Mortgages in the Netherlands

Taking out a mortgage in the Netherlands is thrilling, but the procedure may also be tedious. You’ll learn all you need to know from us. When it comes to purchasing property in the Netherlands, many individuals depend on finance to make the leap of faith.

Getting a mortgage as an expat might be difficult. It is possible to become a homeowner in the Netherlands, though, if you know how to go about it and what documents you need.

Mortgages in the Netherlands

Mortgage rates in the Netherlands may be found in this guide, which explains the many financing options accessible to both citizens and non-residents equally.

There are a lot of Dutch mortgages

Is it wise to invest in real estate in the Netherlands?

In the Netherlands, just about anybody can receive a mortgage.

In the Netherlands, there are a variety of mortgage options.

Dutch home loan interest rates

Are Dutch mortgages available in any amount?

Dutch lenders of mortgages

In the Netherlands, how can you get a mortgage?

Mortgage insurance provided by the Federal Housing Finance Agency (FHFA)

The Dutch cost of a mortgage

The Netherlands has low property taxes.

Payments on the mortgage

It is possible to refinance a Dutch mortgage

Informational tools

There are a lot of Dutch mortgages

For a while now, mortgages have been a major concern in the Netherlands. Interest rates in the Netherlands are now very low, as they are throughout most of central Europe. As a result, this is a great moment to take out a mortgage since the interest rates are so low. It is also possible to get a loan for up to 100% of a property’s worth.

Is it wise to invest in real estate in the Netherlands?

The Netherlands’ house prices have risen rapidly in recent years and are expected to do so again in 2020. Some indicators of this spike slowing down have been reported by ABN AMRO, according to the Dutch bank.

The housing market is hot, and at least 80,000 additional homes are needed to alleviate the problem. In other words, it’s a buyer’s market at this time.

On the other hand, there’s some good news for purchasers. Mortgage rates are at an all-time low at this period of rising prices.

Mortgage rates may drop much more as European banks prepare to decrease their interest rates in response to competition. Homebuyers may take advantage of cheap mortgage rates for two, five, or even ten years or more by securing a long-term deal with a low interest rate.

Mortgage repayments are generally less expensive than rent in big cities like Utrecht, Amsterdam, The Hague, and Rotterdam. Rent costs in the Netherlands continue to rise each year, making it more financially advantageous to own a home rather than rent, particularly when the value of your home is expected to continue to rise.

Expatica’s purchasing a house in the Netherlands and renting a home in the Netherlands guides might help you balance your alternatives between renting and buying.

In the Netherlands, just about anybody can receive a mortgage. Temporary or permanent residents of the United States have the same legal right to apply for a mortgage as anybody else. While it may be more difficult to secure a loan or finance for 100% of the purchase price if you’re new to a job, self-employed, on a low salary or a non-EU citizen, it’s still possible.

Renovating their house as a couple
Depending on the bank, the following are often required:

Possession of a current, valid passport
A bachelor’s degree in nursing (citizen service number)
In the Netherlands, evidence of steady job or proof of income.
For full-time employees as well as contract workers and doctoral candidates: a letter from your place of business (werkgeversverklaring)
To having spent six months in the Netherlands (only required by some providers)
Three years of self-employed residents’ tax returns and financial reporting.
Being self-employed for fewer than three years can make it harder to obtain accepted for a mortgage.

Getting a mortgage in the Netherlands as a foreigner

Non-EU citizens in the Netherlands may take out a mortgage, however the conditions may be more stringent than those for EU nationals.

Furthermore, if the purchase price is greater than the National Mortgage Guarantee, which is set at €310,000 in 2020, banks may refuse to offer non-permanent residents with a mortgage covering 100% of the purchase price.

Since the Mortgage Credit Directive was implemented by the EU in 2015, lending institutions have found it more challenging when working with non-EU residents who have income in non-EU currencies. Banks must take up the risk of currency swings, which is why this is the case. Banks like ABN AMRO, on the other hand, found a solution to this issue by only considering 90% of non-euro income when determining your maximum mortgage amount. As a result, foreign-currency workers now have additional alternatives.

