This step-by-step guide explains how to secure a mortgage in the Netherlands, including Dutch mortgage calculators, Dutch mortgage rates and mortgage brokers for expats.
No restrictions are placed on foreigners buying Dutch property and taking out a mortgage in the Netherlands, even foreigners classed as non-residents. Securing a Dutch mortgage (mortgage in Dutch is hypotheek) is thus facilitated by mortgage lenders that offer specialised expat services, such as English-language contracts or other special features related to expat mortgages in the Netherlands.
The Dutch government has encouraged home ownership for many years, offering tax exemptions on Dutch mortgage payments alongside other benefits for homebuyers in the Netherlands. However, following the 2008 financial crisis regulations were tightened, making it harder for some people to get a Dutch mortgage – although expats are typically not affected if they earn attractive salaries. However, like everywhere else, the self-employed and other groups may now find it harder to get a good deal as banks consider them to be more risky.
As the Dutch housing market continues to show signs of improvement, independent mortgage broker Expat Mortgages advises expats to weigh the benefits of buying a Dutch property and securing a Dutch mortgage in a country where home-ownership is the norm, with owner-occupied properties making up some 60% of the total housing stock.
Expat Mortgages is an independent mortgage broker for expats who want to buy a house in the Netherlands and need a mortgage to realize their homeownership dream. For more than ten years, they have become a specialist in providing expats of all nationalities with home financing solutions, walking them through the entire process from the mortgage application to life insurance and tax advice.
Guide to Dutch Mortgages
This guide explains:
- Dutch mortgage rates
- Mortgage calculators in the Netherlands
- Cost of getting a mortgage in the Netherlands
- Tax refunds on Dutch mortgage payments
- How to apply for a Dutch mortgage
- Types of Dutch mortgages
- What is the National Mortgage Guarantee (NHG)
- Your maximum mortgage amount is not only be based on the LTV ratio but also your income. From 2017, the income of your partner will have a greater effect in determining your loan maximum limit, increasing your buying capabilities as a couple.
- From 2017, the government-set mortgage limit was reduced by 1 percentage point to 101% of the property purchase price; although, banks typically charge an extra interest rate of 0.5% if a mortgage is higher than 80–90% of the property value.
- The mortgage limit will be reduced by another percentage point in 2018, to 100%, after which no further reductions are currently planned.
- Mortgages rates in the Netherlands continue at historically low levels of around 1.5–2.0% on a 10-year fixed loan, in line with the lowering of the Euribor in recent years.
Should you rent or buy a property in the Netherlands?
In the five years following the onset of the financial crisis, property prices in the Netherlands plummeted more than 20% and left many homebuyers with mortgages that exceeded the value of their Dutch property. However, the Dutch housing market upswing that started mid-2013 is predicted to continue through 2017, as the Dutch economy and consumer confidence improve and interest rates remain at historical lows. These conditions have turned the Dutch housing market into a buyer’s market – particularly for first-time homebuyers – and increased local and foreign investment is pushing property prices back up again.
In contrast, rental prices remained relatively stable over the same period, and are showing significant growth as the economy recovers; in 2015, for example, housing experts said rental prices doubled in the main cities of Amsterdam, The Hague, Utrecht, Rotterdam and Groningen. Rental housing platform Pararius recorded the average rental price in the Netherlands in 2016 at around €1,365 a month but in Amsterdam the average was €2,200 per month, while in Rotterdam the average was around €1,200 and in The Hague €1,500. One main cause is the short rental supply in the private sector, which accounts for only some 5% of total housing stock, with the remaining rental stock classified under the social housing sector, which has long waiting lists and restricted to those on high salaries. Read more about renting in the Netherlands.
In comparision, as a result of low interest rates, in some cases it is possible to secure a mortgage lower than the average rental prices. However, costs associated with buying property in the Netherlands total around 6% of the purchase price, thus buying Dutch property is more suitable for long-term investments, at least a minimum of five years.
