Refinancing your mortgage loan: up-, down- and diagonal conversion

Refinancing a mortgage loan (realkreditlån) can do two very different things for your finances. If you choose an up-conversion (opkonvertering), you can shave off part of your outstanding debt. If you choose a down-conversion (nedkonvertering), you can lower your monthly payment instead. Both routes are open to homeowners in 2026, when changes in interest rates have created a gap that is worth a closer look.

At the start of 2026, a 30-year fixed-rate mortgage loan typically carried an interest rate of 3,8-4,1 %, while F-kort loans were around 2,2-2,3 %. That difference means many homeowners may consider refinancing to save money or pay off more of the loan. The question is when it actually pays off for you.

This guide gives you the specific figures. The article goes through the three types of refinancing: up-conversion, where you cut your outstanding debt; down-conversion, where you get a lower payment; and diagonal conversion (skrå konvertering), where you switch loan type. You also get a step-by-step walkthrough of how to work out your new payment, outstanding debt and payback period. After that, you will look at switching between fixed and variable rates, at the contribution rate and at four worked examples, before finishing with a checklist.

Refinancing a loan: up-, down- and diagonal conversion explained

Each of the three types of refinancing solves a different problem, and it is worth keeping them clearly apart before you start crunching the numbers. One cuts the outstanding debt, the second cuts the payment, and the third is first and foremost about how much interest rate risk you are willing to live with.

• With a down-conversion, interest rates have fallen since you took out the loan. This means you can take out a new loan at a lower rate and so get a lower monthly payment. The catch is that the outstanding debt typically rises. You redeem the old loan at a price of 100, but the new loan is taken out at a price below 100, so you have to borrow more than you receive (a price loss).

• With an up-conversion, on the other hand, interest rates have risen and the price of your bonds has fallen. You can therefore redeem your loan for less than its nominal amount and cut your outstanding debt. In return, your payment goes up, and the gain is more speculative than with a down-conversion.

• With a diagonal conversion, you switch loan type, for example from a fixed to a variable rate or vice versa. Here it is about risk and predictability rather than chasing every last krone in the short term.

The most advantageous sequence can be to up-convert first, while rates are high, and use that to cut your outstanding debt. If rates fall again later, you can then down-convert and get a lower payment on top.

When does it pay to refinance a loan? Rules of thumb and thresholds

There is no one-size-fits-all answer, but there are some rules of thumb that most advisers come back to. Check your own situation against the four points below before you even start crunching the numbers.

• As a general rule, the difference in interest rate between your current loan and the new one should be at least 1-1,5 percentage points before refinancing makes sense. If the gap is smaller, there is rarely enough to gain to cover the costs.

• The outstanding debt should be at least 500.000 kr. Nordea cites 750.000 kr. as a more realistic lower limit, and if you have less than 200.000-300.000 kr. left, it will hardly ever pay off. With only 300.000 kr., the difference in interest rate has to be very large before the saving exceeds the costs.

• You should have at least 10 years left of the term and expect to stay in the home for at least 5-10 years. If you sell within 2-3 years, you will rarely recoup the fees.

• Break-even should come in under 5-7 years. If it takes more than 5 years to earn back the costs, think twice.

The point of these rules is to make sure the saving is big enough, and lasts long enough, to exceed the fees you pay when you refinance. If you are close to the limits on several points, that is a sign you should do the sums carefully before you say yes.

The price of a mortgage loan: why the price can mean the difference between 2 and 10 years

The price (kurs) shows how much you receive for every 100 kr. you borrow. At a price of 100 you get the full amount, while a price of 95 only gives you 95 kr. per 100 kr. of debt, so you have to take out a bigger loan to cover the same amount. The difference may sound modest, but in practice it determines how long it takes before refinancing has paid for itself.

Nordea assesses the price levels for a down-conversion as follows:

• A price above 98 is typically very attractive.

• A price of 97-98 is sensible for most people.

• A price of 95-97 requires patience and a long time horizon.

A specific example from Nordea Kredit (November 2025) shows what the price means in kroner. Here, a 1 million kr. fixed-rate loan at 5 % is refinanced to 3,5 % with 27 years remaining and a tax rate of 33,7 %, calculated at two different prices:

If you wait for that last drop in interest rates, you risk the market turning before the price reaches the level you were hoping for.

