#### What does it cost in kronor to borrow money?

When it comes to loans, people often talk about interest here and interest there. Sure, it’s a good way to see the difference in cost between two different comparable loans, but sometimes it can be interesting to know what a loan actually costs in exact USD.

In the calculations here I have calculated the interest deduction, which is 30%.

## Mortgage loans

This type of loan is most likely the greatest any of us ordinary people will come into contact with. The advantage is that the interest rates on these are lower than for other loans, but the disadvantage is that they are large and run for a very long time. Negative from that perspective then what it will cost you in kronor in total.

When I look at statistics for the cost of a villa in the country, the average in the whole country is about USD 3.2 million in March 2019. It can be said that in Stockholm, for example, the average is 5.57 million as a comparison. This also means that in the countryside etc there are often houses to buy at much lower prices. But for the sake of simplicity I use the national section when I count a bit.

What you can maximum loan a house is 85% which would be 2.7 million but then it is not so much mortgaged on average so to get a more even figure we say that a normal “average loan” is USD 2.5 million . The maturity of mortgages is also long, and there we have an impact on repayment requirements, etc. to take into account. But to make it a little easy for us, we say that the loan is repaid with straight amortization for 50 years.

The interest rates as I write this are very low as they can be down to a few tenths above 1% but if we calculate that many can have a longer binding period we will run a calculation of 1.5% in the first calculation. If we run these figures we get for USD 2,500,000 that the total interest cost would be about USD 660,000 for all years. The house will thus cost almost a million more than the purchase price. Then we must remember that the interest rates are now extremely low and that they should stay so that for 50 years does not feel reasonable at all. If the average interest rate becomes 3% during all these years, the cost would be about 1.3 million.

## Private loans / Blank loans

The next type of loan to look at is the mortgage loan. Thus, the very ordinary loans that one obtains if the sum is needed to do something. For a long time, these loans ranged between USD 10,000 – 350,000, but in recent years there have begun to emerge players who may wish to lend up to USD 600,000.

It goes without saying, of course, that the cost in kronor for these loans will be very variable. Interest rates are also set individually after the application is received, but in general it can be said that a large loan with a longer maturity will have a significantly lower interest rate than a small loan with a short maturity. The economics of those who want to borrow also play a role as a stronger private economy poses a lesser risk to the lender and thus it is often possible to get lower interest rates.

There are two different types of lenders dealing with private loans, and it is partly the smaller ones that only lend a maximum of USD 30,000 – 50,000 and the larger ones that are often our major banks that offer significantly larger loans. The smaller ones can often present more precisely what the loan has for any interest rate, but then you also expect that it is clearly more expensive to borrow from them. Their thing is that it is often easier to get approved for a loan but at a price. Banks often have an interval that is currently 3.5 – 13%.

So if you are going to get to the bottom of the team then it is important to borrow a lot, for many years and have a good personal finances.

## Account Credit / Online Credit

The “new” in the loan market in recent years is that many lenders who previously dealt with SMS loans have switched to offering an account where you can withdraw the amount you want and then pay interest on this.

Unfortunately, the cost of these is rarely cheap but even here you have a great variety. Those who are “cheapest” are in line with the more expensive private loans and those who are most expensive are often even higher with an annual interest rate of 39%. Then it works a little differently in general with the credits, as they usually talk about a monthly interest rate instead of the annual interest rate and that the requirements for the amortization are also higher. But then only if you take care of your repayments you can also borrow more again.