First-time buyer?
If you dream of buying your first home, it is useful to know what is required and how you can prepare for the home purchase.
How much can I borrow for a home loan?
Buying your own home is perhaps the biggest investment you will make. Most of us need a home loan to realise our home ownership goal, especially with high property prices. When you take out a loan, it often involves large sums, and it is common to repay the loan over a period of 25 to 30 years.
When you are considering applying for a home loan, there are several things that need to be in place. Banks follow specific rules, known as the lending regulations, to determine whether they can grant a loan. These regulations help banks assess whether you can afford to repay the loan and ensure that they lend responsibly.
There is no definitive answer as to who can obtain a loan. For example, high equity can compensate for an unstable or low income, whilst a stable income can make up for low equity.
Money you have
Equity is money you have. When you buy a home, you must have a minimum of 10 per cent in equity. This means you must save up part of the purchase price yourself, but there are also several solutions for this.
Other optionsAbility to repay
Your debt-servicing capacity relates to your ability to repay the loan. The bank assesses whether you have enough money left to cover interest rates and instalments after all other bills and expenses have been paid.
Willingness to pay
The bank also looks at how good you are at paying your bills on time, in other words your willingness to pay. This gives them an indication of whether you will be able to repay the loan in the future.
All debt counts
You can have up to five times as much debt as what you earn in one year. This includes all loans, such as mortgages, student loans, car loans and credit cards.
What do you need to buy your first home?
Here are Madelen's best tips for saving towards a deposit.
How to save for a deposit
To secure a mortgage, you need to have saved a certain amount yourself. You must have at least 10% of the purchase price saved as a deposit. This means that if you want to buy a home for three million kroner, you need to have 300,000 kroner saved before the bank will grant you a loan. That's quite a substantial amount... Therefore, it's wise to start saving as early as possible. Be patient, as it can take time to save enough for a deposit!
Tips for saving towards a deposit:
- Save in a BSU home savings scheme for young people, and you will benefit from the favourable tax deduction. If you top up your BSU account with NOK 27,500 each year, you will receive NOK 2,700 back on your tax return.
- Set up a regular savings plan where you transfer a fixed amount to a savings account each month
- Set up a budget - get an overview of your income and expenses, and see where you can cut back to save more each month
How to prepare for buying a home?
To buy a home, you often need to take out a loan, and it is important to know how much the bank can lend you. The bank considers your debt-servicing capacity, income and equity when assessing your loan application.
Before you start attending viewings, it may be wise to apply for a pre-qualification letter. This way, you know how much you can borrow, and you will be in a stronger position during the bidding process.
Find out what is possible with your finances by testing your borrowing capacity.
How to save for your home ownership goal?
Stian explains simply what you need to know.
What and where do you want to buy?
Having good knowledge of the property market can be key to a successful purchase. When searching for a home, you should first consider which areas fit within your budget and look at how prices have developed there. It can be wise to compare prices over time to gain a better understanding of the market.
Some things you should consider before potentially making an offer on a property
- Also be aware that some properties require renovation, whilst others are ready to move into. Think carefully about how much time and money you are willing to invest in renovation.
- It is important to clarify your own needs. What do you want in a home? Think about the number of bedrooms, location, distance to public transport, and how close you want to live to school or work.
- Remember that buying a home is a smart investment for the future, so it is important to think long-term. Ask yourself questions such as: Will you be living here for several years? What will your job situation look like going forward? Can you expect a salary increase over time? Also consider whether you will be living alone or moving in with someone.
- With a stable income, it becomes easier to manage the home loan, and it is wise to have a buffer account for expenses that suddenly arise.
What are interest rates?
Interest rates are the price you pay to borrow money. In the same way that you pay the bank interest rates to borrow money from the bank, the bank pays you interest rates for money it "borrows" from you. This means that when you have money in a bank account, the bank pays you interest rates on this money. This is called deposit interest rate. Remember to keep track of what the interest rate is, and how different loan amounts will affect your monthly costs. The loan includes both interest rates and fees, so it is important to understand the total cost!
Many young people wonder:
How can I buy in?
To buy into a property, you and the other owner must agree on how large a share of the property you will purchase. The bank can help with a loan to cover your proportion, and an agreement must be drawn up showing the ownership structure.
Buying a home together, but with different equity?
If you have different equity, you can agree on who owns how much of the property. It is advisable to write an agreement showing the distribution, so that it is clear what each person owns and what they have contributed.
Is it wise to buy a home now?
Whether it is wise to buy a home now depends on your finances, property prices and interest rates. It may be sensible to consider how the interest rate will affect your monthly costs, and think about whether you can wait or whether you need the property quickly.
Buying a home together?
When you buy a home together with someone, you share both expenses and responsibility. It is important to agree on how the ownership shares will be divided and create an agreement on how things will be handled if one of you wants to sell their share.
Buying a home togetherBuying a property to let?
It can be a good investment to buy a property to let out. You should then consider whether the rental income can cover the loan costs. It is also important that you familiarise yourself with the rules for letting, such as taxes and tenants' rights.
What should I look for at a property viewing?
There is much you should look for at a property viewing. You should, among other things, check the property's energy consumption, the electrical installation, examine the bathroom carefully, look at the plumbing and check for damp inside and outside.
Checklist for property viewing