The costs of refinancing a loan: what it costs and what you need to know

The total cost of refinancing a loan is typically between 10.000 and 30.000 kr. For a loan of 1 million kr., the fixed costs often come to around 10.000 kr., covering both the registration fee (tinglysningsafgift) paid to the state and the fees charged by the mortgage lender. The amount depends on the lender and the size of the loan, so it is worth asking for a specific quote before you decide.

The costs are made up of several separate fees, and you need to understand them before you say yes:

• Brokerage is approx. 0,15 % of the market value. The price spread (kursskæring) is typically 0,20-0,25 price points when the new loan is paid out, and there may be a price premium of 0,10-0,25 price points when the old loan is redeemed by buying back bonds.

• The mortgage lender’s loan processing fee is up to 4.000 kr. per loan, and a fixed-price agreement (fastkursaftale) costs 500-1.000 kr. plus a price deduction.

• In 2026, the registration fee for a mortgage on real property is a fixed fee of 1.825 kr. plus 1,25 % of the secured amount. When you refinance, you still pay the fixed fee, but you only pay the percentage fee on the part of the new mortgage that exceeds the principal of the old registered mortgage.

The worked example shows why break-even has to be part of the decision. If you save 500 kr. a month but refinancing costs 25.000 kr., it takes more than four years before you come out ahead. The monthly saving therefore has to be weighed against a one-off cost that is only earned back after several years.

How to run the numbers on refinancing

Instead of guessing whether refinancing will pay off, you can work it out with your own figures, for example in your mortgage lender’s refinancing calculator or together with your adviser. Go through it in this order:

1. Start with your current loan: outstanding debt, remaining term, interest rate and contribution rate.

2. Then enter the details of the new loan: interest rate and price.

3. Look at the result: the new payment before and after tax, the new outstanding debt and the total costs.

4. Finally, read off the break-even point and compare it with the rule of thumb of no more than 5-7 years.

To get an accurate picture, in practice you have to include contribution rates, price losses and any refinancing costs, not just interest costs. Charges vary more than most people think: the contribution rate, price spread and fees are not the same from lender to lender, and the contribution rate in particular can differ a lot. So compare quotes from several lenders before you decide.

Refinancing from a fixed to a variable rate (and vice versa): what to consider

When you refinance from a fixed to a variable rate, you can reduce your outstanding debt if the price of your fixed-rate loan has fallen. You may also get a lower interest rate and payment. But your risk profile changes at the same time. If rates rise, it feeds through to your payment when the rate is reset, and that is the key difference to factor into your decision.

At the start of 2026, interest rates looked like this for the loan types you can typically choose between:

So the difference between fixed and variable rates was around 1,5 percentage points. Variable rates have risen since then: at Nordea Kredit’s auction for the interest rate reset on 1 October 2026, the F3 rate came out at 3,0 % and the F5 rate at 3,2 %.

The mechanics behind the two loan types are very different. A fixed-rate loan has its interest rate locked for the whole term, typically 10, 20 or 30 years, and it also gives you the option to convert if rates fall. An adjustable-rate loan such as F1, F3 or F5, on the other hand, automatically gets a new rate when the rate period expires after 1, 3 or 5 years, so the rate follows the market without you having to do anything.

In a worked example over 10 years, in which the variable rate starts at 2,3 % and rises gradually, the variable-rate loan ended up 64.000 kr. cheaper than a fixed-rate loan at 3,5 %, measured on interest costs alone. The amount therefore does not cover repayments or contributions, but it shows how much difference the interest rate level alone can make.

Contribution rate and loan-to-value ratio: the overlooked part of the refinancing calculation

When you run the numbers on refinancing, it is easy to look only at the interest rate. But the contribution rate (bidragssats) on your mortgage loan is charged every month, and it depends directly on your loan-to-value ratio (belåningsgrad). Lenders typically divide borrowing into bands of under 40 %, 40-60 % and 60-80 %, and the rate rises the more you have borrowed. For F-kort and adjustable-rate loans with repayments, the total contribution rate at 80 % loan-to-value in 2026 is typically around 0,7-1,2 %, and it is higher with an interest-only period.

