If you are juggling a mortgage, a credit card, a consumer loan, and an overdraft, you are paying multiple interest rates on multiple debts with multiple due dates. Debt consolidation combines these into a single loan at a lower interest rate — saving you money and simplifying your finances. This guide explains how consolidation works in Denmark, when it makes sense, and when it does not.
What Is Debt Consolidation?
Debt consolidation means combining several debts into one new loan. The new loan pays off all existing debts, and you repay the single new loan monthly.
Benefits:
- Lower total interest — the new loan should have a lower weighted average interest rate than your existing debts
- Simplified payments — one monthly payment instead of several
- Fixed repayment schedule — you know exactly when you will be debt-free
- Reduced stress — fewer accounts to track and manage
The key metric is whether the total interest savings exceed the costs of taking out the new loan.
Types of Debt in Denmark
Understanding your current debt portfolio is the first step:
| Debt Type | Typical Interest Rate | Priority for Consolidation |
|---|---|---|
| Realkreditlån (mortgage) | 3–6% | Low — already low rate |
| Bank lån (bank loan) | 5–10% | Medium |
| Forbrugslån (consumer loan) | 8–15% | High — expensive debt |
| Kassekredit (overdraft) | 8–15% | High — very expensive |
| Kreditkort (credit card) | 15–25% | Highest — most expensive |
| SU-lån (student loan) | 4% (income-contingent) | Lowest — cheapest debt |
The general rule: consolidate the most expensive debt first.
Consolidation Options
Mortgage Refinancing (Refinansiering)
If you own property and interest rates have fallen since you took out your mortgage, refinancing your realkreditlån can reduce your rate significantly.
How it works:
- You take out a new mortgage at the current lower rate
- The new mortgage pays off the old one
- You repay the new mortgage at the lower rate
Costs to consider:
- Kurstab (bond loss) — when you break an old mortgage, you may need to buy back bonds at a loss. This can be 1–5% of the mortgage principal.
- Orettelsesgebyr (setup fee) — typically DKK 1,500–5,000 for a new mortgage
- Tinglysningsafgift (registration fee) — DKK 1,850 plus 0.6% of the mortgage amount
Break-even: Typically 2–3 years. If you plan to stay in your home longer than the break-even period, refinancing usually pays off.
Bank Loan Consolidation
Take a new bank loan at a lower interest rate to pay off multiple high-interest debts.
Example:
- Current debts: DKK 100,000 consumer loan at 10% + DKK 50,000 credit card at 18%
- New bank loan: DKK 150,000 at 7%
- Weighted average before: 12.7%
- Interest rate after: 7%
- Annual interest saving: approximately DKK 8,500
Contact your bank and ask for a samlelån (consolidation loan). Most Danish banks offer this product.
Balance Transfer Credit Cards
Some Danish banks offer balance transfer promotions where you can move credit card debt to a new card at a reduced rate (sometimes 0% for 6–12 months).
Watch out for:
- The promotional rate expires — usually reverting to 15–20%
- Balance transfer fees — typically 3–5% of the transferred amount
- The temptation to spend on the new card while carrying transferred debt
Best used as a short-term strategy, not a permanent solution.
Forbrugslån at Lower Rate
If you have multiple consumer loans, consolidate them into a single forbrugslån at a lower rate. Danish consumer loan providers like Santander, Nordea Finans, and Lånlet offer competitive rates for borrowers with good credit scores.
When to Consolidate
Consolidation makes sense when:
- Total interest savings exceed consolidation costs — calculate the break-even period
- You have high-interest debt above 5% — especially credit cards and consumer loans
- You have multiple monthly payments to manage — consolidation simplifies your budget
- You can secure a fixed rate — protects against future interest rate increases
- You have a stable income — ensures you can meet the new repayment schedule
When NOT to Consolidate
Avoid consolidation if:
- Your total debt is small — if it is under DKK 50,000, the fees may outweigh the savings
- You would extend the repayment period significantly — paying 7% over 10 years may cost more than 10% over 3 years
- Consolidation fees are high — especially kurstab on mortgage refinancing
- Your credit score has dropped — you may not qualify for a lower rate
- You have a habit of accumulating new debt — consolidation does not fix spending habits
Mortgage Refinancing in Detail
Refinancing a Danish realkreditlån is the most common form of debt consolidation because mortgages represent the largest debt for most households.
Step-by-Step Process
- Check current mortgage rates — compare rates from Realkredit Danmark, Nordea Kredit, Totalkredit, and Jyske Realkredit
- Calculate kurstab — ask your current mortgage provider for the cost of breaking your existing loan
- Compare total cost — new mortgage cost + kurstab vs. remaining cost of old mortgage
- Apply for new mortgage — your bank or mortgage broker handles the application
- Complete tinglysning — register the new mortgage with the Danish state
- Old mortgage is paid off — the new mortgage provider handles the settlement
When Rates Have Fallen
If your current mortgage rate is 5% and the current market rate is 3.5%, refinancing can save you DKK 10,000–20,000 per year on a DKK 2 million mortgage — depending on the remaining term and kurstab.