There are no formal restrictions for non-Dutch citizens buying Dutch property or applying for a Dutch mortgage. However, if you are relatively new to a job or area, self-employed, on a low income or of a non-EU nationality, these may result in a stricter lending criteria.
Each bank has different requirements but as a rule, if you’re from the EU, they will probably expect you to have a valid passport, have lived in the Netherlands for at least six months, have a citizen service number (BSN) and have permanent employment in the Netherlands. You may need to pay a deposit and be limited to a maximum mortgage of 90% of the property value, although the Netherlands does allow mortgages of the full value of a property.
Regardless of nationality, if you’re employed you will need to show proof of income (eg. a permanent employment contract) and a statement from your employer (werkgeversverklaring) with details of your contract and salary. Temporary workers and university researchers/PhD students will need statements from their employers/universities confirming their position. Self-employed people need to supply the last three years’ income tax returns and accounts.
Mortgage rates in the Netherlands can be as low as 1.5–2% on a 10-year fixed loan, some of the lowest ever recorded Dutch mortgage rates. In the current environment, it is also possible to fix low Dutch mortgage rates for up to 20 or 30 years, which has been a popular option as Dutch mortgage interest rates don’t have much room to go lower but experts predict interest will likely increase in the coming years.
As a rough guideline, you can borrow up to five times your gross salary, although dual-income households can typically borrow more. There is no mandatory minimum deposit, and in 2017 a mortgage can cover up to 101% of the purchase price of the property (to be reduced by 1 percentage point per annum until it reaches 100% in 2018). New laws introduced in 2016 mean that owners of energy-neutral homes will qualify for higher mortgages.
If you can’t repay your mortgage loan, your home will be at risk of seizure. Therefore, it is advised to assess the monthly repayments required by your preferred plan, and determine whether you can afford them.
Buying a Dutch property and arranging a Dutch mortgage comes at a price, typically €5,000–6,000 (excluding your estate agent fees).
These costs will cover:
- Valuation fee, typically €300–400;
- Mortgage broker or advisor’s fee, typically €1,500–3,000;
- Administrative charges for associated products, such as insurance. Typically, life insurance is the expected minimum with an administrative fee of under €200 per person;
- Notaries charge as well, although as mortgage completion usually coincides with the sale completion there is typically only one charge, typically around €1,500.
- Costs related to the National Mortgage Guarantee, if applicable (see below).
Additionally, fees for estate agents are typically based on a percentage of the property purchase price.
In the Netherlands, it is possible to claim a tax refund on mortgage interest payments – even as an expat – provided the mortgage is a capital repayment mortgage (not an interest-only mortgage) and the property is your main residence. Thus, you typically need to be Dutch resident and paying taxes in the Netherlands to claim a tax exemption.
In 2017, the maximum refund was set at 50% of the interest, and will be further reduced at an annual rate of 0.5 percentage points until 2040. This refund deduction only affects those with a gross annual income more than €66,421; typically lower income earners can claim a refund of up to 42% of the interest.
If you are aged between 18 and 40 you can receive a tax-free, one-off contribution of €53,016 from your parents to buy a home, which will be increased to a maximum of €100,000 in 2017. However, a parent residing abroad can donate any amount tax free. Parents who used the one-off exemption in 2015 or 2016 will be able to increase their tax-exemption donation to €100,000 in 2017 as well. In addition, in 2017 a parent-child relationship will no longer be necessary to quality for the exemption.
The following are usually tax deductible:
- Valuation fee
- Mortgage broker’s fee
- Administrative charges for arranging the mortgage
- Notary’s fee
- NHG fee
- The mortgage interest.
Read more about tax advantages for expat homebuyers in the Netherlands.
In the Netherlands, a mortgage is formally arranged after you have made an offer on a property and it has been accepted. However, it’s important to make sure you have already investigated mortgage options and chosen your mortgage provider. They can give you a quote which, once you sign to agree the terms and conditions, will be valid for three months. It is usually possible to get an extension if the property transfer is going slowly.