It’s important to keep in mind that securing a mortgage for a rental property is quite tough. For more information, check out our buy-to-let mortgages in the Netherlands page.

In the Netherlands, there are a variety of mortgage options. Mortgages come in numerous forms in the Netherlands, but the most popular ones are these:

Mortgages with a fixed interest rate (lineaire hypotheek)

Each month, you make a predetermined payment to cover the interest on your loan as well as a portion of the principal. During the term of the mortgage, payments are made on a predetermined schedule. The amount of interest you pay lowers as you pay back the loan.

Mortgages that include annuities (annuteiten hypotheek)

Each month, the borrower makes a certain payment to the lender. Beginning, you pay less interest and more of the loan, which means that you may deduct more from your income tax. However, as time goes on, you will pay more of the loan and less interest.

For income tax purposes, only two types of mortgages are acceptable.

Some more kinds of mortgages include:

You just pay interest on an interest-only loan (aflossingsvrijehypotheek). The only time a bank will allow this is under exceptional circumstances.

You may take money out, put it in, and pay interest on the money you borrow using a credit mortgage (krediethypotheek).
Save money instead of making monthly payments and pay off the mortgage in full at the conclusion of the term using a savings mortgage (spaarhypotheek).

Dutch home loan interest rates

The Netherlands has historically low mortgage rates, however they might rise or fall in response to changes in interest rates. The interest rate you pay on your mortgage will also fluctuate based on how long it will take you to pay it off, with a 30-year term being the most common. Your mortgage’s interest rate is determined by the length of the fixed period and the level of risk associated with the loan. Loan-to-value (LTV) is a measure of how much a loan is worth in relation to the value of the underlying property. Your interest rate will be lower if your LTV is lower.

In the Netherlands, there are two kinds of interest rates: fixed and variable. Floating rates are less expensive, but there is always the possibility that they may rise. Interest rates can’t fall much lower, and this is particularly true now.

The main Dutch banks’ mortgage rates are as follows as of February 2019. (based on a maximum loan-to-value of 100 percent ).

For a five-year loan, expect a rate between 1.7% and 2.2% annually.
2.2–2.57 percent for a ten-year fixed-rate mortgage
2.65–3.4 percent for a 20-year fixed mortgage
Interest rates may drop as your home’s value improves. Through WOZ – valuation of immovable property – you may request a valuation or contest the municipality’s assessment of the value of your property.

Are Dutch mortgages available in any amount?
A good rule of thumb is to borrow up to five times your gross monthly income, however families with two earners tend to be able to borrow more. Renewable energy systems in a property allow for an additional €9,000 in mortgage borrowing.

A cap has been put on the amount of money that may be borrowed against the value of a property in the Netherlands. While previously you could borrow up to 101 percent of the property’s worth, the maximum mortgage amount is now 100 percent of the property’s value. Any extra expenditures, like as fees for the purchase or improvements, must be paid for by the buyer themselves.

The good news is that if you get a 30% tax break on your salary, you’ll be able to borrow more.

interest rates on home loans in The Netherlands
Mortgage calculator on the internet
Use an online mortgage calculator from a bank or a business like Expats Amsterdam or Expat Mortgages to estimate your maximum loan amount, payback period, and cost.

Remember that these calculations are simply meant to serve as a starting point. Before taking out a mortgage, you should consult with your financial institution or a mortgage expert.

Dutch lenders of mortgages
As in the United States, mortgages in the Netherlands may either be arranged with lenders (often major banks) or via a mortgage adviser (hypotheekadviseur).

The Netherlands has a number of banks that lend to expatriates.
International Banking and Markets (ABN AMRO) (offers English-language mortgage sections on their website and advice tailored to expats on request)
ING Direct (Dutch only)
A branch of the Rabobank (mortgages section in Dutch only)
Social media sites and services (Dutch only)
Small banks, insurance firms, pension funds, and international mortgage providers are also offering competitive mortgage rates.

Expatriate mortgages are available via mortgage advisers.

