Loans in Norway – what types are available?

Loans in Norway are of several main types: refinancing, consumer credit, car loans, credit cards and mortgage loans. In the case of credit cards, it is possible to get a refinancing of up to NOK 500,000 and a consumer loan of up to NOK 500,000 with a repayment period of up to 5 years.

It is worth talking about secured loans, also called mortgages. There are two types of mortgage in Norway: annuitetslån and serielån. They should be translated as ‘loans with equal payments’ and ‘loans with decreasing payments’ respectively.

 

Annuitetslån is a loan that is repaid in fixed instalments throughout the term. At the beginning, the repayment of capital is considerably lower than the interest portion. At the end of the loan, the interest payment decreases, but the capital portion increases. What does not change is the amount you have to send to the bank each month.

Serielån, on the other hand, is characterised by the fact that the payment becomes smaller and smaller as the debt is repaid. This is because interest is charged on the total amount of the principal debt. So as time passes and the debt is repaid, the value of the principal decreases, resulting in a lower interest rate. At the same time, the capital portion of the instalment remains the same throughout the life of the commitment. As a result, the payments sent to the bank become smaller and smaller.

Which conditions must be met?

The conditions for taking out a loan in Norway depend on the type of loan commitment. For a consumer loan, you need to provide proof of all your income for the past 3 years. This will determine how much credit the bank can offer you.

In the case of a mortgage, the situation is slightly different. It is sufficient to document your earnings for the previous year only, and enclose printouts of your last two salaries preceding the month of application.

Mortgage loan in Norway – documents:

  • Skattemelding

  • Salary statements for the 2 months preceding the submission of the application.

  • Printout from the debt register – Gjeldsregisteret.com.

  • Proof of capital, usually funds or savings in a bank account.

Who can get credit in Norway?

Not everyone with a full-time job can get a loan in Norway. This applies, for example, to an application for a consumer loan. No bank will provide financing for a person under 23 years of age. There are some offers for young people between the ages of 18 and 23, but the maximum amount does not exceed NOK 100,000.

It is somewhat easier to get a car loan. Some financial institutions don’t even require a down payment and may even grant a loan of 100 per cent of the car’s value. It’s worth noting that this solution is slightly cheaper than a consumer loan, as the interest rate on it is about 5%. Banks also impose restrictions and generally do not lend on cars older than 13 years. So if you are buying a 13-year-old car, the maximum repayment period is 3 years.

 

How do I get a mortgage in Norway?

One of the most important criteria for a home loan in Norway is the down payment. This is usually between 15% and 25% of the value of the property. If you do not have this amount, you can apply for a starter home loan from the municipality (also known as startlån).

In addition to your own deposit, you must have a steady job and a high income. Note that the maximum mortgage loan amount cannot exceed five times the annual income of the borrower or family. In addition, you must submit the following documents:

  • Employment contract

  • The last three payment receipts

  • The tax return for the last year.

Read more about mortgages

Kredittscore, or how banks assess creditworthiness

The accepted principle in Norway is to assess creditworthiness based on a table called the kredittscore. The score scale is from 1 to 1000, with scores from 1 to 442 considered high risk. Usually, financing for such people is impossible or very difficult to obtain. The average score of Norwegian residents is approximately 502.

 

Loans in Norway – how to get the best conditions?

You can find out the best terms by contacting each bank separately. You should be aware that each institution may offer different conditions and calculate creditworthiness in different ways. Also, a lot depends on the bank advisor. However, this type of solution requires a lot of time, maximum commitment and patience.

A much more convenient way out of this situation is to take advantage of professional credit counselling. Lorentzen Consulting AS provides such services and has already helped many clients to get financing. We recommend that you contact us!