The situation on the real estate market and the profitability of the loan
According to Norges Bank, prices are expected to rise by 2-4 percent in the coming years. This is a good signal for those who want to enter the related market. By all indications, price falls should not be expected any time soon. The barrier to taking this step is uncertainty as to whether the bank will lend to us. Practice shows that these are unfounded concerns. The most important issue remains compliance with strict rules and regulations, which must also be respected by the bank’s employees themselves.
The bank is certainly not based on a hunch when making a credit decision. When examining an application, certain criteria shall be taken into account. The checklist includes the following:
- Own contribution: The buyer’s own contribution is to represent 15% of the price of the property
- Amount ofcredit : The sum of the credit obligations may not exceed five times the annual income. This criterion also covers other financial products, such as the student loan.
- Interest sensitivity : Theborrower must be prepared to increase the interest rate by five percentage points. Today’s market also encourages us to be prepared for an interest rate of 6-7. This condition must be met in order to receive a loan.
- Other information: The overall assessment also takes into account the expected repayment period, the life situation of the borrower, comments on payments made so far, tax reports, arrears and other debts.
– At the moment, no one can ensure that every applicant receives an amount equal to or more than five times his or her annual income. The key issue remains that the borrower is able to maintain liquidity after receiving the loan.
Note, however, that there are exceptions to each policy. The capital requirement can be circumvented by providing a guarantor, and the principle of five times annual earnings in 10% of cases issued by the bank of loans can be circumvented. The new provision in the Rules of Procedure also states that banks may recognise, on a tax-free basis, m.in. children’s allowance (barnetrygd). This novelty will have a positive impact on creditworthiness for both parents and those who raise their child alone.
Bidding: You should not give anyone the maximum amount you are able to offer. When bidding on a property, you must have proof of credit (finansieringsbevis).
– Proof of credit is binding on the bank, but not on the client. In almost all banks, this process is completely digital. – You should never show your proof of the loan to the broker and give your maximum loan amount to the seller or broker.
Buying a property is probably one of the biggest investments you’ll make in your life. It is therefore important to approach this action fully prepared. – Think carefully in the prospectus and prepare the questions you will want to ask. Find out what’s wrong and what’s missing. Explore the surrounding area. Check the windows, doors, fuse box and pipes. Find out what is included in the common debt (fellesgjeld), as well as what is the existing insurance.
– The overarching principle, however, remains the following: Ask! Especially if you don’t feel sure. Contacting an advisor is always a good idea!