An overview of changes for Dutch mortgages in 2022

At the start of every new year there are some changes in the rules concerning mortgages. We have summarized the main changes that impact home owners and new mortgage applications.

1. Tax rebate on mortgage interest payments and expenses

The tax rebate on mortgage interest payments will drop for home owners with an income over EUR 69.398. Right now the rebate is 43% but this will drop to 40% at the start of the new year. Similarly the tax rebate will also drop on the one-off mortgage expenses such as a valuation, mortgage advice and mortgage deed & registration fees.

2. Transfer tax

The new transfer tax exemption for buyers under 35 buying a property up to EUR 400.000 in which they intend to live will remain 0% (instead of 2% or 8%). If you have previously received this exemption you cannot get it on your next property.

3. NHG limit & commission

Next year you will be able to apply for a NHG mortgage on properties with a value up to EUR 355.000 (currently the limit is EUR 325.000). The commission you pay for the NHG mortgage will drop to 0,6% of the mortgage amount (right now this is 0,7%). You also get a tax rebate on this commission. If you want to finance energy saving measures on a NHG mortgage the limit is in total EUR 376.300.

4. Impact of a private lease car on your maximum mortgage

If you are personally leasing a car all mortgage providers consider this as an outstanding loan during a mortgage application. Till now 65% of the lease agreement value was registered with BKR (the Dutch credit registration institution), but will now be listed for 100% as of April 2022. If you have a private lease car this make a big difference on your maximum mortgage (expect to be able to borrow EUR 50.000 to EUR 150.000 less).

Get in touch

Lets us know if you want to discuss how these changes will affect your personal situation and mortgage eligibility.

Buying a new-build property 

The housing market in The Netherlands is very competitive. Every property that comes on the market is sold in no time with many bidders competing pushing prices up. In this article we will summarize some of the main points to consider if you might be interested in buying a new-build property. 

Advantages of a new-build property 

• • Bidding on a new-build home is unusual. The price for which the house is for sale is the purchase price. So you don’t have to worry about overbidding! You can also buy a new-build home V.O.N. (vrij op naam) which means no additional costs payable by the vendor. You therefore do not pay any transfer tax which is mostly 2%.

• • Buying a new-build property also allows you to customize the lay-out. If you buy a property from the start within a project, you still have the opportunity to make your wishes known. Whether it is two or three bedroom which you prefer, a living room extension or creating extra storage in the attic. On top of that the house can be furnished completely to your own style: kitchen, bathrooms, floors, doors etc. 

• • A new-build property must meet high standards. New properties often have a better energy label than A. You save a lot on your energy bill here. You will also receive a discount on your mortgage interest at a number of banks when you purchase an energy-efficient property. When buying a new-build home, you have little or no maintenance and warranty in the first few years.

Disadvantages of a new-build property 

• • New projects often work with a lottery. If you meet the conditions, you can indicate your desired construction number, sometimes several preferences. You will have to be patient and see if you are one of the lucky ones and whether you will also be offered the desired property.

• • You also often have to wait for some time before you can move into your home. On average, it takes a year, but there are certainly projects that take two years.

• • You must take into account your current monthly payments for your current home and the new mortgage payments during the construction period. As soon as the mortgage has been approved and construction has started, you can go to the notary. At the notary you sign the deed of transfer for the land and your mortgage is registered in the land register. You then officially have a mortgage in your name, the mortgage amount becomes available and you pay mortgage interest and repayment every month. You typically only pay the interest on the amount withdrawn from the mortgage. In the beginning this will only be the sum of the land costs. You pay for the construction in installments. You will receive an invoice every time a part of the property has been completed. On average, the construction cost is split into 10 installments. So, you pay your mortgage every month even though you have not yet moved in. You may be able to co-finance the mortgage costs in your mortgage during the construction period.

• • Lastly, the delivery date may be postponed due to delays. Construction companies are currently short of materials and workers. So always take into account delays!

Our new-build mortgage specialists are happy to help you

One of our new-build mortgage specialists would be happy to tell you everything that is important if you are interested in new-build projects in The Netherlands.

Refinance your mortgage – explained for expats in The Netherlands

Mortgage interest rates in The Netherlands are currently very low. In fact they are lower than they have ever been and it is expected that they could be increasing again according to forecasts of banks such as ABN AMRO and ING. This means there could be an interesting opportunity for home owners to refinance your mortgage and get long term security and lower monthly payments. In this blog we will explain how refinancing works and what the pros and cons are.

Why is now a good time to refinance your mortgage?

