Mortgage loans (realkreditlån) and bank loans are the two typical ways of borrowing for a home, and they are structured in very different ways. A mortgage loan is funded by the mortgage credit institution issuing bonds and selling them on the market, and the loan is always secured on real property. A bank loan, on the other hand, is not funded by bonds.
Specifically, a mortgage loan is a loan with fixed limits that can cover up to 80 % of the home’s value, or 75 % for a holiday home. The bank loan typically sits on top, covering up to 15 %, and often has a 2nd-priority charge on the home, ranking behind the mortgage loan. This means a higher risk for the bank and usually a higher interest rate. Mortgage loans are standardised, so terms and prices follow the loan type and the market, whereas the bank assesses a bank loan individually.
80 per cent mortgage loan and 5 per cent down payment – how the financing fits together
When you buy a home in Denmark, you generally have to put down at least 5 % of the purchase price yourself as a down payment. The requirement follows from the rules on good practice for home credit, and you can finance the remaining amount, up to 95 %, with a mortgage loan and a bank loan. The two loans split the amount between them according to fixed limits, with an 80 per cent mortgage loan making up the bulk and the bank loan covering the rest.
If you buy a home for 3.000.000 kr., you have to put down 5 % yourself, which is 150.000 kr. On top of that comes a mortgage loan of 80 %, equivalent to 2.400.000 kr., and a bank loan of 15 %, which is 450.000 kr. Together, the three amounts cover the entire purchase price.
For a holiday home, the split looks different. Here the mortgage limit is 75 % instead of 80 %, which means the bank’s share becomes correspondingly larger unless you choose to make a larger down payment yourself. So if you want to avoid a larger bank loan at the higher interest rate, this is where you can make a difference.
How much you can borrow depends first and foremost on your income. A common rule of thumb is that you can borrow 3,5-4 times your household income.
Another rule of thumb for the highest home price you can aim for is: annual household income × 4 + savings minus debt.
Interest rates in 2026 on mortgage loans and bank loans for homes
What you end up paying in interest in 2026 depends first and foremost on the type of loan and how much risk the lender takes on. Here are the levels you can expect:
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In October 2026, a 30-year fixed-rate mortgage loan carries an interest rate of around 5 %.
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In October 2026, adjustable-rate loans such as F3 and F5 are at around 3,3-3,5 %.
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Bank loans for homes typically have an interest rate of 3-15 %, depending on the bank, the loan-to-value ratio and an individual credit assessment.
A bank loan of 450.000 kr. at 7 % interest over a 20-year term costs approx. 3.489 kr. a month. A mortgage loan of 2.400.000 kr. at a 5 % fixed rate over 30 years costs approx. 12.884 kr. a month before contribution fees. The total payment is approx. 16.373 kr. a month before contribution fees and tax.
However, interest is not the only ongoing cost of a mortgage loan. On top of the interest, you pay a contribution fee (bidrag) to the mortgage credit institution, calculated on the basis of a contribution rate. In 2026, it is typically between 0,45 % and 1,2 % of the outstanding debt a year, and it falls the lower your loan-to-value ratio. So if you make a larger down payment and borrow less, you can get a lower contribution rate and make do with a smaller bank loan at the higher interest rate.
Term, repayments and flexibility on home loans
When you choose a mortgage loan and a bank loan for a home, the term is one of the areas where the two types of loan differ markedly. You can typically set the term of a mortgage loan at anything between 10 and 30 years, and 30 years is the choice the vast majority end up with. The bank loan, on the other hand, often has a shorter term, typically 10-20 years, and here repayments are not something you can skip. The difference matters for your everyday finances: the long mortgage loan keeps the payment down, while the bank loan has to be paid off faster because the bank wants to reduce its risk.
With a mortgage loan, you can also choose interest-only periods totalling up to 10 years, and if your year-round home is mortgaged to no more than 60 %, there are loans with an interest-only period of up to 30 years. During those periods, you only pay interest and contribution fees, and the loan stays as large as when you took it out. That can give your budget breathing room here and now, but an interest-only period typically comes with a higher contribution rate, so the lower payment does not come free. You pay more in contribution fees in the years when you are not repaying, and the debt is waiting for you afterwards.