Each band has its own rate, and it only applies to the part of the loan that falls within that band. At Totalkredit and Realkredit Danmark, for example, you pay the lowest rate on the part below 40 % of the home’s value, a higher rate on the part between 40 and 60 %, and the highest rate on the part above 60 %. Your total contribution rate is a weighted average of the three.

A specific example shows how quickly the loan-to-value ratio can change. You bought a home 5 years ago for 2,5 million kr. and borrowed 2 million kr., which is 80 % loan-to-value. Today you owe 1,8 million kr., and the home is worth 3,3 million kr. That gives a loan-to-value ratio of 55 %, not 80 %. In other words, no part of your loan is in the most expensive band above 60 % any longer, without you having done a thing.

So if your home rises in value, the loan-to-value ratio falls automatically and can give you a lower contribution rate. But in many cases you need to refinance before the saving takes effect. That is worth bearing in mind when you assess whether refinancing will pay off.

In 2026, contribution rates for fixed-rate loans with repayments on owner-occupied homes look like this, for example:

Totalkredit (price list as of 1 July 2026): 0,45 % on the part of the loan below 40 % of the home’s value, 0,85 % on 40-60 % and 1,20 % above 60 %.

Realkredit Danmark (prices as of 23 September 2026, with monthly payments): 0,21 %, 0,62 % and 1,01 % in the same bands.

The range within each lender reflects exactly where you sit in terms of loan-to-value. That is why it is not enough just to compare the rates lenders advertise. You need to know your own loan-to-value ratio to know which rate you will actually end up with.

Refinancing a mortgage loan: worked examples of up- and down-conversion

Figures make it easier to judge whether refinancing your mortgage loan makes sense in your situation. Below you will find four short worked examples, each showing how the numbers turn out when you up- or down-convert, or switch banks.

In a down-conversion, you had an old loan of 1.000.000 kr. at 4 %, and the new loan came in at 2 %. The annual payment fell from 51.500 kr. to 33.286 kr., a saving of 18.214 kr. a year, but the outstanding debt rose to 1.056.701 kr. because you redeem the old loan at a price of 100.

With an up-conversion, the picture looks different. If you had an old loan of 1.000.000 kr. at 2 % and the price had fallen to 63, a new loan at 4 % could cut your outstanding debt to around 681.000 kr. In return, the interest rate rises, and your interest costs grow from 20.000 kr. to around 27.000 kr. a year, even though the debt is smaller.

Another down-conversion example, switching from a 5 % to a 3,5 % fixed rate, had total costs calculated at 18.000 kr. That figure has to be weighed against the monthly saving before you can say whether the refinancing has paid for itself.

If, on the other hand, you switched banks, the calculation could look like this: a loan processing fee of 4.000 kr. and total costs of 20.760 kr., which had to be earned back through lower contributions or interest before the switch paid off.

Your refinancing decision: use the figures before you act

The decision to refinance a mortgage loan rests on a few key figures, and you can work them out yourself before you pick up the phone. You do not need to know what the market will do tomorrow. All you need to be able to answer is whether the saving is big enough, lasts long enough and still holds up after tax.

Go through the points below before you decide:

• Check that the difference in interest rate is at least 1-1,5 percentage points, that the outstanding debt is at least 500.000 kr., and that you have at least 10 years left of the term and expect to stay in the home for 5-10 years.

• Remember to do the sums after tax, as interest and contributions are tax-deductible. The real saving is therefore smaller than the nominal one, and it is the after-tax saving that has to hold up all the way.

• The price is often decisive. Above a price of 98, a down-conversion is typically attractive, while a price of 95-97 requires patience and a long time horizon before the costs are recouped.

If you are at the good end on most points, there is reason to take it further. If you are close to the limits on several, the answer is rarely a clear yes.

Run the numbers on refinancing with your own figures, for example in your mortgage lender’s refinancing calculator, so you can see the new payment, outstanding debt and break-even before you contact your bank. That way you turn up with hard figures instead of a hunch, and you can ask the right questions from the very first conversation.