Glossary: Danish mortgage terms explained
Short explanations of Danish mortgage terms – from repayment and contribution fee to price deduction, home equity and APR.
A
- Adjustable-rate loan (F1, F3, F5)
- A loan where the rate is fixed for a period and then reset to the market rate. The number is the number of years between resets.
- See also:Refinancing (of adjustable-rate loans)
- Annuity loan
- The most common loan type, where interest and repayment together are the same amount each period. At first most goes to interest, later most goes to repayment.
- APR (ÅOP)
- Annual percentage rate of charge – a combined measure of the loan's cost that must be stated in the loan offer. For variable loans it assumes the rate does not change.
- See also:Effective rate
B
- Balance principle
- The principle that each mortgage loan is matched by bonds with the same payments. It makes it possible to repay the loan by buying back the bonds.
- See also:Mortgage bond
- Bond loan
- The ordinary mortgage loan, where your debt equals the bonds sold to fund the loan.
- See also:Cash loan (kontantlån)
- Break-even
- The point at which refinancing has earned back its costs, so you are better off than without refinancing.
- See also:Refinancing (conversion)
C
- Capital gain and loss
- The difference between the debt and what it costs to repay it. For individuals, a gain on a bond loan is tax-free, and a loss is not deductible.
- Cash loan (kontantlån)
- A loan where the debt is based on the amount paid out, and the rate equals the effective rate. A capital gain on early repayment can be taxable.
- See also:Bond loan
- Contribution fee (bidragssats)
- The institution's ongoing payment for administering the loan and carrying the risk. Calculated as a percentage of the outstanding debt per year and tax-deductible.
- See also:Loan-to-value (LTV)
D
- Debt-to-income ratio
- Your total debt divided by the household's income before tax. Above 4, the 60/4 rule on loan types applies.
- Deed
- The document that transfers ownership of a home. Registration costs DKK 1,850 + 0.6% of the purchase price.
- Disposable amount
- What you have left each month after tax, housing, loans and fixed expenses.
- Down payment
- The part of the purchase price you pay from your own savings. Normally at least 5%.
E
- Effective rate
- The total annual cost of the loan as a percentage, including interest, contribution fee and costs. On realkredit.ai we calculate it ourselves in the same way for all loans.
- See also:APR (ÅOP)
F
- Fixed-price agreement
- An agreement that locks the price of your new loan before it is paid out. It removes the risk of the price falling in the meantime, but typically costs a fee or a price premium.
G
- Growth-area guideline
- The Danish FSA's extra requirements for home loans in Greater Copenhagen and Aarhus, including that net wealth must withstand a price fall when the debt-to-income ratio exceeds 4.
- See also:Debt-to-income ratio
H
- Home equity
- The home's value minus the debt secured on the home.
- See also:Top-up loanLoan-to-value (LTV)
I
- Interest tax relief
- The tax value of your interest expenses (including contribution fees). In 2026 about 33% up to DKK 50,000 per year (DKK 100,000 for married couples) and about 25% above.
- Interest-only period
- A period, typically up to 10 years, when you only pay interest and the contribution fee. The debt does not fall, and the fee may be higher.
- See also:Repayment (afdrag)Contribution fee (bidragssats)
L
- Land registration duty
- The state's duty for registering a mortgage or a deed. For a mortgage: DKK 1,825 + 1.25% of the principal (from 1 January 2026).
- Loan processing fee
- A fixed fee to the institution for setting up the loan. The bank may charge its own fees on top.
- Loan-to-value (LTV)
- Your debt secured on the home as a percentage of its value. A DKK 2.4 million loan on a DKK 3 million home gives a loan-to-value of 80%.
M
- Market value
- The outstanding debt multiplied by today's price. It is what it costs to buy back the debt.
- Mortgage bond
- A security issued by the mortgage institution to fund the loans. Investors receive your interest and repayments.
- Mortgage deed
- The document that gives the lender security in your home. It is registered, and registration duty is paid.
- See also:Land registration duty
O
P
- Payment
- The total amount you pay per period: interest, contribution fee and repayment.
- Price (kurs)
- The price of the bonds that fund the loan, per DKK 100. A price of 98 means you receive DKK 98 for every DKK 100 you owe.
- See also:Price deductionMarket value
- Price deduction
- A cost in price points deducted from the price when the loan is paid out or refinanced.
- Principal
- The face value of the loan – what you owe when the loan is paid out. With a price below 100, the principal is larger than the amount you receive.
- See also:ProceedsPrice (kurs)
- Proceeds
- The amount you receive from the loan after price deduction, commission and other costs.
- See also:Principal
R
- Refinancing (conversion)
- Repaying a loan and taking out a new one – at a lower rate (down), a higher rate with lower debt (up) or a different loan type.
- See also:Break-evenRepayment (redemption)
- Refinancing (of adjustable-rate loans)
- When an adjustable-rate loan gets a new rate, new bonds are sold. This typically happens at auctions, and each time you pay a price deduction.
- See also:Adjustable-rate loan (F1, F3, F5)
- Repayment (afdrag)
- The part of your payment that reduces your debt. The rest of the payment is interest and the contribution fee.
- See also:PaymentInterest-only period
- Repayment (redemption)
- Paying off the loan in full before it ends – either at a price of 100 or by buying back the bonds at the current price.
- See also:Refinancing (conversion)
S
- Settlement commission
- A fee calculated as a percentage of the market value when bonds are bought or sold in connection with your loan.
- See also:Market value
T
- Term
- How long the loan runs before it is paid off. At most 30 years for residential mortgage loans.
- Top-up loan
- An extra mortgage loan on top of an existing loan. It sits last in priority, where the contribution fee is highest.
- See also:Home equity