Collateral Questions - Demand Guarantee (anfordringsgaranti) vs Escrow Account (deponeringskonto)

[OhKae]

Hej! My name is Kae. I’m a US citizen and my fiancé is a Danish citizen living in Denmark.

I have questions about the collateral for Family Reunification. I’m basing this on the new law that is suppose to happen sometime in the near future. That means instead of the collateral being DKK 55,375.27 (I have this memorized!), it will be DKK 100,000.

I’ve read the definitions of “Demand Guarantee” and “Escrow Account” on the Nyidenmark site but I would like to see if I understand correctly. From what I understand, a “Demand Guarantee” is the bank setting aside DKK 100,000 and an “Escrow account” is the applicant using in their own earned DKK 100,000. If this is accurate, my questions are aimed at the demand guarantee.

I’ve seen an example of a real demand guarantee paper. I’ve been told by a friend the bank has to decide if you are low risk and reliable enough to qualify. After they decide if you qualify, they give you a piece of paper that you give as proof to the Danish Immigration when they ask for the collateral. While this is all going on, you pay the bank a monthly fee to keep the demand guarantee “active”. Is this accurate? If so, I have further questions. If not, I still have questions!

Questions:

1. What is considered “low risk”? (This woman told me they look at the “breadwinner” aka who makes the most money. They want to see if you pay your bills on time, have savings, a job, etc. I’m guessing this also includes a house mortgage?).

2. Does the bank look at you and your financial status, your spouses financial status, or both? (The Nyidenmark website has collateral info under “Requirements the spouse/partner in Denmark needs to meet”, so I’m guessing it’s either whomever makes the most money (the breadwinner) or specifically the Danish spouse in Denmark. The woman who told me this info (the applicant) said her bank is looking at her info, not her Danish spouse.).

3. (Question 2 Followup) Who’s name do they make the demand guarantee under? Can it be the applicant and the Danish spouse?

4. Will the bank allow a demand guarantee if you have a mortgage you’re paying off (on time)?

5. After being approved for a demand guarantee and a family reunification visa, do the Danish test reductions still apply? When I pass the proper tests, will the money still be decreased even though it’s a bank guarantee?

6. When it’s time to renew my visa (2 years), if we’ve earned up the DKK 100,000 on our own, can I renew my visa with an escrow account instead of the banks demand guarantee? If we earned up during my visa, can we switch also or only when it’s time to renew? The Nyidenmark website says, “The collateral guarantee must be valid for 10 years from the date on which the applicant is expected to be granted residence permit. The date will be stated in the letter with the request from the Danish Immigration Service. The guarantee must be irrevocable for the entire duration.”.. Does that mean there is no option to switch from demand guarantee to escrow, even though the money is still available?

7. (With question 6) I’m assuming the bank monthly fee varies from bank to bank. Let’s say the fee is DKK 300 per month. Does that mean the applicant and Danish spouse must pay DKK 300 per month for 8 years (until the applicant can get permanent residency)?

8. What is the specific point of paying a monthly fee to the bank?

9. Does the bank fee have to be monthly or can we pay yearly?

10. If a bank denies you for some reason, can you try another one?

Extra questions:
1. Should we ask the bank before we apply to see if they consider either of us “low risk”? We thought this would smart.

2. Can he go by himself or should we go together? If I’m in America, I can’t go with him at that time.

I think that’s all of my questions so far and I hope I haven’t forgotten any. I’m asking before we ask the bank anything just so we know what I’m talking about.

Side Note: The woman who told me this info hasn’t been able to apply yet (doesn’t fit the 24-year age requirement yet) and her bank told her that they want to do a “test” to make sure she pays her bills on time for the next few months. Then when she applies for the family reunification visa, they will give her the demand guarantee paper, she pays a monthly fee to keep it active, they live happily ever after.

My fiancé and I fit all of the normal requirements and the soon-to-be new requirements (“4 out of 6” rule, no “ghettos”, etc). So our focus is the collateral. We have savings but DKK 100,000 is kindaaa crazy! We thought we could get a demand guarantee. While the demand guarantee does its thing, he and I would be working in Denmark to save up our own 100,000 (while paying everything off on time) so that when it’s time for me to renew my visa after 2 years, we could post our own collateral and not keep owing the bank. Owing the bank a monthly (or yearly?) fee for 2 years instead of 10 years is less unfortunate. He does have a bank mortgage he pays off but he pays it on time along with all other bills. He has a job and a savings too. I would think that is low risk. I plan to have a job/savings so hopefully that will make us look low risk overall.

