How to get a mortgage in the Netherlands?

How to get a mortgage in the Netherlands?

Getting a Dutch mortgage as an expat.

To 'expat mortgages'

When you’re thinking about buying a Dutch house, the first thing you should do is check if you’re eligible for a mortgage in the Netherlands. Applying for a Dutch mortgage can be a confusing process, since the rules are quite complicated and almost all the information is in Dutch. How does a Dutch mortgage work and what are the special requirements for expats? In this article you can find general information about mortgages in the Netherlands.

How to get a mortgage in the Netherlands

An expat mortgage in the Netherlands

When you apply for a mortgage in the Netherlands as an expat, you get the same mortgage as Dutch natives. To apply for a Dutchmortgage, you have to live in the Netherlands. Your work can be located abroad, but your salary has to be in euros. A Dutch mortgage lender won’t give you a mortgage when you get paid in a foreign currency. 

Special conditions for expats

Although there’s no such thing as a special expat mortgage in the Netherlands, you do have to meet some extra conditions:

  • You need to have a BSN (citizen service number)
  • When you’re not an EU/EEA citizen, you need a residence permit
  • You (and your partner) live in the Netherlands (in general you can get an expat mortgage when you arrive in the Netherlands, but some banks require that you have lived here at least six months up to five years)

Other conditions might apply to you, depending from your country of origin.

Get a mortgage with a permanent or temporary contract

It’s easiest to apply for a mortgage in the Netherlands with a permanent contract. If you have a temporary contract or work for a university as a PhD student or researcher, you can only get a Dutch mortgage if you’re employer states that your position will become permanent. 

Dutch Mortgage for self-employed expats

As an expat you can also get a Dutch mortgage when you’re self-employed, but it’s more difficult. You need at least three years of income history to show to the mortgage lender. They'll use your net profit to calculate your maximum mortgage. If your profits are increasing, they’ll use the average, but if your profits are decreasing, the lower figure will count for your Dutch mortgage calculation. 

Maximum mortgage value or loan to value

How much you can borrow to buy a house in the Netherlands, depends on your income and the market value of your house. You can get a mortgage up to 100% of the value of your house. So, if you buy a home with a value of 350.000 euros, you can borrow 350.000 euros. 

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Purchasing cost to buy a house

Although you can get a mortgage of 100% of the market value, you can’t buy a house in the Netherlands with just a mortgage. You also need savings. All the cost related to the transfer of the house, the purchasing cost, are paid by the buyer of a house. In general, these costs are about 5 - 6 percent of the purchase price of your new home and you have to pay them out of your own pocket. 

Purchasing costs in the Netherlands

  • Property transfer tax: you pay the government a 2% tax of the purchase price.
  • Notary fee: for the mortgage contract and the transfer contract, about 1000 euros.
  • Mortgage advice fee: at Hanno you can already get a mortgage advice for the competitive price of 1.495 euros. 
  • Appraisal or valuation costs: you need an appraisal report for your mortgage. This is about 500 euros.
  • Real estate agent (if applicable): if you hire a broker to help you buy the house, you’ll pay 1.500 - 3.500 euros.
  • Structural survey (if applicable): if you want to check the condition of the house, you can get a technical survey. This is about 500 euros. 
  • National Mortgage Guarantee or NHG (if applicable): if you get an NHG mortgage, you’ll pay a fee of 0,7% of your total mortgage. 
  • Bank guarantee (if applicable): about 1% of the amount of the guarantee

Purchasing costs and tax deduction

All costs for services that are mandatory when buying a house in the Netherlands are tax deductible. For instance, your appraisal report, notary deeds and mortgage advice. Costs for services that are optional, such as hiring a real estate agent or getting a structural survey, aren’t tax deductible. 

Deposit or bank guarantee

In the Netherlands your mortgage lender doesn't require you to make a deposit. However, you do have to pay a pre-sale agreement deposit to the seller after you’ve signed the preliminary purchase agreement. In general, this is 10% of the purchase price of your new property. You can pay this deposit with your own money or get a bank guarantee. 

National Mortgage Guarantee (NHG)

In the Netherlands you can get a mortgage with NHG: national mortgage guarantee, a governmental guarantee repayment system for smaller mortgages. If you can’t repay your mortgage due to inability to work, unemployment or divorce, NHG will ensure repayment to your mortgage lender. 

Because of this safety net, you get a lower interest rate. In 2020 you can get a Dutch mortgage with national mortgage guarantee up to a purchase price of 310.000 and pay NHG a fee of 0,7% of your mortgage amount. 

Buy a house to let in the Netherlands

You get a standard mortgage in the Netherlands to rent out your house. Not even if you move abroad. If you want to buy a home to let, you can get a special buy-to-let-mortgage. These mortgages have higher interest rates and are not tax-deductible. 

Mortgage types in the Netherlands

When you buy your first house in the Netherlands, you can choose between annuity mortgages and linear mortgages. Both mortgages types are eligible for tax-deduction on mortgage interest and have to be paid off in a 30-year mortgage term. 

An annuity mortgage has fixed payments as long as your fixed interest period lasts, consisting of interest and loan repayment. First you pay a great deal of interest and a small deal of loan. As your debt decreases over time, you repay less interest and more loan. Due to tax-deduction on your (decreasing) mortgage interest, your monthly net payment increases.

Annuity mortgage in the netherlands

With a linear mortgage you repay the same amount of loan every month, and the amount of interest you pay decreases monthly. The monthly payments of a linear mortgage are higher in the beginning, but in total (in the complete 30-year term) you pay less interest. This mortgage type is interesting if you’re not (fully) eligible for tax-deduction.

Linear mortgage in the Netherlands

Fixed or variable interest rate

Another important part of your mortgage in the Netherlands is the mortgage interest rate. You can choose between fixed interest rates and a variable interest rate. Both types of mortgage interests have pros and cons.

A fixed interest rate is generally higher, but you will know how much your loan repayments will be. If you choose a fixed interest rate of 10 or 20 years, your interest rate will stay the same all these years.

A variable interest rate is lower and allows you often to make unlimited additional payments. Your home loan repayments will rise and drop together with the interest rates. Only choose a variable mortgage interest rate if you’re willing to deal with this uncertainty and are able to pay higher monthly payments. 

Paying off your Dutch mortgage

A mortgage in the Netherlands has to be paid off in 30 years, and your monthly payment schedule is set up accordingly. With most mortgage lenders you can make a yearly extra repayment up to 10-20 percent of your total mortgage loan. If you repay a bigger amount, you might have to pay a fine.

Tax relief for your mortgage in the Netherlands

The interest that you pay your mortgage lender in the Netherlands tax-deductible for annuity and linear mortgages, IF you live in the property yourself. If you also own a home in another country or work abroad, you might not be edible for tax relief. Because of tax deduction your taxable income decreases and do you have to pay less income tax. This can reduce your gross monthly mortgage cost by more than a third. 

Get yourself a house ánd a mortgage in the Netherlands

So, you now know the basic requirements for a mortgage in the Netherlands. For more information about the Dutch housing market and smart tips for bidding and negotiating, join our free housing workshop.

Prefer a personal advice? Book an appointment with our mortgage brokers for instant clarity about your mortgage options in the Netherlands and budget to buy a house. Free of charge and without obligation. 

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