Buying Real Estate in Denmark International Private Clients - Danske Bank

Buying Real Estate in Denmark International Private Clients - Danske Bank

Today's speakers are David Birch, Morten Hirsch & Peter Ankær Financial advisors in Danske Bank, Kannikegade Aarhus Buying real estate in Denmark Jane Bak Aagaard Head of Real Estate Denmark, Aarhus Kenneth Andersen Certified insurance sales manager Danske Forsikring Daily insurance in Denmark 2

Agenda Home options Buying Real Estate in Denmark - Legislation - The path to your new home - Expected costs when buying - Taxation and fixed costs - Financial requirements - Financing - Mortgage options 3

Home options Rental Cooperative home (Andelsbolig) Real Estate 4

Summary Downpayment Apply if not EU or EEA Financing Timeframe Rental All Cooperative home + 3y Real Estate + 5y 21/04/2016 5

Legislation Legal requirements when buying Real Estate in Denmark - EU or EEA Citizens and living in Denmark - All others must seek approval from the Danish Justice Department Residence requirement - 99% of all property require a resident - The resident does not have to be the owner Renting out your home - Requirement to have lived in Denmark for 5 years - Does not have to be consecutive 6

The path to your new home Buyers certificate Your bank will issue a buyers certificate based on your individual economy Find your new home Search the marked with a Real Estate agent or on your own. Sign an agreement Make sure that the agreement is conditioned by approval from your bank and lawyer Financing Go over the options with your bank and decide on final financing Banks approval Your bank will approve the purchasing price Lawyers approval Your lawyer will point out any issues before approving. Loans Your bank finalizes loans and register (tinglysing) your mortgage. Registering the deed Your lawyer finalizes the process and register your deed. Take over your home When taking over your new home you also finalize the completion statement BANK - REAL ESTATE AGENT - LAWYER 7

Expected cost when buying Real Estate Example: Own financial contribution of 1.005.000 DKK (30 %) - Financing is 2,5% fixed 30y mortgage 8

Expected cost when buying Real Estate Cost Amount Example Stamping fee deed (3.350.000) Stamping fee mortgage (2.345.000) 0,6% + 1.660 DKK fixed fee 1,5% + 1.660 DKK fixed fee Lawyer 10.000 DKK 15.000 DKK 21.760 DKK 36.835 DKK 15.000 DKK Mortgage Brokerage 0,15% 4.127 DKK Mortgage fee Fixed fee 3.000 DKK Bank guarantee Bank fees May vary from bank to bank May vary from bank to bank 1.500 DKK 4.000 DKK TOTAL 86.222 DKK 9

Taxation and fixed cost Taxation on Real Estate - Real Estate value tax (Ejendomsværdiskat) 1% of public value below 3.000.000 DKK 3% of public value above 3.000.000 DKK - Real Estate Tax (Ejendomsskat) Property tax, waste disposal, etc. Fixed costs - Common expenses for the owners association (Fællesudgifter) * Public taxation value is set at 1.312.500 DKK 10

Taxation and fixed cost No taxation when buying (But you are paying a stamping fee) No taxation when selling (If you have lived on the property) Capital gains taxation (If you have not lived on the property) 11

Financial requirements When seeking approval from a bank to buy Real Estate, provide information such as Three latest pay slips and contract Annual tax report from SKAT Overview of your expenses Savings and travelling Overview of your assets and debts Potential own financial contribution Life insurances and ability to work insurances Your bank will help you calculate your price range or effect on your economy from a specific property. A fixed rate mortgage will be used for calculations 12

Financial requirements A bank will expect you to have a certain amount left for expenditures depending on your family and lifestyle Individual, but a guideline: Family Single Couple Per Child Recommended 6.000 DKK 10.250 DKK 2.500 DKK Your own financial contribution Individual depending on your connection to Denmark, obligations abroad, family situation, etc. 13

Financing The Danish mortgage system is more than 200 years old, and relies on transparent market rates. Mortgage institutions are regulated by Danish FSA (Finanstilsynet) 14

Financing By law, mortgage institutions are required to evaluate the purchasing price of Real Estate and may finance: - 80% Permanent residence - 60% Holiday homes - 40% Lot (lot without house) However, mortgage institutions are not required to offer you the maximum amount of financing - Depending on your credit evaluation and the property. Your bank will handle all communication with the mortgage institution 15

Mortgage options 16

Mortgage options Variable interest (Flexlån) Fixed interest (Obligationslån) Interest Variable timeframes up to 10 years Fixed for 30 years Maximum duration 30 years 30 years Interest only Up to 10 years Up to 10 years Upsides Downside Typically and historically lower interest than fixed interest loans Interest rate will follow market downwards Interest rate will follow market upwards, with no ceiling. No possibility to refinance with a favorable rate Risk assessment High risk Low risk No risk if market rates are rising Possibility to refinance when market is favorable Typically and historically higher interest than variable interest loans Current interest rates (After tax) 1y: 0,76% 3y: 0,77% 5y: 0,98% 30y: 2,52% 20y: 2,15% 10y: 1,47% 17

Expected cost when buying Real Estate Own financial contribution: 1.005.000 DKK Financing: 2.345.000 DKK Example: Own financial contribution of 1.005.000DKK - Financing is 2,5% fixed 30y mortgage 18

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WHAT IS SUNDAY? A possibility to match any given home with your personal budget and get approved right away EASY AND SIMPLE BUDGET INTEGRATED IN THE SEARCH MACHINE With just seven clicks you have provided your economic overview. Once the informations have been put into the system, you are able to find your dream house and whether you can afford it or not UNDERSTAND YOUR ECONOMY The system lets you know, how the purchase of the specific house affects your personal economy and lifestyle. APPROVAL OF THE PURCHASE If the house is within your economic range, you will obtain an approval of purchase from Danske Bank right away. RELIABLE GUIDANCE Feel safe about your decision, knowing that Sunday s support team and Danske Bank are there provide reliable and personal guidance. 20 20

DESIGN OF THE WEBPAGE SUNDAY 1: Frontpage 2: Get started with only seven clicks 3: Overview over current economy 4: Search home 5: Watch details about your home and how it affects your economy if buying it. 6: Get an approval from Danske Bank right away 21 21

Questions? 22