Refinancing with Collateral (Refinansiering Med Sikkerhet)

Refinancing with Collateral (Refinansiering Med Sikkerhet)

Many people have dug themselves into financial pits either through carelessness or due to unforeseen circumstances. Ease of access to consumer loans can also be considered one of the reasons why people easily get into debts. There are banks and financial institutions that are willing to give their customers loans even with minimum requirement.

This now lulls some consumers into forgetting that these debts that are easy to acquire are not so easy to pay off. It takes a measure of discipline and diligence to take out a loan, have a solid repayment plan and stick to it.

That being said however, in the instances where a borrower is already swamped with debts, the next thing to do is to look for solutions. There are a number of practical ways that one can dig himself out of debt. But in this article, we will concentrate on refinancing med sikkerhet (with security).

What is Refinancing?

This is the process through which a borrower replaces an original loan(s) with a new one with better terms and rates. The refi loan is used to pay off all the outstanding debt(s) and then the borrower begins to pay off the new loan based on the new terms and condition and the new interest rate.

Sometimes, borrowers who are finding it difficult to pay off their debt(s) because of high monthly payments also resort to refi loans. In this instance, they have to look for credit facility with longer repayment duration. This will afford them lower monthly payment albeit an overall costlier loan.

There are two major categories of refinancing and they are refinancing with security and refinancing without security.  Just like in regular consumer loan, getting a loan with security means putting down an asset of value as collateral while without simply means not putting down any asset of value.

What Does It Mean To Refinance With Security?

Refinancing with security as we have explained, simply means to put down an asset of value as collateral for the refi loan.  Although on the surface (looking at the agreement), it might see like the difference between refi with security and without is inconsequential but in the long run the difference is substantial.  And just as with regular consumer loans, the asset can be repossessed to recover the funds in the event that the borrower defaults.

Reasons For Refinancing With Security

Some people ask why they are advised to refinance with security; find below some reasons:-

  1. Lower Interest Rates And Fees – When you take out a refi loan backed with collateral, you get lower rates and also lower fees associated with the credit facility. But without collateral your fees and interest rates are likely to be higher, so to make the refi worth it, it is best to use collateral.  In the case of a mortgage, some people are scared of losing their home or property but we feel that the reward of lower fees and interest rate and the fear of losing the property should serve as motivation to adhere strictly to the payment schedule of the refi.
  2. Possibility Of A Higher Amount – Just as with regular credit facility, the amount you can get on a refi with security is usually higher than without. Bear in mind that the collateral just as the term ‘security’ implies, mitigates the risk factor for the lender. So because of that, they are more confident to raise the credit limit for borrowers with collateral than those that don’t have collateral.
  3. You Can Asses Urgent Cash While Retaining Ownership Of Your Home – This is the case with cash out refi loans. You can use the equity you have in your home to take out a loan to solve urgent issues instead of selling the home outright.

These 3 reasons are not exhaustive but they are the some of the most popular reasons why people are advised to refinance with security.

Eligibility For Refinancing


Eligibility For Refinancing

Before we round off this article, let’s briefly discuss the requirements for qualification for refinancing.  Although these requirements differ from bank to bank, there are basic requirement that apply to every financial institution that offers this service.

Must Be Of Legal Age

All over the world, an 18 year old is considered an adult and is eligible to take out a loan. However, for refinancing especially without security, most banks in Norway peg the lowest age at 20 while some go as high as 25years. But the average age limit that you will find is 23 years.

Level Of Income

Apart from the fact that every lender will want proof of a steady income, for refinancing, there is a level of income that is required.  So anyone that is looking to take out a refi loan from a bank must know what the income limit of that bank is.  The average range is between NOK 100,000 and NOK 250,000 per annum.

Furthermore, they will look at your ability to repay starting from day one and also if there was to be a hike in the interest rate by as much as 5%.  Government regulations also stipulate that you can’t be approved for an amount that is 5 times more than your yearly income.

Payment/Credit History

This is a critical record that is considered for those who want to get loans without collateral.  There must be no payment notice on your record or any debt collection case that is on-going.  But for those who plan to refinance with security, this is a moot point.


You must be a citizen of Norway who is duly registered with the National Register of Citizens. For non- citizens, you must have lived in the country for the past 3 years and also have a residential address that is registered in the country. For those who are not registered, proof of tax payment in the country for 3 years can also serve in place of registration.


Finally, it is best to begin to seek refinancing once you start having difficulty with servicing your debt(s). It wouldn’t make sense for you to wait until you get a payment notice or your debt goes to debt collection before you start looking for how to be debt-free.

Ambika Taylor

Ambika Taylor is a admin of She is a blogger, writer, managing director, and SEO executive. She loves to express her ideas and thoughts through her writings. She loves to get engaged with the readers who are seeking informative content on various niches over the internet.

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