As a middleman between you and the lender, a mortgage adviser or broker may help you find the loan that best suits your needs. If you don’t understand Dutch or are unfamiliar with the Dutch real estate market, this may be extremely helpful. Brokers in the Netherlands that are favorable to expats include:

Mortgages for International Residency

Independent Expat Finance Expats in the city of Amsterdam.
Mortgage Advisors in the Netherlands may be found in our Business Directory.

An official mortgage arrangement may only be created in the Netherlands once an accepted offer on a property has been made.

If you haven’t already done so, you’ll want to make sure you’ve done your homework and choose a mortgage provider. For three months, they may provide you with a quotation that is effective after you sign the agreement. If the transfer of property is taking longer than expected, you may be able to request an extension.

A qualified appraiser must evaluate the property in order to set up a mortgage. Buyer’s and seller’s agents, as well as any other interested parties, should not be included in this process.

Although this has become very impossible in today’s sellers’ market, it’s still a good idea to do so before agreeing on a selling price. A mortgage application normally does not need a structural survey. You may get the whole list of things an appraisal needs to cover from your lender.

Learn how to purchase a home in the Netherlands with our purchasing guide.
Signing the agreement and making an appointment with a notary (notaris) to sign the mortgage deed will be done after you have accepted a mortgage offer and submitted the necessary paperwork The transfer deed is often signed at the same time as this.

The Federal Housing Administration’s National Mortgage Security Program (NMLSP) (NHG) Mortgages may be repaid even if the borrower can no longer afford to do so. The NHG (Nationale Hypotheek Garantie) assures this. A maximum of €310,000 in Dutch mortgages will be eligible for the program in 2020, with a possible increase to €328,600 for properties that satisfy specified energy-saving criteria. In the event that you are unable to make your mortgage payments, the National Housing Trust (NHT) guarantees that:

When your house is sold, the lender receives the whole amount owed to them, and you are not responsible for the difference. Your property will continue to be taken and sold if you lose your job and cannot keep up with your mortgage payments.

You will, however, not be responsible for the difference if the value of your property is lower than the amount of your mortgage (e.g., if your house sells for €150,000 and your mortgage is €200,000). A reduced interest rate, normally 0.7 percent, is offered to NHG members as a result of the NHG’s lower cost of lending.

For the NHG, the application cost is 1% of the mortgage amount. This implies that if you pay €140,000 for a house and put down €40,000, your mortgage will be worth €100,000 and your application fee will be €1,000. Mortgages secured by NHG typically have the lowest interest rates.

The Dutch cost of a mortgage

Obtaining a mortgage entails additional expenses beyond the initial down payment and recurring monthly installments. These are typically based on the property’s value + VAT (BTW in Dutch). There are a number of mortgage advisory firms that charge a flat cost (often between €3,000 and €5,000) that includes the mortgage provider’s fees. These are some of the possible expenses:

1 percent of the mortgage or 1.2 percent (plus BTW) of the purchase price is the hypothesized mortgage arrangement fee.
For tax purposes, 0.15 percent (plus BTW) of the purchase price is included in the mortgage contract.
Around €1,500 in notarial fees.
1% of the total loan amount is covered by the National Mortgage Guarantee (NHG) (see above)
Taxatierapport: 0.2 percent of the purchase price (plus BTW).
Overdrachtsbelasting (transfer tax): 2% of the purchase amount.
The price of a policy.
The Netherlands has low property taxes.
Transfer tax (overdrachtsbelasting) in the Netherlands is 2 percent of the purchase price and must be paid when purchasing property (6 percent for commercial buildings.).

Figuring out your tax bill

The presumed rental value of a property is used to compute the Dutch property tax (onroerendezaakbelasting). Immovable property tax, or WOZ-waarde, is the word for this. Tax rates vary per municipality, but they typically fall between 0.1% and 3.0% of the assessed value of a home.

If you rent out a Dutch property that you own, the WOZ-value of the property is deducted from the taxable value to determine the tax liability. As part of your savings and investment income, this is taxed each year.

Taxes are often greater if the WOZ value is higher. On the other hand, customers with NHG-backed loans may cut their rates by moving into a lower risk bracket.

Expenses that aren’t deductible by the taxpayer

Tax refunds on mortgage interest payments are available as long as you are a Dutch tax payer. If you have a capital repayment mortgage (as opposed to an interest-only mortgage) and the property is your primary home, then this is an option for you.

