It would be a mistake to end this without defining a loan. A loan is when an entity offers to give you money with a promise of paying back. Loans can come in different forms depending on what you are looking for. The type of loan you get will also depend on your lender and what you expect to use it for. Let’s take a look at some forms of loans available in Norway today.
Secured Loans in Norway
A secured loan is a loan that involves some form of collateral. It implies that you borrow against a property such as a home, boat, or car. One thing you will love about these loans is the favourable interest rates involved. They also have longer repayment periods stretching over many years.
Before applying for a secured loan, you should always ensure that you can handle the monthly installments. Especially since there is usually something else at stake. Thankfully, most lenders will let you know whether you are in a position to repay the loan or not.
Unsecured loans are those where no collateral is needed. They are usually of a lower amount than secured loans. The disadvantage of these loans is that they have higher fees and interest than secured loans. A good example is a credit card.
Consumer Loan: Forbrukslån
A consumer loan refers to a loan that you can access without a collateral. You can also use it for any purpose and amounts to between 25 000 to 500 000 Norwegian krone. Most lenders will expect you to repay it back within five years at most. However, you can extend the repayment period by refinancing all your liabilities, for up to 15 years.
Consolidation Loan: Refinansiering
This is an extension of a consumer loan and mostly involves debt refinancing. It implies that you gather your current liabilities including loans and credit cards and put them together. Subsequently, you repay them as one through more favorable terms than for individual liabilities.
The advantage of this is that it enables you to extend your repayment period for as long as fifteen years. It also gives you time to organize your finances accordingly without a rush to clear overdue loans. Most lenders allow their customers to refinance their loans only 6 months after drawing the loan.
Mortgage Loans in Norway
It’s normal to start thinking about getting your own home after you have worked for a while in Norway. One thing I know is that we have all dreamt of owning property at different points in our lives. Owning a house in Norway would really save you from the high monthly rental fees. The sad truth though is most of us cannot afford to buy property from savings.
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All Scandinavian countries are characterized by high property prices hence the increase in mortgage loans. A mortgage loan is a loan taken to purchase property such as a home. In Norway, most banks expect you to have an individual contribution of 15% or 25% of the property value. However, you can avoid this by using a different property as collateral. The property must have a minimum value of NOK 750 000.
Other Requirements for Mortgage Loans in Norway
To get a mortgage loan in Norway, you must have been permanently employed for at least a year. You should also note that you can only apply for a minimum of NOK 100 000. Similarly, the maximum repayment period is 30 years. The interest rate on mortgage loans vary from 1.5 – 6% depending on the lender. However, the interest rate will be heavily influenced by your creditworthiness.
Like other loans in the country, you can refinance a mortgage loan after a minimum period of 3 years of repayment. The best thing about this is that you can refinance the mortgage in a different bank.