Banking / Scandinavia / The Nordic

How to get approval for a mortgage in Scandinavia?

By: Ludvig Hoel

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How to get approval for a mortgage in Scandinavia?

In Scandinavia, it`s a strong culture of owning your own home but it might be tough for new citizens to get approval for a loan. The reason is that the banks are very regulated from the equivalent to the SEC after the financial crisis in 2007. Scandinavia navigated through the financial crisis but has since then seen an extreme increase in debts within the households. The increase has been driven by:

  • Increased prices on real estate
  • Increase in personal debt/consumer debt
  • Low interest

The rules for loaning out money to people has therefore changed quite a bit for new citizens and for the locals themself. The different countries have different policies but they are very similar:

  1. You must have lived in the country for 5 years
  2. You must have taxed income from at least 3 years
  3. No payment remarks
  4. You must have equity of 10-25 % of the total value of the real estate

Are there any exceptions from these requirements?

Yes, most banks can decide themselves for about 10 % of their customer base but that’s mostly within the equity and the income. As a foreigner with little documentation on your income or economy from the last few years, it can be nearly impossible to get a loan. There are banks that specialize in giving loans to people who normally don’t get a loan from a traditional bank but loans from them are quite expensive. They often have a very high interest and a fee for establishing loans and are mostly used for refinancing according to the Norwegian website

If you have a job in Scandinavia that is well paid it might be possible to get a loan if you have the equity but it might be that the bank wants you to have more equity or a guarantee from your employer.

How do you apply for a mortgage and how do you increase your chances?

We strongly recommend you when you apply for a loan in Scandinavia that you first try to gather all the documentation you have from the previous years. It can be tax returns, bank transcripts and also an overview of your savings. If you have a high credit score, get a print of that as well. In addition gather all the info you have about your status quo now such as job contracts, savings and all aspect of your economy.

When applying for a loan, you should schedule a meeting with the bank and not use the online banks. The reasons are that you will mostly get denied because these banks use automated tools for approval and our experience is that complex cases get denied. With a meeting with the bank, you can explain your situation and the bank can explain what they need for you to get approval.

It`s also very important that you apply in more than one bank. Even though they are regulated in the same way, each bank makes different judgements and one denial does not mean that you get denied from all banks!