Mortgages may be arranged directly with lenders (typically the larger banks) or via a mortgage advisor (hypotheekadviseur). There are a large number of mortgage brokers and advisors, and some firms, including Expat Mortgages, Independent Expat Finance and Oranjeland (whose particular focus is the south of the Netherlands), explicitly cater to expats. Additionally, according to the Financial Times, mortgage loans are increasingly originating from private funds acting on behalf of institutional investors (regiepartijen). Before the crisis, the main Dutch banks controlled around three-quarters of the Dutch mortgage market, but this landscape is increasingly changing as pension funds, insurance companies, small banks and foreign mortgage providers enter the market.
Large banks include:
- ABN AMRO – offers English-language mortgage sections on their website and advice tailored to expats on request.
- ING Bank (Dutch only).
- Rabobank (mortgages section in Dutch only).
- SNS (Dutch only).
In order to arrange a mortgage, an appraisal of the property must be made by a certified appraiser. This must be an objective third party – not the buyer’s agent nor the seller’s agent nor another interested party. It is advisable to have this done before you agree on a sale price as this could be a key piece of information. Structural surveys are typically not required to get a mortgage – your lender can provide you with the full list of what an appraisal must cover.
The mortgage deed must also be signed in front of a notary (notaris) and this is usually done at the same time as completion of the property transfer, by the same notary.
There are two main types of mortgages available in the Netherlands: a linear mortgage or an annuity mortgage. The critical point is that any mortgage must include a plan for paying off at least 50% of the loan during the loan period. Below is an explanation of the main Dutch mortgages available (including a translation for each mortgage in Dutch).
Linear mortgage (lineaire hypotheek)
The borrower repays a fixed sum each month, which covers the interest and a slice of the capital. Repayments are fixed over the entire period.
Annuity or repayment mortgages (annuïteiten hypotheek)
The borrower repays a fixed amount of the capital each month, plus a fluctuating amount of interest. Repayments will go down over the loan period.
There is a wide range of options available in both cases, covering most mortgage types found elsewhere, such as a fixed or variable interest rate and savings-offset accounts. Unusually, it may be possible to fix interest rates for long periods, up to 10 or even 30 years. Dutch mortgages are typically arranged for a period of 30 years.
Why can’t I have an interest-only mortgage?
In the years since the 2008 financial crisis, the Dutch government has instituted a range of measures that have affected the housing market and property purchases. This includes banning interest-only mortgages where the loan amount is greater than 50 percent of the value of the property. If you are not a first-time buyer, it may be possible to get a combination mortgage, where part of the mortgage is interest-only and part a repayment mortgage.
The NHG (Nationale Hypotheek Garantie) is a scheme that guarantees repayment of a mortgage, even if the borrower becomes unable to do so directly. It is only available for mortgages up to a certain value (€247,450 in 2017). Taking into consideration the maximum mortgage of 101%, the maximum purchase price (if you want to be covered by NHG) is €245,000.
Should you become unable to repay the mortgage, the NHG ensures that:
- you will not be liable for any sum over the value of your property when it is sold;
- the lender will be repaid in full.
This means that if, for example, you become unemployed and can no longer repay your mortgage, your property will still be seized and sold. However, if the value of your property is lower than the value of your mortgage (eg. your home sells for €150,000 but your mortgage is €200,000), you will not be liable for the difference.
The NHG reduces the cost of lending, and lenders in turn offer NHG participants a lower interest rate, typically up to 0.7% lower.
The application fee for the NHG is 1% of the mortgage value. This means that if you buy a property that costs €140,000 and put €40,000 down upfront, the mortgage value will be €100,000 and the application fee will be €1,000.
Click to the top of our guide to Dutch mortgages.
This information is provided as a guide only. It is always advised to seek the help of a specialist as each individual case is different.