What can you do if you are struggling to pay a mortgage in Norway?
With sky-high interest rates on mortgages and ever-increasing inflation, some consumers in Norway are having trouble making their mortgage payments. Know that even if you find yourself in such a situation, you still have options.
As is the case in most of Europe, Norway has been hit hard by a cost of living crisis and rising inflation and interest rates.
Inflation in the country amounted to 6.4 percent between June 2022 and the same month this year, according to figures from the national statistics bureau Statistics Norway (SSB).
In an effort to tackle inflation and slow down the Norwegian economy, the country's central bank (Norges Bank) has been raising interest rates since 2021. The current key interest rate in Norway is 3.75 percent.
For Norwegian consumers, this translates to interest rates of between four and five percent on loans and mortgages, and further interest rate hikes are expected this year, with Norges Bank currently projecting 4.25 percent as the peak of its key interest rate.
It comes as no surprise, then, that numerous Norwegian consumers are facing challenges in making their mortgage payments.
However, even though the possibility of defaulting on your loan can be daunting, there are steps you can take when you find yourself in a difficult financial situation.
Contact your bank (the sooner, the better)
It's a good idea to contact your back as soon as you realise that you'll have problems paying back your loan.
The sooner you contact the bank, the greater the chance that you will be able to find a joint solution to the problem together in a collaborative way.
Furthermore, the bank is more likely to show some flexibility if you honestly explain how you ended up in your current situation.
Potential solutions may include payment deferral or a modified repayment plan.
If your loan repayment term is currently less than 30 years, it may be beneficial to inquire about extending the repayment period. By doing so, you can reduce your monthly loan expenses, providing some relief during tight financial situations.
It's important to be aware that opting for a longer repayment period means paying more in interest over the entirety of the loan.
Norwegian banks can show understanding and a level of flexibility toward debtors that face financial challenges due to events that are out of their control, so never skip the step of trying to work out a temporary solution with your bank before resorting to other options.
Call the NAV's debt advice line
If you're struggling financially and worried that you won't be able to pay a debt instalment, it's always a good idea to contact the Norwegian Labour and Welfare Administration's (NAV) debt advice line by calling 55 55 33 39.
NAV's advisers will be able to give you general advice on how to resolve the situation.
However, if you have serious financial problems, the NAV will likely put you in touch with debt advisers.
Advisers specialising in mortgage-related issues can help you evaluate your financial situation and provide guidance on managing your mortgage payments.
You can find out more about the NAV's advisory offer on the webpage of the labour and welfare agency.
Reduce your spending
As electricity, food, and fuel prices continue to soar, many households in Norway need to find ways to cut their spending.
If you haven't done so already, now is the time to assess your expenses and identify areas where you can tighten your budget.
Being conscious of your spending habits is crucial. Consider whether you have any unnecessary subscriptions or pay for services that can be dropped.
Additionally, adopting a weekly shopping routine and planning meals in advance can help optimize your grocery expenses.
Selling off what you can do without
If push comes to shove, you should also sell off the possessions you can do without and use the money you pay off some of your debt.
You can sell most items on Finn.no, Norway's largest online marketplace.
However, if you're selling valuables – such as art – you might want to consider contacting a dealer or auction house.
Worst case - if maintaining the mortgage becomes unmanageable - you might have to consider selling the property or renting it out to generate income.
Temporary exemption from paying off loan instalments
If you fulfil specific criteria, primarily based on your loan-to-value ratio, you could be eligible for a temporary exemption from making instalment payments.
Under this arrangement, you would only need to pay the interest for a designated period, not the principal loan amount.
However, it's crucial to understand that by paying off less of the loan during this period, you will ultimately extend the duration of servicing the loan and increase the total amount you will repay over the entire repayment period.
Carefully consider the implications before opting for this scheme. While it provides short-term relief from instalments, it's essential to weigh the long-term consequences of extended loan duration and increased overall repayment costs.
Debt settlement
Debt settlement should be used only as a last resort. The Debt Settlement Act (Gjeldsordningsloven) gives individuals in Norway with serious debt problems the opportunity to gain control of their finances through a very rigorous process.
In simple terms, the debt settlement scheme is an agreement to pay as much as possible of the debt you owe during a limited period and then have the remaining debt cancelled.
The scheme covers all types of debt, and can, as a general rule, only be used once in a person's lifetime. If you decide to go this route, you'll be living on a minimum income for five years, while the rest of the money will go towards paying off your loans.
You will be paid a small sum monthly to cover food expenses and other basic needs. Although this can be tough, you'll get a brand new start after the five years are through, as all of your debts will be written off.
If you want to apply for debt settlement, you'll need to contact the local enforcement commissioner, the district police authority, or the enforcement bailiff in your area.
The main requirement for debt settlement is a permanent inability to meet your liabilities, meaning that you're facing problems of a permanent nature and that it is impossible for you to pay the debt off within the foreseeable future.