This is where the fundamental trade-off lies. The longer the term, the lower the instalments, because the amount is spread over more years. The shorter the term, the lower the total interest costs, because you pay interest for a shorter time and become debt-free sooner. So it is up to you whether you want as much room in your budget as possible now, or would rather pay less in the long run.
When should you choose a bank loan, and when a mortgage loan?
The answer depends on how much of the price of the home you need to finance. A mortgage loan is often best for the bulk of the financing, because the interest rate is typically lower and the terms are standardised. The bank loan is used as top-up financing of up to 15 % when you cannot, or do not want to, put in more yourself. So the question of when to choose a bank loan is rarely about choosing one over the other. Many people end up with a combination, where the mortgage loan covers the base and the bank loan covers the rest, up to 95 %.
The bank loan can later be moved into a mortgage loan if the home has risen in value, or if you have paid off so much that there is room for the bank loan within the mortgage lending limit. But the move costs a new valuation, new fees and a new registration of the mortgage, so shifting your financing around later is not free. Factor that cost into your sums if you expect to refinance in a couple of years.
If you need to borrow for a renovation, the picture looks a little different, because there are more ways to raise the money:
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In October 2026, a fixed-rate mortgage loan for renovation is at around 5 %.
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In the second half of 2026, an F-kort loan for renovation is at around 2,5-2,6 %.
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A bank loan for renovation typically has an APR (ÅOP) of 4,0-8,2 %.
This is exactly where the choice between a mortgage loan and a bank loan becomes a question of what the money is for. For a larger renovation, where you can register the loan against the home, there is a lot to be said for a mortgage loan. For smaller amounts or an urgent project, the bank loan can be the quicker route, but you pay for it in APR.
Always compare the APR, not just the interest rate, because the APR includes all costs and makes it possible to compare across lenders. A low interest rate can easily be obscured by fees and contribution fees, so the figure you can actually use to weigh two offers against each other is the APR.
Refinancing a bank loan with a mortgage loan – how to make the right choice
Refinancing a bank loan with a mortgage loan means moving the expensive part of your financing into the mortgage loan when conditions allow. It makes sense when the bank loan has become a heavy burden on your budget, and when the value of your home or your repayment history has changed so that you can now borrow more through a mortgage loan than when you bought. But it is not always a good idea. There are three rules of thumb you can measure the refinancing against:
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Only do it if there are many years left on the loan you want to move. The shorter the remaining term, the less there is to save.
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Only do it if the interest rate on the bank loan is clearly above the mortgage loan’s interest rate plus the contribution fee.
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Only do it if the saving exceeds the cost of refinancing.
You need to know those costs before you work out the saving. When you move a bank loan into a mortgage loan, they typically add up to:
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A redemption fee of 750 kr.
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Brokerage of 0,15-0,25 %.
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A loan processing fee of up to 4.000 kr. per loan, payable to the mortgage credit institution.
Registration fee (tinglysningsafgift) to the state: a fixed fee of 1.825 kr. plus 1,25 % of the new mortgage amount. The percentage fee is waived on the part that replaces an existing registered mortgage, but not if the old mortgage is an indemnity mortgage deed (skadesløsbrev).
On top of that, the move typically requires a new valuation of the home. So it is not something you set in motion for a couple of thousand kroner.
To pull together the threads of the whole article, this is how the two loans differ:
| Mortgage loan | Bank loan | |
|---|---|---|
| Interest rate | Fixed approx. 5 %, F3/F5 approx. 3,3-3,5 % (October 2026) | 3-15 % |
| Term | 10-30 years, 30 years most common | 10-20 years |
| Security | 1st-priority charge on the home | 2nd-priority charge behind the mortgage loan |
| Costs | Contribution rate 0,45-1,2 % plus fees | Interest and fees, combined in the APR |
| When to use which | The bulk of the financing, up to 80 % (75 % for a holiday home) | Top-up financing up to 15 %, or smaller and urgent amounts |
The conclusion: a mortgage loan often gives a lower interest rate and a fixed framework, while the bank loan is more expensive, but quicker to get and easier to use for smaller amounts. That is why refinancing is worth doing the sums on, but it is not something you just set in motion. Your next step is to ask several lenders for specific offers and compare them on APR, not on the interest rate alone. It is the only figure that makes two offers genuinely comparable.
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