In Scandinavia as a whole but specifically in Norwegia, the landscape is refreshingly well-kept and beautiful. The air is fresh, the water is clean and clear, and the land is always well maintained.
That goes for private homes as well. Homeowners ensure that their houses meld nicely with the surrounding countryside, each with vibrant shades to stand out against the backdrop.
In an effort to retain the beauty, homeowners are constantly performing work on their houses via renovations, home projects, remodeling, whether putting on additions, updating the kitchen, or refreshing in other areas of the household before deterioration sets in.
In order to do that, many of the residents need to take out consumer loans with sites like forbrukslan.no/lan-til-oppussing/ to help afford the projects ranging relatively high in cost. The average citizen must meet stipulations for consumer loans before being approved for either a secured or unsecured loan.
A secured loan requires collateral to be attached (an item of equal value put down on the loan), but an unsecured loan does not; however, it will be for a lesser loan amount. Not everyone receives approval for the request for a loan for varying reasons. Let’s see why a consumer loan request for a renovation would receive a denial.
Why Would An Oppussing (renovation) Consumer Loan Request Be Rejected
Many Norwegians participate in renovation and remodeling projects each year, so their homes correspond to the surrounding landscape, always immaculate and well maintained.
The houses offer brilliantly colored wood exteriors with a minimalist interior design and a focus on nature. The most sought renovation for homeowners in Norway is a kitchen redo, and then there’s an occasional add-on or change to the structure itself.
These are costly changes that require a consumer loan to be able to afford the expense. For the specific purpose of an oppussing or renovation, a consumer loan can be either secured with collateral (something of value the lender can hold if the loan defaults) or unsecured. Still, these will be in a lesser amount than you hope for.
A consumer loan has several stipulations that, when not met, can result in the financial institution rejecting the loan request. They’re not necessarily challenging for a homeowner to get, but guidelines are becoming a bit more stringent since homeowners were beginning to have difficulties repaying their loans. Check out some reasons why you might find yourself rejected.
● Taxes weren’t filed for the previous tax year
Nearly everyone can apply for an unsecured consumer loan if you have a “national Norwegian Identity number” and residency with approval given to those bringing in income from employment or receiving (AAP) “work assessment allowance,” but it depends on the bank and their specific stipulations.
The typical scenario involves sending inquiries to various financial institutes to determine eligibility and creditworthiness. Often there are things that clients overlook or rules of which they’re unaware, but there are typically ways around some of these.
One issue for being rejected is neglect in filing taxes for the previous year, which is essential when checking for creditworthiness.
The consulting agencies’ reports show the collection process for any current debt and previous year’s income. In order to avoid this, it’s essential to be prepared before applying for the loan by evaluating your creditworthiness in the same systems that the bank will be checking.
If you detect tax reporting missing, you can have this corrected with the appropriate authorities, so it’s up-to-date when the bank does its check. There will then be no need for your application to be rejected.
● Registering your address
Whether you own a home or rent, it’s essential to register the address. Many residents procrastinate, especially when they rent, believing the situation might be temporary only to find they remain there longer than they had initially anticipated. When it comes time to get a consumer loan, it slips their mind that they never took this vital step.
Loan consultants are mindful of these situations and will not be forgiving of the misstep. The paperwork will be rejected until the registration process is taken care of properly. It will be necessary to go and handle this business and then return to start the paperwork again.
● The agencies the bank does their checks with have no address for you
Suppose you did register your address and had been living comfortably and happily in Norway as a productive citizen; however, when you try to apply for a second time, the advisor cannot let the application pass through yet again. What could be the problem this time?
The credit systems that the bank goes through are not updated with your information. That can also happen if the national identity number is changed for any reason.
Again, before taking time to go all the way to the financial institution to apply, it’s to your benefit to go into the systems to ensure your information is up-to-date. If not, contact the agencies to ask for these updates. Double-check this takes place before making a third trip for the application.
