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PROPERTY

How easy is it to get a mortgage in Norway as a foreign resident? 

Is getting a mortgage for foreign residents in Norway a breeze, or are there plenty of hoops to jump through? Here's what you need to know. 

Published: 8 October 2021 15:28 CEST
Updated: 29 July 2022 14:47 CEST
Ever wondered how straightforward it is for a foreigner to get a mortgage. Pictured is a typical Norwegian coastal house with a cruise ship sailing past in the background
Ever wondered how straightforward it is for a foreigner to get a mortgage. Pictured is a typical Norwegian coastal house with a cruise ship sailing past in the background. Photo by Vidar Nordli-Mathisen on Unsplash

The first step towards buying a home in Norway begins with a mortgage application, but how much red tape is there for foreign residents when it comes to securing a loan? 

One of the first things you’ll need to know is that there are no rules that prevent foreigners from owning or buying property in Norway, so you’re all set to begin the hunt for your dream home in that regard. 

You’ll be able to apply for a mortgage from most traditional banks in Norway. In addition, there is also the Norwegian State Housing Bank, Husbank, which provides grants for building new houses and renovating properties. 

Municipal startup loans are also an option for those struggling to get a mortgage from a typical bank. You can read more about municipal startup loans here. How municipal loans are granted will depend on the practices of the local authority in question. 

READ ALSO: Is it better to buy or rent property in Norway?

Once you’ve found your provider, it’s time to sit down with them and discuss the mortgage itself. 

If you want to read more about property in Norway, ranging from a guide to buying in Oslo to whether or not solar panels are worth investing in, click here. 

What paperwork will I need? 

The documents you need will vary, but generally, you’ll need your financial records, such as payslips, as proof of your income. In addition, the bank may ask for your tax records too. You will also need a Norwegian Identification Number, such as a D-number or Personummer. You will not be able to secure a mortgage or buy any property without the ID number. 

This could be one of the main stumbling blocks for foreign residents new to Norway. 

Another hurdle could be a lack of credit history in Norway if you have been in the country for less than a year, sometimes longer. The lack of credit history, which doesn’t carry over from the country you came from, could hold up the process or prevent you from getting a mortgage entirely. 

For those that have already lived in Norway for a while, getting a mortgage should be straightforward as you will already have an identification number and credit history.

If you are applying for a loan with a Norwegian partner, then it may be possible to secure a housing loan without much credit history in Norway, but this will come at the cost of higher rates.

How much can I borrow

Generally speaking, you’ll be able to borrow either three times your annual income or up to 85 percent of the price of the property. Top-up loans are an option for those unable to put down 15 percent upfront. 

Furthermore, first-time buyers can apply for a special mortgage where you can borrow 100 percent of the purchase price, and the interest rate will be fixed for the duration of the mortgage. 

The repayment period in Norway is typically between 20 to 30 years. You can check out and compare mortgage providers here. 

It’s worth being aware that mortgage rates are rising in Norway after being set to zero throughout the pandemic. This means you should expect the interest rates to increase and the repayments to become more expensive for the first few years after taking out your mortgage. Therefore, you should try and factor the increasing repayment costs into your budget if you can. 

READ MORE: Norwegian lenders raise interest rates after central bank hike

Another thing worth highlighting is that you should receive the all-important official mortgage approval document once your application has been approved. You will need this to purchase a house in Norway.  

Vocab

  • Visninger- Viewing
  • Boligån- Mortgage
  • Nybygg- New build 
  • Eiendomspriser- Real estate prices
  • Budrunde- Bidding process
  • Selvangivelse – tax assessment
  • Bolig konto– house account
  • Gjennomsnittspris – average price

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PROPERTY

How not to buy a house in Norway: Five pitfalls to avoid 

Buying a home in Norway comes with many challenges, from the dreaded bidding rounds to the small print. Here are some of the mistakes you need to steer clear of. 

Published: 17 April 2024 12:00 CEST
How not to buy a house in Norway: Five pitfalls to avoid 

Norway’s property market moves quickly, and most homes do not spend too long on the market. 

Furthermore, rising property prices can make it feel like it’s constantly getting harder and harder to get on the property ladder. 

However, despite rising prices and the market’s breakneck speed, it’s important not to rush into things and end up making a massive mistake. 

Not sorting your paperwork 

Before you are ready to start putting in offers on houses, you will need the mortgage offer from the bank. Therefore, you should fix this before really getting stuck into viewings. 

Banks in Norway offer mortgages of up to 85 percent of a home’s value, with a 15 percent deposit required. 

They will also stress-test your finances against interest rate raises and consider factors such as your income and any existing loans you may have. In Norway, your debt typically can’t exceed five times your income when purchasing a property. 

Once you’ve got an offer, you can approach other banks to see if they will better the offer you received, and after this, you are ready to begin searching as you know what you can afford. 

READ ALSO: What foreign residents in Norway need to know to get a mortgage

Not reading the small print 

There is quite a lot of important small print when purchasing a house that will cost you big time if you don’t properly read it. 

All homes in Norway generally come with an in-depth report on the property’s condition, and in most cases, the buyer is responsible for uncovering flaws in the property. 

During a condition report, an appraiser will check for deterioration on the property, assess the materials used in the construction and thoroughly evaluate the home for any areas where maintenance will be required in the immediate or near future. 

Pay particular attention to things like the electrics, plumbing, kitchen, bathroom, and moisture damage, as repairs to these can be incredibly expensive. 

Then there’s the information about the housing association to which many, but not all, homes in Norway belong. 

It is crucial to check the association’s monthly costs and shared debt, as well as any future plans for major renovations that could increase those costs. 

Being able to tell a well-run housing association with healthy finances from one in a more perilous position can make or break whether a home is for you.

READ ALSO: How to analyse a Norwegian housing association’s finances

Showing the realtor your proof of funds 

Banks issue proof of funds certificates (Norwegian: finansieringsbevis). However, you should never show this to the realtor selling the property. 

This is because it will reveal how much money you have available, and as the realtor is working for and being paid by the seller, they will do what they can to ensure a higher price for the seller. 

Bidding on homes that you aren’t quite sure about 

Once you have your mortgage offer or proof of financing, you can put in offers on homes. 

Be warned, though. You shouldn’t just put in bids to be involved and get a feel for the market. 

You also shouldn’t put in offers on “maybes” either, as all bids in Norway are legally binding. 

This means that you could end up having to buy a property you put a speculative bid on if it is accepted by the owner. 

Agents do their utmost to prevent people from bidding on more than one home at a time, but some offers can slip through the cracks, so you also need to make sure you only bid on one property at a time. 

You also need to make sure you don’t offer more than you have, as you will be expected to follow through with the purchase. 

It is incredibly difficult to back out of a home purchase in Norway, and if you do manage to wriggle out of the process, it will likely end up costing you quite a lot of money. 

Not having money for the other costs 

Given that property is typically the largest purchase of most people’s lives, it’s easy to lose track of the smaller costs. 

One of these is stamp duty (dokumentavgift). When buying a freehold property in Norway, you will need to pay 2.5 percent of the purchase to the state in stamp duty. 

Banks in Norway don’t offer financing for stamp duty. So it’s worth remembering that you will need to pay this cost. 

One advantage of buying into a housing association is that you will not need to pay stamp duty. 

READ MORE: The hidden extra costs when buying property in Norway

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