When Rates Have Risen
If current rates are higher than your existing rate, do not refinance. Keep your current mortgage and consider overpaying instead.
Bank Loan Consolidation in Detail
A bank consolidation loan (samlelån) is simpler than mortgage refinancing and works well for non-mortgage debt.
What You Need
- A Danish bank account (NemKonto)
- Proof of income (payslips or tax returns)
- A list of all debts to be consolidated
- A good credit score (typically above 700 on the Danish scale)
How to Apply
- Gather debt information — balances, interest rates, and monthly payments for each debt
- Contact your bank — request a samlelån quote
- Compare with other banks — use Mybanker.dk or Lendme.dk to compare rates
- Accept the best offer — the new bank pays off your old debts directly
- Close old accounts — once the debts are settled, close or reduce the old credit lines
Forbrugslån: The Hidden Cost
Danish consumer loans often carry high interest rates that many borrowers underestimate.
Example: A DKK 50,000 forbrugslån at 12% over 5 years costs approximately DKK 16,500 in total interest. The same loan at 7% costs approximately DKK 9,300 — a saving of DKK 7,200.
If you have a forbrugslån, always check whether you can refinance at a lower rate through your bank or a competing provider.
SU-lån: Keep It Separate
The Danish SU-lån (student loan) has a low interest rate of approximately 4% with income-contingent repayment. This means:
- Repayments are based on your income, not a fixed schedule
- The interest rate is lower than most other debt
- There is no penalty for early repayment
Do not consolidate SU-lån with higher-rate debt. The SU-lån is the cheapest debt you will ever have. Pay it off according to the income-contingent schedule and focus your consolidation efforts on more expensive debt.
Costs of Consolidation
| Cost | Typical Range |
|---|---|
| Orettelsesgebyr (setup fee) | DKK 1,500–5,000 |
| Kurstab (mortgage bond loss) | 1–5% of mortgage principal |
| Tinglysningsafgift (registration fee) | DKK 1,850 + 0.6% |
| Early repayment fee (some loans) | 0–1% of outstanding balance |
| Balance transfer fee (credit cards) | 3–5% of transferred amount |
Always calculate the total cost before committing to consolidation.
Worked Example
Situation: You have DKK 500,000 total debt:
| Debt | Balance | Interest Rate | Monthly Payment |
|---|---|---|---|
| Realkreditlån (mortgage) | DKK 300,000 | 4.0% | DKK 2,500 |
| Forbrugslån (consumer loan) | DKK 100,000 | 10.0% | DKK 2,100 |
| Kreditkort (credit card) | DKK 50,000 | 18.0% | DKK 1,500 |
| Bank lån (bank loan) | DKK 50,000 | 8.0% | DKK 1,000 |
| Total | DKK 500,000 | 6.4% weighted | DKK 7,100 |
After consolidation into a single mortgage at 4.5%:
| Debt | Balance | Interest Rate | Monthly Payment |
|---|---|---|---|
| Realkreditlån (consolidated) | DKK 500,000 | 4.5% | DKK 6,700 |
Monthly saving: approximately DKK 400
Interest saving over 5 years: approximately DKK 15,000
Consolidation costs (estimated): DKK 5,000 setup + DKK 8,000 kurstab = DKK 13,000
Net saving over 5 years: approximately DKK 2,000
This example shows that consolidation works, but the savings depend heavily on your specific debts, rates, and consolidation costs. Always run the numbers before deciding.
Tips for Danish Debt Consolidation
- List all debts — write down every debt with its balance, interest rate, and monthly payment
- Calculate your weighted average interest rate — this is your benchmark
- Compare at least three options — your own bank, a competing bank, and a mortgage broker
- Use Mybanker.dk or Lendme.dk — Danish comparison platforms for loans and mortgages
- Factor in all costs — setup fees, kurstab, registration fees, and early repayment penalties
- Check your credit score — a better score gets you a better rate
- Do not close old credit lines too quickly — this can temporarily lower your credit score
- Set up automatic payments — avoid missed payments after consolidation
- Consider professional advice — for large amounts (DKK 500,000+), a financial advisor can save you money
Summary
Debt consolidation in Denmark can simplify your finances and save you money — but only if the numbers work. Compare your current weighted average interest rate against the consolidation rate, factor in all costs, and ensure the break-even period fits your plans. Start by listing every debt, then explore your options. For most people, consolidating high-interest consumer debt and credit cards into a lower-rate bank loan or mortgage is the most effective strategy.