● Debt is sitting in collections
In Norway, if you have a “debtor” status, you are ineligible to take out a loan that can include parking violations, debt sitting in collections, and any money you owe to a creditor.
The only way to fix this to make yourself eligible to take out an application is to pay off all outstanding debt. You will then need to call the credit reporting system to ask that they remove any outstanding entries with you submitting a confirmation of repayment. The bank can then see the cleared report and approve the application.
● Debt is debt . . . is debt
While you might have paid off what you believe to be all outstanding debt, you might still have “debt” of which you’re unaware. Perhaps you have a few credit cards, but there’s no balance.
You actually never use these, but they give you a sense of financial security. Many people find credit comforting if something happens, like loss of income or an emergency.
Most people who don’t have a balance on their credit cards or don’t use them frequently don’t mention them when applying for other financial credit. Anything not mentioned on the application, whether it has a balance or not, will be found out by the financial institute, making obtaining the loan an impossibility.
The application will need to include this debt which had unused credit cards, since the limit on these counts as debt decreasing creditworthiness. The suggestion when attempting an application is to cancel any credit cards with a zero balance.
● Debt number is excessive
Perhaps you have a few credit cards that are paid on time plus a loan that pays rapidly and with no challenges. Credit standing is a critical component when a bank considers adding to your debt. Most institutes look at the debt-to-income ratio and how added debt will affect your monthly expenses.
Each individual debt, unused credit, loan reduces creditworthiness. The bank collects information from the credit reporting agencies to validate whether you are in poor financial circumstances.
Regulations state that the total debt for a potential borrower is not to exceed their gross income by five times, and you need to be able to make the repayment even if interest rates were to jump as high as five percentage points.
The ideal scenario in every household is to avoid accumulating debt. The problem is if life circumstances take control as a medical emergency, a job loss, and you’re stuck with all this debt. It can snowball out of control before you know it. Instead of getting a new loan, pay off what you have first, get everything cleaned up, and then relook at it.
● The amount you’re looking for is too great
You’re eligible to apply for a much higher amount than you anticipated. You don’t need nearly that much but decide since you can apply, you will. While you have decent earnings, the situation looks bleak after all. But why?
Regardless of the high income, you have no credit history established. Without knowing how you might pay, the bank will not always be unwilling to take a chance strictly based on what you earn. That’s not always the case, though.
Suppose you’ve been living in Norway for a significant period with the same identity number assigned long ago in addition to the high level of income. In that case, the bank will often make an exception without the established credit.
You can also make a conscious effort to develop credit and earn the bank’s confidence by applying for minimal loans to purchase small items that you can pay back fast in an effort to look favorable in the eyes of the bank.
● Insufficient income
For a consumer to receive a loan to renovate or remodel a home, there are income stipulations in Norway. In contrast, you have to have a documented yearly income level at 220,000 NOK at minimum to receive approval for a renovation loan. There are no exceptions or ways around the rule.
One of the primary considerations when attempting to renovate your home and you need to get a loan from the bank is the ability to communicate with the financial institution when they contact you in Norwegian.
If you’re someone who only knows a few phrases because you don’t need to learn the language in your day-to-day life, you could have passed up first-hand knowledge that your application has been approved.
Instead of communicating via intermediaries, especially in these types of essential scenarios, it’s beneficial to become familiar with Norwegian phrases for pertinent conversations.
You might not lose this loan since it is approved and the advisor gave you the good news; plus, there are translators in many cases. Still, it’s definitely something to consider if the situation were of a much more emergent nature, especially if there were questions the bank needed answers to before approving and you couldn’t answer.
Fortunately, after many tries, you have your funds and can go to work on your house. Go here for advice on why costs are rising for home renovations in Norway. Despite that, acquiring a consumer loan in Norway isn’t that challenging; it’s just a matter of educating before applying and making any necessary changes until you’re compliant.