this process, we will make sure your financing is obtained to your needs.
We have an excellent track record of successfully negotiating very substantial savings from asking prices. Our clients’ bids are often favoured over competing bids because agents and vendors value our involvement and have greater confidence the deal will reach successful conclusion.
Step 3: Review purchase documents - preferably with a lawyer by your side
Once you have found your dream home, and you and seller have agreed on a price, it is time to meticulously go through each purchase document. This is to ensure that you are getting what you are paying for.
Most people hire a lawyer to go through the documents, as these kinds of papers tend to be written in a manner that for laymen is difficult to understand.
A lawyer is not required to complete the purchase but keep in mind that the cost of hiring a lawyer is tiny compared to the huge amount of money you are spending on your future home. If there is a time when you don’t want to make a mistake, then this is it.
Finally, when all the documents have been read and approved - either with or without a lawyer – the deed is created and sent to the Registry Court, officially making you the new owner of the property.
What should I pay attention to when looking to buy an apartment in Denmark?
Once you have set your eyes on a specific house (not an apartment – we will get back to that later on), make sure you get an independent surveyor to inspect the property.
Though the seller will always provide you with a home condition report that describes the state of the property, including deficiencies and damages, there is a chance that the surveyor who made it missed some crucial issues.
By hiring your own surveyor, you get an independent evaluation of your future home. Also, the surveyor can help you to better understand the issues listed in seller’s home condition report and how they will financially affect you in the long run. These findings can then be used as negotiation advantages when dealing with the real estate agent.
But what if I want to buy an apartment - shouldn’t I also get a surveyor to inspect it?
The short answer is no. The long answer is that if you want to perform a survey on an apartment, you need to include the entire building in the survey. And that, dear reader, is very, very expensive.
Practically no one performs a survey when they want to buy an apartment in Denmark. The only exception is when the buyer seeks to purchase the whole building.
We hope you found this overview helpful. Feel free to contact us if you have any questions about the Danish homebuying process or just want to know more about the Danish real estate market.