If you have already had a mortgage for a few years your interest is likely locked at a higher interest rate than current rates. If you would refinance your mortgage it means your monthly mortgage costs would decrease. By choosing to fix your interest for a longer period of time such as 10, 20 or even 30 years, you can get long term security on your monthly payments and lower expenses. 

When is refinancing an interesting opportunity?

With low interest rates and the expectation of higher rates in sight it is possible to get lower monthly expenses and security for a longer period of time. But also if you are getting close to the end date of your current interest fixed term but don’t want to run the risk of rates increasing in the meantime, now is a good time to check what the options are with refinancing. We also have many clients that want to renovate their home and choose to combine refinancing their mortgage with a mortgage increase to pay for these renovations. Often in this way you could end up with lower monthly expenses, your renovations paid for by your mortgage provider and more security. 

When is refinancing a bad idea?

The goal is to get more security and or lower monthly expenses. If the penalty to cancel your current mortgage and other costs is large compared to the benefit of the lower interest rate you could get it might not make sense. We can calculate for you how quick you can earn the penalty back. As an expat you might also have expectations to be moving abroad again in the near future. In that case refinancing does not make sense as you would be paying for security you are not planning on using.

What costs will you need to pay when you refinance your mortgage?

The first expense you will come across is a penalty to cancel your current mortgage. How much the penalty will be depends on the outstanding mortgage amount, how long your mortgage interest rate is still fixed and the difference between actual interest rates and the one you are paying. You can always ask your mortgage provider what the penalty would be and if we helped you with your last mortgage we can even check for you. If you want long term security, in most cases you are better of refinancing. 

Next to the penalty you will also have to pay your mortgage advisor and in most cases you need a new valuation and go to the notary. All together the expenses can add up but you should know that these expenses are tax deductible and in many cases if your income allows it can also be included in a refinance and mortgage increase combination. We even work with a mortgage provider that will allow you to also refinance your personal loans into your mortgage over a 30 year period and against a much better interest rate. 

How can we help you?

We understand if this all can sound puzzling. That’s why we are here to help you figure it out by giving you insight in your options and our professional advice. Just know that our goal is always to get you lower monthly expenses and more security and we are here to share our expertise.

How long should I fix the interest for?

This is something clients often don’t think too much about. Yet, it is a strategic decision of what best fits your situation vs the costs. Generally, the longer the interest is fixed, the more security you get, but it comes at a price. We will explain the options out there and give advice for different type of situations.

Within the 30 year duration of a mortgage you can decide to fix the interest for different periods of time. By fixing the interest you will have security that the interest rates and your payments don’t constantly change. You can fix it for different terms such as 1, 5, 10, 20 or even 30 years.

Interest rates are right now at an all-time low. Many people in The Netherlands therefore think it is the perfect opportunity to fix it for a long period of time. We would like to point out some reasons why this is not necessarily true:

1. Fixing your interest for a longer duration comes at a price. For example, the difference between a 10 and 20 years interest fixed terms is about 0,4%. So even if the rates would be a little bit higher after 10 years and you need to renew, in many cases you would only have been better off going for a 20 years rate after about 13 or 14 years.
2. If we look at the historic interest rates in The Netherlands of 1, 10 and 20 years, you would always been best of to never fix the interest longer than 1 year. By doing so, you would have saved a huge amount in interest payments. But who knows what will happen in the future.
3. Even though rates are at an all-time low, we cannot look into the future. You wouldn’t be the first person who though that was the case already between 2015 and 2017 who now realizes that rates are about half again and regrets fixing it for so long. Many banks are also anticipating that the interest rates will also remain very low for the medium term.

Some general client situations and our advice:

• • • Young clients: we often recommend fixing your interest for 10 or 20 years so you don’t have too many risks. If you decide to move house, you can choose to take your mortgage with you or cancel it without any penalty and apply for a new one. If the interest will then be lower, you should go for the last alternative.
    • Elder clients: we often recommend fixing your interest for as long as possible. In this way once your retirement starts, you will not have any nasty financial surprises.
    • Clients expecting to move abroad again: If you are planning on either selling or switching to a buy-to-let mortgage in the foreseeable future, you will be best of fixing the interest for 1, 3, or 5 years. You will be charge less interest and if you would want to switch to a buy-to-let mortgage, the penalty for cancelling your mortgage could be substantially lower with a short interest fixed term.

The above are some general situations but do not apply for everyone. If for example you are very risk averse, then you should probably not fix your interest for just 1 year. Important questions you should be asking yourself are how long you intend to live in the home, how much risk is acceptable and if you can manage higher mortgage expenses if the interest rises.

