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.
If you’re moving to the Netherlands, you might be wondering how expensive it is to step on to the property ladder as an expat buyer. One of the ways that you’ll step onto this ladder is through Dutch mortgages.
In this guide, the independent mortgage broker Expat Mortgages offers advice expats to on Dutch mortgages, including rates, additional costs and application criteria.
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.
Should you buy a property in the Netherlands?
Buying a home in the Netherlands can be a very expensive business; some areas have seen unsustainably high levels of house price growth.
According to data from Rabobank, property prices increased by around 9% in 2018. In January 2019, the Dutch estate agent body NVM said prices appear to be reaching a ceiling – with the market overheated and the need for at least 80,000 new homes to be built each year.
As of February 2019, Dutch mortgages rates from the major banks are as follows (based on a maximum loan-to-value of 100%).
- Five-year fixed mortgage: 1.7–2.2%
- 10-year fixed mortgage: 2.2–2.57%
- 20-year fixed mortgage: 2.65–3.4%
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, you may find it harder to get a loan.
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 will generally be limited to a maximum mortgage of 90% of the property’s value; 100% mortgages are available from some banks, however. Regardless of nationality, you will need to show proof of income (e.g., a permanent employment contract) and a statement from your employer (werkgeversverklaring) with details of your contract and salary.
Temporary workers and university researchers/doctoral students will need statements from their employer/university confirming their position. Self-employed people need to supply the last three years’ income tax returns and accounts.
In the current environment, it is also possible to fix low Dutch mortgage rates for up to 20 or 30 years. This has been a popular option as Dutch mortgage interest rates don’t have much room to go lower. Experts predict, however, that 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. If you buy a home with renewable energy systems, you can borrow up to €9,000 extra when taking out a mortgage.
If you can’t repay your mortgage, 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. You can work out the maximum you can borrow and monthly loan repayments using a mortgage calculator.
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:€300–€400
- Mortgage broker or advisor’s fee: €1,500–€3,000
- Administrative charges for associated products, such as insurance: Typically, life insurance is the expected minimum with an administrative fee of less than €200 per person
- Notaries charge: €1,500
- Costs related to the National Mortgage Guarantee, if applicable (see below).
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 in the Netherlands 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 and Independent Expat Finance, explicitly cater to expats.
Before the crisis, the main Dutch banks controlled around three-quarters of the Dutch mortgage market. 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)
Arranging a mortgage
In order to arrange a mortgage, the property must be assessed 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 do this 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 is signed in front of a notary (notaris). This is usually done at the same time as completion of the property transfer by the same notary.
There are two main types of Dutch mortgages available: 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.
Linear mortgage (lineaire hypotheek)
The borrower repays a fixed sum each month, which covers the interest and a slice of the capital. Repayments occur at fixed times during the mortgage 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.
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 Dutch mortgages up to a certain value (€290,000 in 2019). Should you become unable to repay the mortgage, the NHG ensures that:
- you are not liable for any sum over the value of your property when it is sold;
- the lender is 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 (e.g., 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 is €100,000 and the application fee is €1,000.
In the Netherlands, it is possible to claim a tax refund on mortgage interest payments. This is possible, 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 2019, the maximum refund is 49% of the interest; this will be further reduced at an annual rate of 3% until it hits 37% in 2023.
This refund deduction only affects those with a gross annual income of more than €66,421; typically those with a lower income can claim a refund of up to 42% of the interest.
If you are aged between 18–40, you can receive a one-off tax-free contribution of €100,000 from your parents to buy a home. However, a parent residing abroad can donate any amount tax-free.
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.