Tax deductions are available for the following expenses:

Cost of valuing property
The commission paid to a mortgage advisor
The costs of securing a home loan.
The fee charged by the notary public
Fee for NHG
Interest on a home loan
Tax deductions for mortgage payments are lost if you decide to rent out your house. And of course, if you leave the Netherlands, all of your tax deductions are wiped out.

A tax exemption for expats employed outside the Netherlands to work in the Netherlands should also be considered. It’s possible that the amount of money you’re qualified for a mortgage may increase as a result of your decision. A 30 percent ruling status might be beneficial for your mortgage application since it reduces your taxable income, so speaking with a mortgage advisor is a smart move.

Learn all you need to know about purchasing a home in the Netherlands and how the Dutch tax system works.

Dutch homeowners insurance:

In the Netherlands, evidence of homeowners insurance (woonhuisverzekering) is likely to be required when applying for a mortgage. Indeed, some companies give a discount to customers who take up both their mortgage and house insurance with them. The requirements for a basic insurance might vary, but it usually includes protection against fire, storm, flood, and theft.

An insurance policy for your new flat is often arranged by the Association of Owners (VVE). It is common for apartment owners to split the expenditures evenly. In the Netherlands, other forms of insurance, such as life and property insurance, might have an impact on the terms of your mortgage agreement. Among the Netherlands’ house and contents insurance providers are:

You might think about getting contents insurance as well (inboedelverzekering). Furniture, glass, and other belongings are often covered under this policy. High-value insurance policies (kostbaarhedenverzekering) are required to protect valuable or unique items. You may be able to get a reduction on your insurance premiums by showing that your home is adequately protected against burglary and that your security systems are certified. In the Netherlands, you can get house and contents insurance from the following companies:

Citrus FBTO Centrale Beheer FBTO

The Goudse

Using a trusted price comparison service like Pricewise, you may compare home contents insurance. Learn more about Dutch house insurance in our guide.

Repayment of a mortgage

Additional payments may be made to lower your interest rate in addition to the monthly credit and interest payments. Most banks don’t charge a fee for yearly mortgage repayments of 10% or less.

To what extent you may do this, though, is determined on the sort of mortgage you own. If you have an interest-only (aflossingvrij) mortgage, you don’t have to make any principal payments on the loan itself. There may be penalties for making lump sum or additional payments on this sort of mortgage. A reduced long-term interest rate, on the other hand, may result in significant savings if your mortgage permits for additional payments.

It is possible to restructure a Dutch mortgage

You may be able to save money on your mortgage bills by taking advantage of low interest rates in the Netherlands if you currently own a home there. Refinancing your home loan is essentially the same as taking out a new loan to pay off your current one. You begin making monthly payments on your new mortgage when your old one is repaid in full.

It is possible to compare rates and terms with a wide range of Dutch lenders via an independent mortgage consultant. However, the disadvantages outweigh the benefits. Refinancing has both advantages and disadvantages.

Refinancing an existing Dutch mortgage has many advantages.

Lower monthly payments may be achieved by shopping around for the best interest rate. A lower loan-to-value owing to rising property values may result in a cheaper interest rate. If you plan to sell your home within a few years after refinancing, your savings may be reduced.

Decrease the length of your loan: You might shorten your loan’s duration by maintaining a fixed monthly payment. A 30-year mortgage, for example, might be repaid in only 20 years.

In the event that you have a variable-interest rate mortgage, you may benefit from low interest rates by switching to a fixed-rate mortgage and prevent the possibility of higher payments in the future.

Refinancing may help you access equity in your house to pay for large expenses like home upgrades or a decrease in your monthly income. This has little to do with saving money.

Cons of Refinancing a Dutch Mortgage

Your savings from the reduced interest rate might be outweighed by the expenses of getting a new mortgage. Intermediary costs, restitution to your current lender for the loss of interest, and Notary fees if you move lenders may be included.

Make sure you can handle the increased financial burden: If you refinance your mortgage to tap into your home equity, you might be on a slippery slope to ever-increasing debt.

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