Most of our clients fix the interest for 10 years, which is the sweet spot between a good rate and security. Something else which could make a difference for you is, that if you want to fix the interest for less than 10 years, your maximum mortgage borrowing capacity drops with about 25.000 – 50.000 euro. So for clients that want to borrow at their max fixing the interest shorter than 10 years is not even an option.

How can we help you? 

Our mortgage advisors would love to give you personal advice on this topic. 

Investing in Dutch real estate and buy-to-let mortgages

Last updated September 2023- Buying a property to rent out was an interesting opportunity in the past. Over the last two years regulations in The Netherlands have been introduced to try to stimulate personal home ownership rather than investment properties. This in combination with current interest rates for buy to let mortgages have made it less interesting or not possible for many clients. In some specific cases clients still want a buy to let mortgage or decide to hold on to their investment property. Our role as an independent mortgage advisor is to show you what is possible.

So what is a buy-to-let mortgage?

Let’s explain buy-to-let-mortgage. With a normal mortgage you agree to specific terms set out by banks. You may not rent out your property. Reason for this is that your property will be valued less with a tenant in it and they have tenant rights to protect them. A bank doesn’t want to your property to be valued less as this is a risk towards them.

A buy-to-let mortgage is specifically designed for investors that want to buy a property to rent out. You will receive a rental income from your tenants and on top of that the property value could increase over time. On the other side you will have to repay your buy-to-let mortgage and pay interest over the money you will borrow.

What are the requirements for buy-to-let mortgages?

The rules around buy-to-let mortgages are similar to those around regular Dutch mortgages, but there are some key differences:

• Interest rates on buy-to-let mortgages are approximately 1% higher compared to regular mortgages
• With a buy-to-let mortgage the bank requires a down payment of approximately 25% of the property’s rented state value (it can vary between 20-40%).
• Stricter affordability checks compared to a regular mortgage – the expected rental income should also always exceed the buy to let mortgage costs
• Most buy-to-let mortgages are on a full repayment scheme, but in some cases (partial) interest only is also an option
• There are far less banks / mortgage vendors offering buy-to-let mortgages then regular mortgages
• Higher fees for the valuation and mortgage advice

Any other ways to invest in real estate?

Yes. If you already own a home you could also check how much equity you have in it. You need to know the current value and subtract the outstanding mortgage amount. You could then increase your mortgage (if also possible on your income) with your current bank or choose to increase and refinance with another party. In all cases this way your interest will be lower than with a buy-to-let mortgage.

What about tax?

In the Netherlands rental properties are considered financial assets, which is taxed in Box 3. Therefor the rental income is not taxed in Box 1. There are different brackets in Box 3, so depending on how much financial assets you have you will pay a certain percentage.

Since January 2021 the transfer tax (stamp duty) on investment properties increased from 2% to 10,4%. This tax is on top of the 25% down payment.

How can we help you? 

Let us know if you want a referral for an appraiser or to book a free session to discuss your buy-to-let mortgage options. We are happy to help! 

Opportunities for homeowners in an overheated market?

Housing prices have steadily been increasing over the last few years in The Netherlands. What started with the bigger cities has now shifted towards the whole metro area “Randstad” and even more remote towns. Interest rates have been dropping and it looks like there is not much room to go any lower. How can this market situation benefit expat homeowners in The Netherlands? We can help you lower your monthly expenses by checking if your mortgage risk category is up to date and or by doing an analysis on the financial implications of moving to a new home.

Updating your mortgage risk category

If you originally financed more than 70% of your property value in a regular mortgage (for NHG mortgages this is not possible), then there is a big chance  you are still paying a surcharge for the risk category of your loan-to-value. Banks often (for example ABN AMRO and ING) do not update this automatically whilst you are paying your mortgage back. On top of that, with current prices increasing year after year you can expect your property has also significantly increased in value.

It can pay off to conduct a new valuation on your property or see what your yearly WOZ value is. If either of these states have a higher value then the market value at the time of buying, you should inform your mortgage provider. This will lower your loan-to-value and potentially update your risk category which can save you quite some money per month. 

Moving to a new house

Another way to lower your monthly expenses is to move to a new house. When you move you can cancel your current mortgage without a penalty. A new house in a slightly higher price range will in many cases lead to lower monthly expenses as interest rates are now lower than ever. You can also take your surplus value with you in a bridging loan if you have not sold your property yet. For example:

You own a home worth € 500.000. Your initial mortgage was set up in 2016 for € 300.000 with an interest of 3%. Right now your outstanding debt is € 250.000 and your monthly gross payment is € 1.265. If you would now buy a new home worth € 600.000 you could bridge € 250.000 from your current home and only require a mortgage of € 350.000. Due to the low loan-to-value you could get an interest of around 1,2% which would give you gross monthly expenses of € 1.158. So your gross payment per month would drop € 107 and you get a housing upgrade.

