If you are juggling a mortgage, a credit card, a consumer loan and an overdraft, you are paying several interest rates and chasing several statements. Debt consolidation is the attempt to compress all of that into a single new loan that pays off the existing debts, leaving one monthly payment. When the numbers work it saves money and simplifies life; when they do not, it quietly adds costs to a situation already stretched.
This guide runs through the main routes, the costs attached, and a fully worked example. It is general information rather than personal financial advice, and interest rates and fees move around, so treat the figures as a starting point.
What consolidation actually changes
The mechanics are straightforward. Instead of several commitments, you take out one loan — typically at a lower weighted rate — which settles everything else immediately. The benefits follow from that single act: interest savings if the new rate is genuinely below the weighted average you were paying, one payment instead of several, a fixed schedule so you know exactly when the debt ends, and fewer accounts to keep track of. The test that matters is blunt: the interest you save must exceed the total cost of the new loan. If it does not, consolidation is ceremony rather than improvement.
Where your money is going in Denmark
Danish household debt is a broad spread, and knowing what each slice costs tells you where consolidation is worth the effort:
| Debt type | Typical interest rate | Priority for consolidation |
|---|---|---|
| Realkreditlån (mortgage) | 3–6% | Low — already cheap |
| Bank lån (bank loan) | 5–10% | Medium |
| Forbrugslån (consumer loan) | 8–15% | High — expensive |
| Kassekredit (overdraft) | 8–15% | High — very expensive |
| Kreditkort (credit card) | 15–25% | Highest — most expensive |
| SU-lån (student loan) | 4% (income-contingent) | Lowest — the cheapest debt |
The general rule is to consolidate the most expensive debt first. Paying off a credit card at 18% obviously beats paying off a mortgage at 4%.
The main routes to consolidate
Mortgage refinancing (refinansiering). If you own property and mortgage rates have fallen since you took out your loan, refinancing lets you replace the old paper with a new mortgage at today’s lower rates. The saving can be substantial, but the moving parts are real: a kurstab (bond loss) when the old loan’s bonds are bought back, an orettelsesgebyr (setup fee) of typically DKK 1,500–5,000, and the tinglysningsafgift (registration duty) of DKK 1,850 plus 0.6% of the mortgage amount.
A bank consolidation loan (samlelån). For non-mortgage debt, most Danish banks offer a samlelån — one loan that settles your credit cards, consumer loans and overdraft. The arithmetic is easy to test. Say you hold a DKK 100,000 consumer loan at 10% and a DKK 50,000 credit card balance at 18% — a weighted average of 12.7%. A new DKK 150,000 bank loan at 7% replaces both, which works out to roughly DKK 8,500 of interest saved per year.
Balance transfer credit cards. Some Danish issuers run promotions where you move card debt to a new card at a reduced rate, sometimes 0% for 6–12 months. It is a short-term strategy rather than a permanent solution: the promotional rate typically reverts to 15–20%, a transfer fee of about 3–5% applies, and there is the human risk of spending on the new card while still carrying transferred debt.
A lower-rate forbrugslån. If you have several consumer loans, consolidating them into one forbrugslån at a lower rate is the relevant route. Danish lenders such as Santander, Nordea Finans and Lånlet advertise competitive rates for borrowers with good credit, and your own bank should be the first comparison point rather than the last.
When consolidation genuinely helps
The conditions for a sensible consolidation are quite specific. It helps when the interest saved exceeds the costs — which is why calculating the break-even period matters. It helps when your most expensive debt sits above roughly 5%, with credit cards and consumer loans the usual candidates, and when several monthly payments are making the budget hard to follow. A fixed rate is a genuine benefit if it protects you against future increases, and a stable income gives you room to meet the new repayment schedule without squeezing the rest of spending.
When it does not
The mirror image is just as clear. If total debt is under roughly DKK 50,000, fees can easily swallow the savings. If consolidation stretches the repayment period dramatically — paying 7% over ten years can cost more than 10% over three years — the headline rate hides the damage. High fees, and kurstab in particular, can wipe out the benefit on mortgage refinancing. A drop in your credit score may mean you cannot qualify for the lower rate you are counting on. And most important, consolidation does not fix spending habits; without a change in behaviour, the accounts you just paid off have a habit of refilling.
