How much can I get in a mortgage?
How much you can borrow is a complicated calculation with several factors. Here we give you more information about how much you can expect to get in a mortgage.
How much can I get in a mortgage? – that’s a question many people wonder
How much you can get in a mortgage or how much you can borrow in relation to your income depends on a number of things, but as a general rule with all banks the framework in the Lending Regulations applies.
There are 2 particularly important elements here:
- The customer must not have more debt in total than a maximum of 5 times the annual gross income (if there are 2 or more people who are going to borrow together, the total income before tax applies)
- The loan granted for the purchase of a home must not be more than 85% of the home’s purchase price or value.
How banks calculate a customer’s liquidity is quite different. It is important that you have a few thousand to spare each month, even with an interest rate that is 5% higher than today’s actual interest rate. This is called “stress interest”.
Other things that come into play are:
- Number of cars
- Number of children under the age of 18
- What type of other loans you have
- How long you have been employed in your current job
- How long you have lived in your current home
- Education
How much can I borrow?
Many people wonder how much they can get in loans, and most often mortgages. The simple answer that often comes up is that you can borrow up to 5 times your gross income. This is not necessarily true. Some customers with a high fixed salary can probably expect a maximum loan based on 5 times their gross income, but for the vast majority it is income minus costs that gives the answer to how much loan you are granted.
The banks do not base themselves on the current interest rate level, but must take into account a future interest rate level. They must be sure that the customer can tolerate a 3% higher interest rate than today’s floating interest rate. When the interest rate is on the way up, this surcharge the customer must bear rises in parallel. It will therefore be more difficult to get a loan.
Another thing many people forget is that how much you can borrow, i.e. this 5 times, includes all loans. Student loans, car loans, boat loans and consumer loans/credit cards must be included in the calculation. For example, if he has NOK 650,000 in total debt excluding mortgages, this must be included in the calculation. For example, if you have a credit card that has not been used, but has a credit limit of NOK 50,000, then the credit limit is also debt that must be included in the calculation.
How much you can borrow is a complicated calculation with several factors .
One is that you must satisfy the requirement for a total mortgage of a maximum of 5 times your gross income.
Another requirement is that the banks cannot grant loans for the purchase of a home in excess of 85% of the value of the home provided as collateral.
A third requirement is that you have liquidity that enables you to service your debt even with an interest surcharge of 3%.
The banks have often incorporated these requirements into a calculation model that varies from bank to bank. This takes account of salary income, possibly rental income or other income. Furthermore, it takes into account existing debts, new loans you apply for, the number of properties you own, how many people the household consists of, the number of cars you have and a good deal of other things. It is no secret that couples with and without children make a big difference in the banks’ calculation models.
In short: there is no easy conclusion on what you can borrow, but we can make it easy for you as a customer;
You can contact EIendomsfinans today and get an answer to this – completely free of charge. We offer your own adviser who knows which bank suits you best, and who knows the different banks’ calculation models. There are big variations on how much you can borrow. If you want to know exactly how much your income means you can borrow, contact us today!
FAQ – frequently asked questions about loans
Liquidity is the same as the ability to pay for itself. Liquidity ratio says something about income in relation to expenses
The banks are required to check that the customer can withstand an interest rate increase of at least 3% (or a total interest rate of 7%) in order to be able to offer the loan. This means that if you apply for a loan that has an interest rate of 4% today, the bank must make sure that you are also able to pay off the loan every month even if the interest rate increases to 7%.
Debt ratio is all the debt you have in total (including joint debt to housing associations) divided by gross income. The total debt must not be higher than five times gross annual income. This applies not only to mortgage debt mortgagebut also consumer loans, credit cards, student loans, car loans and the like.
If you earn NOK 450,000, you must not have debts that in total exceed NOK 2,250,000. If you have a car loan of NOK 150,000, you cannot borrow more than a maximum of NOK 2,100,000 in mortgages. If you are 2 people who earn 450,000 each, you can have a total debt of up to 4,500,000.
It differs from bank to bank. There are also large differences in the banks’ fees, which affects the effective interest rate. It does not help to have a slightly lower mortgage interest rate if the bank’s term fee and establishment fee are high. At finance portal you can compare the banks’ interest rates. The vast majority of banks offer the best interest rates to young home buyers under the age of 34.
You should choose a fixed interest rate if you are very worried about an interest rate rise. Few people manage to fool the bank by speculating on fixed interest rates, but we have also seen cases where it has been beneficial. The vast majority of loans are most affordable with floating interest rates over time, but sometimes it can be worth a few extra kroner to avoid financial worries.
Yes you can. Here there are some differences in how the different banks calculate how much more you can borrow due to rental income. Contact us and we will set up an example for you. For tax-free rental income, you can start from approx. 80 months’ rental income in additional loans. If you have 7,000 per month. rental income, you can expect to be able to borrow approx. 560,000 extra. As I said, big variations – contact us for a concrete answer to your particular case.
This is called secondary housing. For a secondary home in Oslo, 40 percent equity or 40% secured in other residential property is required. For the rest of the country, this is 15 per cent, the same as primary residence. The banks can make exceptions to the requirements, but a maximum of 10 per cent of the banks’ total approved loans per quarter. For Oslo, there is a maximum of 8 percent exceptions. Here, priority is given to good first home loan customers.
The main rule is that you must have 15% equity + costs (read more about costs below). If you lack all or part of this sum in your own account, this can be replaced with security in the residence of, for example, parents or someone in the immediate family. This is called bailment.
The mortgage regulations state that a customer must not have more debt than 5 times their annual gross income. Student loans also take a part of this cake, but are still seen more leniently than, for example, car loans. Student loans are the cheapest loan you can get and can be canceled if you die. You also have the right to cancel interest and postpone payment in a number of cases. You can read more about this on NAV’s pages: Deletion of student loans.
Here there are differences from bank to bank, contact us and we will quickly calculate this for you. The main rule for all banks is that the customer must not have more total debt than a maximum of 5 times annual gross income, must be able to pay the loan even if the interest rate is 5 per cent higher than the current interest rate and have 15 per cent equity (or mortgage guarantor).
Additional security is when the bank is allowed to take a mortgage on a property in addition to the property you are buying. This is also called bailment. If you lack 15 percent equity, this can be used. Then the bank takes a mortgage (security) on the property you buy, but also gets security for 15-20 per cent in, for example, your parents’ home. Those who own this property become real estate developers.
If you lack 15 percent equity, you can use a real estate surety. The bank then gets a mortgage (security) in the property you buy, but also gets security for 15-20 per cent in, for example, your parents’ home. Those who own the property become real guarantors. Read more about surety here.
