It can be a dream for many to be able to borrow a million kroner. It can be difficult to see what is up and down when you need to take out a loan. But what does it actually cost to borrow DKK 1 million?
There are countless types of loans and choosing the right one, as well as what to pay attention to when making a decision, can seem daunting. Because of the many loan options, it is especially important to know the purpose of the loan, as this provides the framework for the type of loan to choose.
If the purpose of the loan is financing new housing, a mortgage may be an obvious choice. Or if the dream car you want, for example, a car loan may be ideal. A third option may be a collateral loan to convert your loans into a bank, which can reduce your debt. There may be several reasons why people take out a loan of DKK 1 million, but how do you make a wise choice?
A new historic mortgage has become a reality. The fixed-interest 30-year loan at 2% has hit rate 100 on a bond. This means that the limit is crossed and the loan is no longer issued in that series.
When the price of a loan exceeds 100, it is no longer an advantage for investors and the sale of bonds for the loan is closed.
This has opened up a new series with a fixed rate 30-year loan. The loan is issued with a historically low interest rate of 1.5%, which is the lowest interest rate ever on a fixed-interest 30-year mortgage and a rate close to 96.
With our new loan calculator you can easily calculate what it costs to borrow a million, with different interest rates.
As a rule of thumb, the price should preferably be above 95 before a loan is attractive to buyers. The new series with the 1.5 per cent loan has therefore got off to a good start.
This scenario therefore creates the opportunity for a perfect home loan for home buyers as well as homeowners, since it has never been cheaper to borrow a million DKK or more. However, there are, of course, more costs if, for example, you want to find out what it costs to borrow DKK 2 million.
Fixed-rate million loans are emerging
Compared to the past 10 years, new fixed-rate loans excl. contributions decreased by more than 5%. This means that in 2008, one borrowed at a fixed interest rate excl. 7% contribution. This is a huge change in interest rates. When the interest rate is described without contribution, it means that you do not repay the loan at the same time. The 7% is pure earnings to the institute to lend you the money.
Therefore, it has never been cheaper to borrow a million kroner when compared with previous years. At the same time, it is also becoming more secure, as fixed-rate mortgages are gaining ground, and one should not fear that interest rates will suddenly rise.
Interest rates for the past 10 years
Examples of what it costs to borrow DKK 1 million
Once the purpose of the loan is found, what should you be aware of? First and foremost, one’s financial situation must be calculated, since it is all crucial in terms of what loan options you have and how much you can potentially borrow.
The more value you own, the better loan opportunities you create for yourself. For example, value can be your house, your car or a good paycheck. Therefore, it will always be cheapest to borrow a million kroner if you already have a value in advance. For example, a good draft to get an idea of what you are able to borrow can be calculated through Danske Bank’s loan calculator. This creates a good starting point for you, but be aware that loan calculators should only be used for indicative calculations.
Once the foundation of the loan itself is created, there are a lot of factors to be aware of before choosing your loan. One of your best tools for assessing whether a loan is attractive to you is ÅOP, which accounts for annual percentage costs. This figure shows all the costs associated with the loan during the entire term of the loan, shown as a percentage of the loan. year. Thus, the loan’s contribution, interest, foundation costs, rates, fees, etc. are included.
See possibly this page with an overview and explanation of various financial concepts.
This figure can be used to compare the total cost of uniform loans, which is a good indicator for choosing the best loan. This is ideal if, for example, you want to find out what it costs to borrow a million kroner if you are offered several types of loans from different providers.
One of the biggest loans that you are most likely to take out is a home loan.
This means that it is therefore very important that you make the right decisions. This is typically the home loan that you will pay back for over half of your life. The performance of a home loan will most often be greater than other loans. Therefore, you must dress properly before you make this decision to lend DKK 1 million to a home.
Your home financing can be put together in several ways through different loan types, each with their own unique characteristics. However, the common term for them is the same, ie to finance your home purchase. The distribution of loan types is determined by the rule 80% – 15% – 5%. It is explained as follows:
80% can be borrowed as a mortgage
It is possible to borrow up to 80% of the value of the home through one or more types of mortgage loans. This will be your primary loan as it is the largest amount of money you borrow also called the loan proceeds.
A mortgage loan is offered by the mortgage institutions and is financed through bonds that the institution sells for you. Bonds take collateral in your home and the amount you get paid out through the loan comes from the sale of the bonds. Since the loan is tied to bonds and traded in a market, it is difficult to get out of the loan.
The actual value of the bonds is assessed on the basis of the market price, as, as I said, they are traded on a market. The reason why it is difficult to get out of the loan is because people invest in the bonds. That is, you need to “repurchase” the bonds that finance your mortgage.
15% can be borrowed as a bank loan
When the first 80% of the home’s value is borrowed, the next 15% can be financed through a bank loan also called a mortgage. This type of loan often has a higher interest rate than your primary loan. However, you can pay off your bank loan at any time. This is because the bank loan is not based on bonds and is issued by the bank itself.
You must own 5% in value
You must be able to contribute the last 5% of the value of the home. This is statutory and therefore you can only borrow up to 95% of the value of the home. This law is created to reduce the risk of you buying too expensive. After all, you may end up in a situation where you are forced to sell at a lower price than what you borrowed.
However, this law has certain exceptions. For example, if you are a younger home buyer with a high income and a high amount of money each month, you may not be forced to put down 5% in payment.
All this means, then, that if you borrow a million dollars for a home, you will be able to borrow DKK 800,000, ie 80% from a mortgage institution. DKK 150,000, which is 15% in the bank and the last 5%, which is DKK 50,000, you must be able to finance yourself in order to borrow.