Thank you in advance for all information!

- Kae

[DortheM]

It is your spouse who have to finance the guarantee. A Demand Guarantee can end up being money the bank borrow your spouse in case you receive social help from the commune. So that is why the bank will investigates, whether your spouse will be able to pay back the loan, in case the guarantee comes into use. Danish banks take fees for almost all kind of services. There is a big difference how much the various banks takes for a Demand Guarantee.

And yes the guarantee amount goes down as you pass the Danish tests. I am not quite sure if the reductions will be bigger with the new amount, but I think so. That is it will be reduced with 2/5 for the first test and then with 1/5 for the next two.

To the commune the guarantee is a guarantee no matter how it is made with the bank.

[evc]

1. The danish resident has an income and has paid all her debts (if any were made) up to time. This is seen as a positive thing;
2. Probably just the danish citizen since they do not have any information regarding the person moving to Denmark;
3. The danish citizen. However, if you have the money, nothing can stop you from giving it to your future wife so she can pay it;
4. This probably follows question one: if the Danish resident has a good profile with the bank, nothing will stop them from lending the money;
5. That is a good question and I imagine so. Nethertheless, that doesn't really matter since you have already paid a fee and got the guarantee from the bank. They will not pay any debt (up to 100.000 kr-) you might have with the commune until they are asked to do so. So if the value is 10.000 or 100.000 kroner, it makes no difference;
6. No, you cannot switch;
7. I do not think these fees are monthly (someone please correct me). I believe you have some one-time fees and a specific interest rate in case you need to pay back the money;
8. Refer to #7;
9. Refer to #8;
10. Yes
11. Talk to the bank to see what are the costs of owning such account. The best bank will probably be the bank he already has his account, since they know his financial history;
12. It is not necessary for you to be with the person to ask this kind of information. However, when requiring the guarantee, you have to be in Denmark;

My suggestion is: if you have the money, use it for the guarantee. It is not that crazy amount if you have a normal job in Denmark. However, by having the money, You will avoid some fees with the bank and if you are interested enough, in 4 years will have recovered all of your money.
And start learning danish as soon as possible. The PD3, one of the tests you have to do, is pretty harsh and passing it requires dedication. Don't wait for you to go to the language school to start learning danish. Duolingo is a great start.

[OhKae]

It is your spouse who have to finance the guarantee. A Demand Guarantee can end up being money the bank borrow your spouse in case you receive social help from the commune. So that is why the bank will investigates, whether your spouse will be able to pay back the loan, in case the guarantee comes into use. Danish banks take fees for almost all kind of services. There is a big difference how much the various banks takes for a Demand Guarantee.

And yes the guarantee amount goes down as you pass the Danish tests. I am not quite sure if the reductions will be bigger with the new amount, but I think so. That is it will be reduced with 2/5 for the first test and then with 1/5 for the next two.

To the commune the guarantee is a guarantee no matter how it is made with the bank.

Thank you for replying and giving this info!

[OhKae]

1. The danish resident has an income and has paid all her debts (if any were made) up to time. This is seen as a positive thing;
2. Probably just the danish citizen since they do not have any information regarding the person moving to Denmark;
3. The danish citizen. However, if you have the money, nothing can stop you from giving it to your future wife so she can pay it;
4. This probably follows question one: if the Danish resident has a good profile with the bank, nothing will stop them from lending the money;
5. That is a good question and I imagine so. Nethertheless, that doesn't really matter since you have already paid a fee and got the guarantee from the bank. They will not pay any debt (up to 100.000 kr-) you might have with the commune until they are asked to do so. So if the value is 10.000 or 100.000 kroner, it makes no difference;
6. No, you cannot switch;
7. I do not think these fees are monthly (someone please correct me). I believe you have some one-time fees and a specific interest rate in case you need to pay back the money;
8. Refer to #7;
9. Refer to #8;
10. Yes
11. Talk to the bank to see what are the costs of owning such account. The best bank will probably be the bank he already has his account, since they know his financial history;
12. It is not necessary for you to be with the person to ask this kind of information. However, when requiring the guarantee, you have to be in Denmark;

My suggestion is: if you have the money, use it for the guarantee. It is not that crazy amount if you have a normal job in Denmark. However, by having the money, You will avoid some fees with the bank and if you are interested enough, in 4 years will have recovered all of your money.
And start learning danish as soon as possible. The PD3, one of the tests you have to do, is pretty harsh and passing it requires dedication. Don't wait for you to go to the language school to start learning danish. Duolingo is a great start.

