How to finance home buying in Norway?

Av: Dato: English

Almost 80% of Norwegian families own their own home.  Or maybe we should say, their bank owns it. But most Norwegian do not worry about their debt ratio.  Maybe because we have a solid bank system and regulation regarding how big mortgage the bank can give people according to equity and monthly income.

In general, the bank requires 15% of the sales value in equity, you cannot have a mortgage that exceeds 5 times the family income.  And you have to be able to pay an increase in interest with 5%.  This is public regulations from the government that the banks have to follow.   This is difficult to fulfil for some first-time buyers.  Therefore 50% of them get help from their parents to meet the banks requirements.

What about foreigners or non-Norwegian citizens, will they be able to get a mortgage in Norway?

The answer is yes, on certain conditions.

Normally the bank will require 25% of the sales value as equity.
You have to have a Norwegian D-number or identification number.

With a D-number you can apply for a bank account in Norway, which you will need.
But you are free to apply for a loan in different banks.

The banks requires that you are employed in Norway, or get your salary paid through a Norwegian bank account.  Income abroad is not sufficient.

Regarding your equity you probably have to transfer them to your Norwegian bank, or at least give a proof that you have the funds in your bank at home.
When you transfer money you have to give an account of the origin of the funds.  Due to money laundry regulations.

Much easier to buy a home, if you already have the cash 

If you don’t need a mortgage to buy a property you will get the D-number after the purchase, from the Norwegian Mapping Authority (property Register).  The money will go through a bank in Norway to the real estate agency, who will take care of the registration and send the D-number application.  In that process you have to give an account of the origin of the funds, due to money laundry regulations.

This is what I know about financing rules for foreigners. If you contact me can help you to get in contact with the right banking people to answer your more detailed questions.

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Market update on the housing market in Norway Q1-2022

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The housing prices have been rising every month in 2022.  At the end of the quarter the prices are 7,2% higher than the beginning of the year.  In Oslo the increase is a little bit lower with 6,9% increase in the same period.

There have been far too few houses on the market compared with the number of potential buyers.

The realtors are now telling that they have received many sales assignments lately and it is expected that there will be more homes for sale after the Easter holiday.  That is good news for the buyers.

The big increase in already high house prices is not healthy in the long run.
Also, other prices are increasing in Norway and the inflation is increasing.  Therefore the Central Bank of Norway has notified that the mortgage interest will increase 7 – seven times before the end of 2023.   A rice of 0,25% has already been completed in March this year.

The interest rate is the most important factor when it comes to housing prices.  It is therefore expected that the housing prices will flatten out throughout the spring.

There have been very low interest rates in Norway for many, many years.   Many home buyers have not experienced increases in interest rates.  Although the banks have been obliged to stress test their mortgage customers’ ability to manage an increase in the interest with 5%, it can be a challenge for some people to manage their housing costs.   But experts believe that most people will manage this, they just have to reprioritize. Anyhow, a more moderate price development in housing prices will be a good thing.

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Can you trust the bidding and the home sale system in Norway?

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When I am working with my home buyer costumers from different countries, they are often wondering if we can trust the various actors and the transparency of the process.

The question is wise, and I totally understand it.  The process is quite complicated with a lot of different people and systems involved.  And maybe you have bad experiences from your own home market.

I like to put some remarks on this issue.

All in all, the home buying sale process in Norway is safe and transparent.  Of course, the realtor is trying to get you to pay as high price as possible.  The seller is his client, and he is paying his fee.

But according to the law the realtor is also obliged to take care of the buyer’s interest.  And make sure that the adds, sales material and oral information are correct.  The realtor is together with the seller, responsible to give all known information about the property, before the bidding round.

Read:  Be aware of new regulations for home buying in Norway

The last twenty years the home buying market and the real estate business has become more and more regulated.  This is based on a wish from the authorities to create a safe home buying process.  But it has also been necessary because of some professional short cuts the realtors have taken to promote their own interests. You know, when profit is in the picture, people always want to take advantage of it.  Within in the law or on the edge of the low.

The Norwegian “Finanstilsynet” is responsible for the supervision and control of the real estate agents

We also have the consumer authority and other  complaint bodies where consumers, seller and buyers can complain if they experience bad practice. And of course, we have the the court system.

So, on the formal side everything is in order.

But when it comes to whom to trust in the home buying process, many buyers tend to not put totally trust in the realtor.  Because he is the seller’s representative, and his priority is to get the highest price The realtors in Norway have to fulfil the Bachelor grade in Real Estate and have work practice before they can take independent sales assignment.  So, they know what to do, and what laws to follow.  But because of the competition among the realtors and the hunt for the highest price, some buyers experience bad customer care on their behalf.

This unbalance between seller and buyers need in the home buying process, is the reason why I started as a home buying consultant.

One important thing in the end:

Fake bids

Many of you are anxios about this. Understandable, especially when we practise the principle of auction and  bidding rounds administrated by the realtor.

Fake bids are luckily no longer an issue in Norway.  All the bids must be registered in a journal by the realtor. If you buy the property, you will receive the bidding journal with all the bidders name, time of the different bidders and amounts.  If you are only participant, but not a buyer you can ask for the same journal but without names.

Also, the realtor is obliged to check the bidders financing in their bank.  In that way he will know that the bidder is a serious one that are able to pay for the property.



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Merry Christmas and a happy home buying year

Av: Dato: English

Christmas and a new year is coming. Time to look a little bit back, but mostly forward

New rules for home buying in Norway from 2022

As you probably know new rules come into action from 1.1.22.  The buyer will be better informed on the state of the property and other factors that are important for the deal.

But there will also be more information to read and interpret and a danger of “information overflow” for the buyer.   And the duty of inspection has been tightened. Therefore, you must be aware of not missing important information before you give a bid. The bid is binding in Norway, remember.

I am ready to help you with going through all the sales material on a home you want to buy and ensure you that no questions are unanswered.  If you do not read Norwegian well, I think it is unresponsible to give bid on a property.

So just contact me if you need my help. It is not as expensive as you think, and essential for securing you investment.

Next year I will collaborate with a surveyor and expert in construction to help you to find out how you can renovate a property, change it a bit and what it will cost.  It is quite rare that the property is designed and renovated exactly the way you want it.  Because the bid is binding it is essential to know that you are able to do the changes you need BEFORE you give a bid.  So far, I have been able to help my customers in some extent, but with this collaboration the advice and help will be really professional and substantial.

Price development in 2022

The statistics for 2021 shows that the prices have increased with 6% in Norway.  In Oslo it has increased with 2,5%.  Oslo had a very big increase in 2020 and in 2021it has been a correction.  But still the prices in Oslo are on a very high level.

The experts forecast a moderate price development in 2022.  2,5 to 3%.  This is due to expected increase in mortgage interest.  Also the high energy prices will influence on people’s purchasing power.  It was a very active housing market in 2020, and some experts believe that many people will stay steady for a while, without further moving.

I also believe in a moderate price development.  This is a better situation when you want to buy.  Then the bidding rounds will be calmer and a bit more predictable.

2022 will be a good home buying year

I have finished a good year.  Many new customers.  To help people to secure the investment of their life gives me a lot of energy and joy.  Many English speakers have approached me for help with the home buying.  You are welcome to contact me for a digital meeting for discussing your possibilities on the Norwegian Housing Market and how I can help you.

I will celebrate Christmas in my winter cabin in the mountains.  With my children and grandchildren.  Very sad with restrictions this year also, but I am happy to have the family around.

Merry Christmas and happy new year

From Boligdama

Do you want a free booklet about home buying in Norway, click here.  New edition.


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