Kreditvurdering (credit assessment)

The credit assessment (kreditvurdering) is the bank’s check of whether you can afford the loan, based on income, debt, wealth and disposable income. As part of it the bank must stress-test your budget at 1 percentage point above the current rate, minimum 4 %.

The stress test is calculated on a fixed-rate loan with amortisation over 30 years. If your budget can carry the higher payment, you are on solid ground even if rates rise.

If your debt is over 4 times household income together with loan-to-value over 60 %, the bank may as a rule only offer you a fixed rate or a variable rate with amortisation and at least 5 years of rate fixing.

If the debt-to-income is over 5, your wealth must survive a 25 % fall in the home’s value. In 18 larger city municipalities, including Copenhagen and Aarhus, requests for a variable rate are assessed more strictly.

The credit assessment is not only about what the home costs, but about what you can carry if the rate or your life changes.