The real cost of consolidating
Every route carries fees, and they are worth listing rather than burying:
| 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 |
Consumer loans deserve a special mention because their interest is easy to underestimate. A DKK 50,000 forbrugslån at 12% over five years costs roughly DKK 16,500 in total interest; the same loan at 7% costs about DKK 9,300 — a difference of DKK 7,200. It is always worth asking whether a competing provider will refinance an existing forbrugslån at a lower rate.
Mortgage refinancing in more detail
Because a mortgage is the largest debt most Danish households carry, refinancing it is the most consequential form of consolidation. The steps are few: compare rates from lenders such as Realkredit Danmark, Nordea Kredit, Totalkredit and Jyske Realkredit; ask your current provider what breaking your loan would cost in kurstab; weigh the new mortgage plus kurstab against the remaining cost of the old one; apply through your bank or broker; register the new mortgage (tinglysning) with the Danish state; and let the new lender settle the old loan.
The direction of rates decides most of the maths. If your current mortgage is at 5% and new money is offered at 3.5%, refinancing a DKK 2 million mortgage can save DKK 10,000–20,000 per year, depending on the remaining term and the kurstab. If rates have risen instead, the usual advice reverses: keep the cheap loan you have and consider overpaying it. Break-even is typically two to three years, so refinancing usually pays off if you expect to stay in the home beyond that point.
Applying for a samlelån
A bank consolidation loan is simpler than a mortgage refinance and suits any debt that is not secured on property. Danish banks will expect a NemKonto, proof of income in the form of payslips or a tax return, a complete list of the debts to consolidate, and a credit score typically above 700 on the Danish scale. In practice: gather the balances, rates and monthly payments for each debt, ask your own bank for a samlelån quote, compare it with offers from other institutions — Mybanker.dk and Lendme.dk both aggregate Danish loan and mortgage rates — then accept the best offer, let the new lender settle the old debts directly, and close or reduce the old credit lines once the balances are cleared.
Putting it together: a worked example
A full example is worth more than any summary. Say you owe DKK 500,000 in total: a DKK 300,000 mortgage at 4.0% costing DKK 2,500 a month, a DKK 100,000 forbrugslån at 10% costing DKK 2,100, a DKK 50,000 credit card balance at 18% costing DKK 1,500, and a DKK 50,000 bank loan at 8% costing DKK 1,000. That is a weighted average rate of 6.4% and DKK 7,100 of monthly payments.
Consolidate everything into a single mortgage at 4.5%, and the picture changes. A DKK 500,000 loan at 4.5% costs about DKK 6,700 a month — a monthly saving of roughly DKK 400, and about DKK 15,000 of interest saved over five years. But consolidation is not free: a DKK 5,000 setup fee plus DKK 8,000 of kurstab adds up to DKK 13,000, leaving a net saving of only roughly DKK 2,000 over five years. The deal works — but barely, which is exactly the point. Consolidation rarely produces fireworks; it produces a modest, dependable simplification, and the numbers have to be run each time because the outcome depends entirely on the specific debts, rates and fees involved.
Weighing it all up
The discipline that makes consolidation work is the same one that makes future problems less likely. List every debt with its balance, rate and monthly payment; calculate the weighted average rate as your benchmark; and compare at least three options — your own bank, a competing bank and a mortgage broker. Factor in every cost, from setup fees and kurstab to registration duties and early repayment penalties, and remember that closing old credit lines too quickly can temporarily lower your credit score. For debts of DKK 500,000 or more, professional advice is often worth its cost. The SU-lån, at around 4% with income-contingent repayment and no early repayment penalty, is normally the last thing to consolidate rather than the first. Done properly, consolidation is not a refuge from overspending but a disciplined rearrangement of it — and it works only as well as the numbers behind it.