How can we help you? 

Let us know if you want a referral for an appraiser or to book a free session to discuss your mortgage options if you are considering moving house.

Insurances for Dutch expats
moving abroad

Care-free living, working or travelling abroad with the right expat insurances.

Working and living abroad for a while is a unique experience and is often interesting for your career. Even if you go abroad for a different reason than work and a longer period of time, for example; to go backpacking, become an au pair, do voluntary work, study or do an internship. Your insurances abroad should be arranged just as well as in your home country. We are happy to advise you in your new adventure abroad! 

What insurances do you need abroad? 

You determine yourself which insurance you want to include in your package. This way, you only insure the things you really need. Mostly, you need to make a selection from the following options: 

• Medical expenses
• Dental costs
• SOS-assistance 
• Private liability
• Travel baggage and cancellation fees
• Legal counsel
• Incapacity for work
• Accidents

Calculate your insurance premium

Interested in what your insurance premium abroad will be? Calculate your premium using the tool below. Are you a student? Then choose the option ‘Expat package for students’.

How can we help you? 

At Independent Expat Finance we can advise you in the right insurance package when moving abroad. We are an independent company and thus are able to give you unbiased information. Get in touch by filling in the contact form below and we will get back to you as soon as possible! 

Looking for independent expat insurances advice or more information about mortgages in the Netherlands? Check out our financial services!

The main mortgage updates you can encounter in 2021

Every year, the Dutch government, the Dutch Banking Association and Nibud update the mortgage rules in the Netherlands. The new rules and regulations took effect on the 1st of January 2021. But, what does this exactly mean for homebuyers in the Netherlands? We have made a summary of the main mortgage rules changes you can encounter in 2021. 

The NHG limit increase

NHG, meaning National Mortgage Guarantee, is a foundation that offers assistance to buyers in the lower segment of the market. With their support banks consider the mortgage to fall into the lowest risk category and you are able to get a better interest rate. To compare, for a regular mortgage with interest fixed for 10 years the going rate is about 1,50% and with an NHG mortgage it is 1,00%.

In order to obtain NHG you have to pay a one of commission of 0,7% of the mortgage amount. As of January 1st 2021 the NHG limit has increased from € 310.000 to € 325.000. In order to apply for an NHG mortgage it is important that either (a) you buy a property for not more than € 325.000 or (b) the property is valued at € 325.000 or less by an appraiser.

A new employer statement form

As of the 1st of January all mortgage providers require the latest employer statement form template for mortgage applications. Differently to the previous templates, if you are employed with a fixed term contract, your employer must now specify if they have the intention for a permanent position or again a new fixed term. The outcome of that will impact the mortgage application, as with the intention for a permanent position we can calculate with your current income as specified on the employer statement and with the intention for another fixed term we can calculate with the average income of the last three years.

Your company HR team should have the new template, otherwise you can download the form in Dutch or English from the NHG website. 

Maximum mortgage calculation and second income

It could be that in December you could borrow € 300.000 on your income and now in February only € 295.000, even if the interest rates stayed the same. This is because the formula to calculate the maximum borrowing capacity is slightly updated at the start of each new year. One of the elements that we know which has been updated is regarding the second income in case you are buying with your partner. In 2020 the second income counted for 80% in the mortgage calculation and in 2021 it counts for 90%. 

New transfer tax ruling

You’ve probably already heard of the updates with regard to transfer tax. Rather than having a rate of 2% for all purchases it has now been split up into 3 categories:

1) 0% tax – if you are under 35 years and buy a property below € 400.000 you can apply for a 0% transfer tax rate. Once you have used this deal you cannot use it anymore on future house purchase.

2) 2% tax – all purchase above € 400.000, or people over 35 or who have used the transfer tax deal in the past fall into this category.

3) 8% tax – this rate applies if the purchase purpose is an investment. So if you buy a property with the intention to rent it out and not live in it yourself you have to pay this highest rate.

Explore your options with Independent Expat Finance!

Anything about the mortgage updates unclear? Or perhaps now the time is right for you to purchase a home with the 0% transfer tax rate? Explore your mortgage options with a free intake that you can book here:

What happens to my mortgage when I sell my house and do I need to pay any penalties or taxes?