You can find more information (in English) on Norway's debt settlement system on the webpage of the Norwegian government.
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As is the case in most of Europe, Norway has been hit hard by a cost of living crisis and rising inflation and interest rates.
Inflation in the country amounted to 6.4 percent between June 2022 and the same month this year, according to figures from the national statistics bureau Statistics Norway (SSB).
In an effort to tackle inflation and slow down the Norwegian economy, the country's central bank (Norges Bank) has been raising interest rates since 2021. The current key interest rate in Norway is 3.75 percent.
For Norwegian consumers, this translates to interest rates of between four and five percent on loans and mortgages, and further interest rate hikes are expected this year, with Norges Bank currently projecting 4.25 percent as the peak of its key interest rate.
It comes as no surprise, then, that numerous Norwegian consumers are facing challenges in making their mortgage payments.
However, even though the possibility of defaulting on your loan can be daunting, there are steps you can take when you find yourself in a difficult financial situation.
Contact your bank (the sooner, the better)
It's a good idea to contact your back as soon as you realise that you'll have problems paying back your loan.
The sooner you contact the bank, the greater the chance that you will be able to find a joint solution to the problem together in a collaborative way.
Furthermore, the bank is more likely to show some flexibility if you honestly explain how you ended up in your current situation.
Potential solutions may include payment deferral or a modified repayment plan.
If your loan repayment term is currently less than 30 years, it may be beneficial to inquire about extending the repayment period. By doing so, you can reduce your monthly loan expenses, providing some relief during tight financial situations.
It's important to be aware that opting for a longer repayment period means paying more in interest over the entirety of the loan.
Norwegian banks can show understanding and a level of flexibility toward debtors that face financial challenges due to events that are out of their control, so never skip the step of trying to work out a temporary solution with your bank before resorting to other options.
Call the NAV's debt advice line
If you're struggling financially and worried that you won't be able to pay a debt instalment, it's always a good idea to contact the Norwegian Labour and Welfare Administration's (NAV) debt advice line by calling 55 55 33 39.
NAV's advisers will be able to give you general advice on how to resolve the situation.
However, if you have serious financial problems, the NAV will likely put you in touch with debt advisers.
Advisers specialising in mortgage-related issues can help you evaluate your financial situation and provide guidance on managing your mortgage payments.
You can find out more about the NAV's advisory offer on the webpage of the labour and welfare agency.
Reduce your spending
As electricity, food, and fuel prices continue to soar, many households in Norway need to find ways to cut their spending.
If you haven't done so already, now is the time to assess your expenses and identify areas where you can tighten your budget.
Being conscious of your spending habits is crucial. Consider whether you have any unnecessary subscriptions or pay for services that can be dropped.
Additionally, adopting a weekly shopping routine and planning meals in advance can help optimize your grocery expenses.
Selling off what you can do without
If push comes to shove, you should also sell off the possessions you can do without and use the money you pay off some of your debt.
You can sell most items on Finn.no, Norway's largest online marketplace.
However, if you're selling valuables – such as art – you might want to consider contacting a dealer or auction house.
Worst case - if maintaining the mortgage becomes unmanageable - you might have to consider selling the property or renting it out to generate income.
Temporary exemption from paying off loan instalments
If you fulfil specific criteria, primarily based on your loan-to-value ratio, you could be eligible for a temporary exemption from making instalment payments.
Under this arrangement, you would only need to pay the interest for a designated period, not the principal loan amount.
However, it's crucial to understand that by paying off less of the loan during this period, you will ultimately extend the duration of servicing the loan and increase the total amount you will repay over the entire repayment period.
Carefully consider the implications before opting for this scheme. While it provides short-term relief from instalments, it's essential to weigh the long-term consequences of extended loan duration and increased overall repayment costs.
Debt settlement
Debt settlement should be used only as a last resort. The Debt Settlement Act (Gjeldsordningsloven) gives individuals in Norway with serious debt problems the opportunity to gain control of their finances through a very rigorous process.
In simple terms, the debt settlement scheme is an agreement to pay as much as possible of the debt you owe during a limited period and then have the remaining debt cancelled.
The scheme covers all types of debt, and can, as a general rule, only be used once in a person's lifetime. If you decide to go this route, you'll be living on a minimum income for five years, while the rest of the money will go towards paying off your loans.
You will be paid a small sum monthly to cover food expenses and other basic needs. Although this can be tough, you'll get a brand new start after the five years are through, as all of your debts will be written off.
If you want to apply for debt settlement, you'll need to contact the local enforcement commissioner, the district police authority, or the enforcement bailiff in your area.
The main requirement for debt settlement is a permanent inability to meet your liabilities, meaning that you're facing problems of a permanent nature and that it is impossible for you to pay the debt off within the foreseeable future.
You can find more information (in English) on Norway's debt settlement system on the webpage of the Norwegian government.
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