Thank you for your organized and detailed response! I really appreciate it. I love organized/detailed responses.
I'm satisfied with numbers 1 - 5, thanks!

1. Response #5: That makes complete sense... I realized how that would not matter after I read what you said. I thought, "Duhhh, oops!".

2. Response #6: That is unfortunate. You would think as long as the money exists, is deposited, and connected to the Danish Immigration, they would be satisfied, especially if you show you actually can do it yourself. If someone has to use the demand guarantee, it seems it should be possible that they can switch to the escrow account so they don't get stuck with bank fees.

3. Response #7 - #9: Maybe the fee price and when/how it's paid varies by bank?

4. Response #10 - #12: That makes sense. It would definitely be better for us if the bank knows his history! They would already have that trust.

Your suggestion: We hope we can use our own money but it would be bad towards our savings account.
I have been using Duolingo and it's been very helpful. I thought the new rules for the applicant are that they have to pass the Danish A1 test and the A2 test? Then the Danish spouse in Denmark must pass Danish at level 3? Does the Danish spouse in Denmark have to actually pass a test or can they use documentation of some sort from their time in normal school?

New Question:
1. I just read that if the applicant (me) can pass the required Danish tests before applying for Family Reunification, the collateral owed (regardless if it's Demand Guarantee or Escrow Account) is decreased. Then when I apply, I show documented proof that I passed the required tests and the collateral is decreased. That means instead of asking the bank for a demand guarantee of DKK 100,000, it would be about a half or so. Is this true?

[mh1]

The rule about Danish test for the in Denmark living spouse sounds strange, but it is because the law also is applied when a foreign citizen with permanent residence wants family reunification. A person who has attended 10 years of Danish primary school will normally just have to prove that s/he passed the ordinary final exam in Danish.

[evc]

Your suggestion: We hope we can use our own money but it would be bad towards our savings account.
I have been using Duolingo and it's been very helpful. I thought the new rules for the applicant are that they have to pass the Danish A1 test and the A2 test? Then the Danish spouse in Denmark must pass Danish at level 3? Does the Danish spouse in Denmark have to actually pass a test or can they use documentation of some sort from their time in normal school?

New Question:
1. I just read that if the applicant (me) can pass the required Danish tests before applying for Family Reunification, the collateral owed (regardless if it's Demand Guarantee or Escrow Account) is decreased. Then when I apply, I show documented proof that I passed the required tests and the collateral is decreased. That means instead of asking the bank for a demand guarantee of DKK 100,000, it would be about a half or so. Is this true?

1) See mh's answer.
2) I am not sure about that. I believe you will need to do the test, pay the 100.000 guarantee and then apply for a reduction.

[OhKae]

The rule about Danish test for the in Denmark living spouse sounds strange, but it is because the law also is applied when a foreign citizen with permanent residence wants family reunification. A person who has attended 10 years of Danish primary school will normally just have to prove that s/he passed the ordinary final exam in Danish.

Thanks for replying!
That’s what I thought which is why I was confused. I remember the new law said it’s for the spouse living in Denmark. I don’t have to pass PD3 until I become a permanent resident. How would the Danish citizen prove they passed it? Just showing their school records (like an American report card)?

[OhKae]

Your suggestion: We hope we can use our own money but it would be bad towards our savings account.
I have been using Duolingo and it's been very helpful. I thought the new rules for the applicant are that they have to pass the Danish A1 test and the A2 test? Then the Danish spouse in Denmark must pass Danish at level 3? Does the Danish spouse in Denmark have to actually pass a test or can they use documentation of some sort from their time in normal school?

New Question:
1. I just read that if the applicant (me) can pass the required Danish tests before applying for Family Reunification, the collateral owed (regardless if it's Demand Guarantee or Escrow Account) is decreased. Then when I apply, I show documented proof that I passed the required tests and the collateral is decreased. That means instead of asking the bank for a demand guarantee of DKK 100,000, it would be about a half or so. Is this true?

1) See mh's answer.
2) I am not sure about that. I believe you will need to do the test, pay the 100.000 guarantee and then apply for a reduction.

1. Okay, I did!
2. That is possible. I’ll look into it (but anyone can feel free to share their experience still!).

Tak!

[Da3Li4]

7. Our bank charged us per kvartal, which is every 3 months, and the amount stays the same. Even though I have passed several tests, and the guarantee now down to 10.000kr (passed the mandatory A1 test + DU 3.5). We are still paying per 3 months to the bank.
8. It started as soon as you are granted the demand guarantee. It will show as a minus in your acc
9. see answer no. 7

Extra Q:
1. That sounds like a good plan
2. He can go by himself. My husband did everything himself, I could not speak Danish at that time.