As an expat living abroad there is a big chance you won’t live in The Netherlands forever. We often get questions during a mortgage intake from clients what happens to the mortgage when you end up selling your Dutch home. Do you have to pay a penalty to cancel the mortgage or do you need to pay taxes over the capital gains?

Is there a penalty when you cancel your mortgage prematurely? 

No, when you sell your home and you cancel the mortgage you never have to pay a penalty in the Netherlands. Even if it is just after a few years or you are in the middle of an interest fixed term. A penalty is only due if you want to cancel your mortgage while you are in an interest fixed term and want to renegotiate your interest of change over to another mortgage provider for a better deal.

Do you need to pay taxes over the capital you gain?

So what happens if you end up with capital after your home is sold? In most cases you will end up with capital because either (a) you have been paying off your mortgage and or (b) your property is now worth more than you bought it for. Whatever the reason, over the money you end with on your bank account you do not have to pay any immediate capital gains tax or income tax.

Eventually you might need to pay wealth tax, currently this is applicable if you have more than € 50.000 in assets (Box 3: savings or investments) as a single person or with a partner € 100.000 between the two of you. How much wealth tax you have to pay to the Dutch tax authority depends on the value of your assets as of Jan 1st in the coming year. Don’t forget, your main residence that you live in in The Netherlands is not considered an asset in Box 3 but in Box 1 generally.

One rule worth noting: the “bijeenregeling”

There is one rule worth noting that is called the “bijleenregeling”. This stipulates that if you sell your house and end up with excess value and then buy a new home within 3 years, you will need to put the excess value towards the new home in order to get the full tax rebate again. You are however not obliged to and sometimes we see clients that rather prefer to leave a nice buffer on the savings account. With current low interest rates and tax rebates, this is not too much of a disadvantage and can be worth considering.

Book your free intake mortgage consult and explore your options with Independent Expat Finance

We would be happy to discuss your options if you’re planning on selling your home. Contact us to schedule a first intake which is always free of charge. For more information about mortgages in the Netherlands, click here! 

Prince’s Day mortgage update: 0% transfer tax for “starters”

Every third Tuesday of September it is Prince’s Day in The Netherlands. This marks the start of a new parliamentary year in which the government announces their plans for the coming year.

One of this year’s plans is to help starters (between 18 and 35) on the housing market. As of the 1st of January 2021, they will be exempted from paying transfer tax when buying a home. Normally the transfer tax is 2%, so on a new home of € 300.000 you can save € 6.000. To be exempted you have to meet the following requirements:

• Age between 18 and 35 (sorry 35 years olds and elders, you are excluded from this party)
• Have not previously used the transfer tax exemption
• Need to sign a declaration that you intend to live in the home

Some possible scenarios you might be wondering about:

“We are under 35 and just signed the contract for buying our first home. We planned to go the notary in December. Can we push the date back to January?”

If you push the date back you will save the 2% transfer tax. You will however need to firstly convince the sellers (maybe offer some form of compensation). Also, if you have already signed a mortgage offer you need to check if it is still valid in January. If not, you might need to cancel it or pay an extra fee to extend it.

“My partner is 37 and I am 32. We want to buy our first home. Are we exempt from the transfer tax?”

The regulation states that each individual will be reviewed separately. Your partner does not meet the criteria and will therefore have to pay 2% transfer tax over their share of the purchase (so 2% over in general half the purchase price). You do meet the requirements and therefore don’t have to pay any transfer tax over the other half. Between the two of you, you will pay half the transfer tax.

“We are both 28 and bought a house a few years back. We plan to buy a new home next year. Do we need to pay transfer tax?”

In contrast to what many people think, the regulation is aimed at young people rather than first time buyers. If you have not previously been exempt from this new regulation you also meet the requirements. So as long as you buy the new home before turning 35 you will be exempt from transfer tax.

Take advantage now

Due to the exemption young people that did not yet have enough savings to buy can now do so quicker. Other young people that did have enough savings will also have more flexibility to bid higher on properties. We expect this will push housing prices up further, especially in the lower and middle segment up to € 500.000. Therefore you have to wonder if it will have the desired effect in the long run or if it is just for those lucky few that can take advantage of it right now.

We would be happy to share more information on updates regarding the transfer tax or how it impacts your situation. More information about expat mortgages or expat insurances? Read more here. 

Update November 2020 – as of the 1st of April 2021 there will be a maximum purchase value for properties up to € 400.000 that will fall under this new exemption. This means that after this date if you buy a property over € 400.000 you will need to pay 2% transfer tax.