Home buyers in rural Denmark could benefit from government finance plan

The government wants to make it easier to get a mortgage in rural areas, but lenders say they do not base loans on location.
The government wants to make it easier to get a mortgage in rural areas, but lenders say they do not base loans on location. Photo: Henning Bagger/Ritzau Scanpix
The Danish government on Friday published a proposal for a new law which could ease the path for house buyers in rural areas.

The proposal, which would need backing in parliament, could give buyers the option of loaning 30 percent of the value of their home from the state.

“We in the government have long worked to find the right model for supporting Danes who want to live outside of cities so they can finance purchasing their homes,” Prime Minister Mette Frederiksen told Avisen Danmark.

“I’ve met many people on trips around the country who have told me how they can’t get a loan for their dream home because it is located in the wrong area code,” she added.

Specifically, the government plans to table a bill in which the state will underwrite the majority of a mortgage which constitutes between 60 and 90 percent of the property’s value for privately owned housing.

A criteria for the scheme will be that the property must have a value of under 8,000 kroner per squre kilometre or must be located in an area code in which the average value of property is below this level.

Finans Danmark, the interest organisation for Danish banks and credit institutions, said it did not see a trend of mortgages in rural areas being rejected based on location.

“It’s absolutely the exception that a ‘no’ will be given to a mortgage, and that applies both in cities and in the countryside,” Finans Danmark’s deputy CEO Ane Arnth Jensen said.

“When the answer is ‘no’, it is mostly because of a lack of funding in the family and there will therefore still be some Danes who get a ‘no’ to a loan,” Jensen added.

A total of 16,396 mortgages were given for purchase of homes in rural areas in Denmark in 2020, according to the organisation. That is an eight percent increase compared to 2019.

READ ALSO: The challenges of buying a home in Denmark as a foreigner


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