The Danish mortgage model

Nykredit uses the traditional Danish mortgage finance model for specialised mortgage banks. The model is based on match funding with a one-to-one cash flow relation between the payments of interest and principal from the customer and the interest and principal payment to the investors owning the bonds that finance the loans.


The modeI is often referred to as the balance principle and means that:

  • The borrower pays the principal, interest and a margin
  • The investor receives the matched cash flows of principal and interest payments
  • The mortgage bank receives the margin