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Buying a property in Denmark with no Deposit

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bunggle
6/2/2014 08:50 EST

Is it possible to somehow borrow 100% of the value of a property? I moved with my family to Denmark last August. I have a good salary, but no money saved to put down a deposit on a house. However, I think it would be much cheaper for us to buy rather than rent, and of course, we get more freedom to do what we want with the property this way.

I'm British and working full time, with a permanent job here in Denmark, my wife is Finnish - currently not working.

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Quickbooks
6/5/2014 08:02 EST

5% is the lowest I have seen anywhere with any scheme. The base mortgage is 80%, and then banks make personal loans for 15% more, leaving 5% out of your pocket.

I am afraid that leaves you to discuss your wife taking a job!

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hhamwv
6/6/2014 06:57 EST

You also must check ownership restrictions. I believe that generally non-Danes are not permitted to own houses in Denmark for first 5 years of residence, then must petition Ministry of Justice to do so, Not sure whether this has changed recently.

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Quickbooks
6/12/2014 08:06 EST

No, anyone can buy, just more forms to fill out. And it has to be for living, not for investment. You need the assistance of a lawyer.

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aero01
6/12/2014 12:54 EST

As with the purchase of any house that is a major investment, you should be very certain that you want to stay where you are for at least five years, meaning in Denmark. Are you all feeling settled in and happy with your move to this country? It is known to be rather inhospitable to foreigners, though slightly less so to other Scandinavians and europeans. Still, unless you understand what you are getting into, be careful. The law in Denmark, for example, is very different than in the UK. Completely different systems and this is not only relating to real estate but family law etc.
I know someone who has been working in the country for several years and she found it very difficult to sell the house she bought - but her experience in DK has caused her to decide to leave the country with her British fiance once his half-Danish children are grown.
Just be careful. Look before you leap.

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Quickbooks
6/13/2014 08:15 EST

Yes, it is the same anywhere. Housing is a risk and you have to be a smart business person.

The same rules are going to apply in Denmark or USA.

1) If the economy slumps, you are going to lose your equity in the house. Maybe even be foreclosed and lose your credit rating.

2) If the economy grows you may make a profit and sell quickly.

Just like in the USA, there are pros and cons on short term home ownership.

Con: You are going to burn cash on the transaction fees of buying and selling.

You are stuck if suddenly the earth moves and your wall cracks and major repairs are needed.

Boiler fails? You fixxxx$$$$ it.

Pros: interest rates are rock bottom. Property values are still on the low side. Property values are climbing in the metro area. Better probability you can "flip" the house in a few years for a profit.

If you know for a fact you are leaving in a few years, or are willing to commit to moving again in a few years, then get an "interest only" loan, and your monthly payment will be dirt cheap. If you are not planning to move in a few years, the risk of interest only is the rates go up, and you have no choice but to make changes in your housing.

Pro: mortgage interest is tax deductible, and if you reach the 50% top tax bracket, that is a big deal. In the first few years of home ownership, the monthly payment is nearly all interest.

I say: buy the smallest house you can live with, go interest only, and start saving cash.

Also, make sure the house is in a location and of a style that has wide appeal and will be easy to sell in three years. Don't buy any unique, odd ball properties.

Long term residence is not an assurance of money back in housing. There are lots of old ladies in Detroit whose homes are now worthless, burned out open lots.

Consider a town house?

Q: What are the three most important decisions in real estate?

A: "Location, location, and location"

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