Mortgage in the Netherlands

How do residential mortgages work in the Netherlands?

In the Netherlands there are a large number of banks that are willing to give you a mortgage loan if you fulfill their requirements. Be aware that depending on your country of origin other conditions might apply to you. Our experts will look into your personal situation and can inform you about the conditions in your specific situation. 

Mortgage requirements

Here are a few of the basic mortgage requirements in the Netherlands.

• A mortgage needs to be paid off within 30 years
• You have to live in the Netherlands, whether this is temporary as an expat or if you are looking into immigrating. To get a mortgage as a (self-employed) expat, there are special conditions, check out expat mortgage page for more information
• The maximum amount of mortgage you get is calculated based on your income and the value of the house you want to buy with said mortgage.
• You (or your partner if you are buying a house together) need to have an income and your salary has to be paid in euros.
• You need to have a BSN (Dutch citizen service number)
• If you are not an EU or EEA citizen, you need to have residence permit

Mortgage types in the Netherlands

If you are a first-time home buyer, you are only eligible for tax-deduction if you take out an annuity mortgage or a linear mortgage. Consequently, these are the most common mortgage types today. There are also a number of other mortgage types. However, most mortgage types can no longer be taken out. Only if you are under the transitional law (if you took out your mortgage before 31 December 2012), you can still continue the mortgage for your next house. This section will break down the annuity and linear mortgages.

 
Annuity mortgage

An annuity mortgage is a type of mortgage where the monthly sum of interest plus repayment remains the same throughout the term. In the beginning of the term, you pay mainly a lot of interest and as the term progresses, you start paying off more. On the end date, the entire mortgage is repaid. An annuity mortgage has the following characteristics:

• The mortgage has a fixed end date;
• You repay periodically during the term;
• Your (gross) monthly expenses are the same every month;
• You have certainty of paying off the mortgage. 

Linear mortgage

A linear mortgage is a form of mortgage where you repay the same amount each month over the term. The interest you pay gets lower and lower, reducing your monthly expenses. The characteristics of a linear mortgage are:

• The mortgage has a fixed end date;
• During the course of the mortgage, you repay the same amount each month;
• You pay a high amount of interest at the beginning, but relatively little at the end;
• You have certainty of paying off the mortgage.

Mortgage interest rates

If you take out a mortgage you can choose a variable or fixed interest rate. The interest rate is an important part of your mortgage as this determines how high your monthly repayment amount will be.
With a fixed rate, also called a long mortgage rate, you fix the interest rate for a longer period. This period can vary from one to 30 years. The percentage you fix when you take out (or refinance) your mortgage does not change during the fixed-rate period. Interested in the current interest rates? We update the mortgage interest rates daily. Do not fixate too much on the lowest interest rates, choosing the right mortgage for your current and future situation mostly depends on the other mortgage terms as well. Our mortgage advisors ask you about subjects like your willingness to take risks, if you intend on working less in the (near future), how long you plan to stay in this house and many more to find the best fit for you.

 
Purchasing costs of the house

To buy a house there are some costs you need to take into account. The mandatory costs are tax deductible.

• Appraisal report
• Transfer tax (usually around 2% of the value of the house, unless you are under 35 years old and/or buying a new-build house)
• Notary deeds (around € 1,000)
• Mortgage advice and brokerage costs (approximately € 3.500)
• Realtor costs (optional)
• Technical building inspection (optional)

When you buy your home, you enter into a purchase agreement. In most cases, the seller will require you, the buyer, to pay a deposit or provide a bank guarantee after signing the sales contract. This gives the seller more certainty that you will actually buy the property. A deposit is usually 10 percent of the agreed purchase price and must be paid within two weeks of signing the deed of sale. If you do not have the money or do not want to deposit it yourself, you can have a bank guarantee drawn up. The bank will then guarantee that amount. If you decide to deposit yourself, the deposit will be reimbursed as soon as possible after you sign the notary deeds.

How do you get a mortgage in the Netherlands?

If you decide to buy a house and need to mortgage to do so, you can either contact a bank or an independent mortgage broker, or what is more common here: a mortgage advisor. A mortgage advisor will look at all the banks, including the well-known banks, and connects borrowers with lenders and seeks out the best fit in terms of the borrower's financial situation and interest rate needs. The mortgage advisor also gathers paperwork from the borrower and passes that paperwork along to a mortgage lender for underwriting and approval purposes.
 
Now you know the basics of the mortgage process in the Netherlands. The mortgage requirements might seem confusing and complicated if you are not familiar with the rules. At De Hypotheker we have over 180 branches and our experts are ready to help you navigate the process so you do not have to worry about anything. If you want to know what your options are and how this applies to your personal situation. Book an appointment with our mortgage advisors. The first appointment is free of charge and without obligation.