[OhKae]

7. Our bank charged us per kvartal, which is every 3 months, and the amount stays the same. Even though I have passed several tests, and the guarantee now down to 10.000kr (passed the mandatory A1 test + DU 3.5). We are still paying per 3 months to the bank.
8. It started as soon as you are granted the demand guarantee. It will show as a minus in your acc
9. see answer no. 7

Extra Q:
1. That sounds like a good plan
2. He can go by himself. My husband did everything himself, I could not speak Danish at that time.

Ohh, every 3 months. Interesting! I have questions for you!

1. Now that you’ve done the demand guarentee route, do you regret it at all or are you glad you did it (compared to earning all the money yourselves)?

My fiancé is really, really skeptical about the demand guarentee because of the fee and how long we’d be paying. It’s almost like you have a loan even though it’s bank fees! I’m also kind of skeptical about it because it seems that in the end, the bank fee ends up being even more than the actual amount of collateral. DKK 100,000 as a denmand Guarentee but DKK 100,000+ in bank fees for 8 - 10 years.

2. How did you guys decide to use the demand guarantee route even after hearing about the fees and length you’ll be paying? My fiancé’s outlook is that we should use the demand guarentee as a last resort. If we do use it, then he’s willing to pay the fees together. I agree with him but I consider us already at the last resort and said I’m willing to pay the bank fees out of my own pay check if it means we’ll be together quicker. Of course, he wouldn’t have me do that myself but I was really passionate about what I was saying! Lolol

3. When you wrote, “It started as soon as you are granted the demand guarantee. It will show as a minus in your acc.” I’m guessing you were referring to the bank subtracting the first fee from your account?

Thanks for replying!

[Da3Li4]

Okay,

will try to answer based on my knowledge, my husband chose this option because you can get tax deduction/fradrag when you owe some money to the bank. Which is in the long run, better for our financial, even though we do have the mean to provide the money ourselves.

I just saw on my husband's acc page, it showed how much money left in his acc and the red minus of -10.000kr, so I guess it is considered as a loan from the bank. But, we are a bit tired with all of the regulation changes on family reunification in Denmark, that's why we are moving to Sweden soon. And that'll be also the end of my demand guarantee money. No more paying per kvartal for us.

Best of luck for you two!

[OhKae]

Okay,

will try to answer based on my knowledge, my husband chose this option because you can get tax deduction/fradrag when you owe some money to the bank. Which is in the long run, better for our financial, even though we do have the mean to provide the money ourselves.

I just saw on my husband's acc page, it showed how much money left in his acc and the red minus of -10.000kr, so I guess it is considered as a loan from the bank. But, we are a bit tired with all of the regulation changes on family reunification in Denmark, that's why we are moving to Sweden soon. And that'll be also the end of my demand guarantee money. No more paying per kvartal for us.

Best of luck for you two!

Ah, a tax deduction. I getcha.

I’m confused about the 10,000 kr. Are you saying if you had used your own money, it would be reduced all the way down to 10,000 kr right now? Or are you saying you pay 10,000 kr every 3 months. Either way, why would your bank be -10,000 kr? If it’s the collateral as a demand guarentee wouldn’t it stay at 55,375.21 kr?

[Da3Li4]

Ah, a tax deduction. I getcha.

I’m confused about the 10,000 kr. Are you saying if you had used your own money, it would be reduced all the way down to 10,000 kr right now? Or are you saying you pay 10,000 kr every 3 months. Either way, why would your bank be -10,000 kr? If it’s the collateral as a demand guarentee wouldn’t it stay at 55,375.21 kr?

Basically the 10.000 is the last straw after you finished a series of test. So, no, it won't stay at 55.000,- kr. Once you finished your A1, you get deduction against your guarantee, you finished another test (in my case was PD3/DU 3) as I remember each time I finished one level, they reduce my guarantee. The last one was when I finished my DU 3.5, they reduced it again, and now my guarantee is down from 50k to 10k. But, my bank still charge us 300kr per kvartal no matter how much left of my guarantee. Oh, based on what I read on ÆUG's forum, 10.000kr is the limit of deduction, you won't get anymore deduction than this.

Once I get my PR then they will release the guarantee money (in my case stop paying the bank fee).

[DortheM]

@Da3Li4

Kan I ikke spare 10000 op og så lave garantien om til den deponeringskonto? Det er da tosset I skal betale kr. 300 i kvartalet for at have en anfordringskonto på 10000.