National Mortgage Guarantee (NHG) limit increases to € 450,000 and participation becomes cheaper

The Dutch National Mortgage Guarantee (Nationale Hypotheek Garantie, or NHG) is set to undergo changes in 2025, as the maximum mortgage limit will increase to € 450,000. Additionally the cost of enrolling in the NHG program will be substantially reduced from 0,6% of the mortgage amount to 0,4%. This will make it up to €1,000 cheaper for homebuyers to participate in the scheme.

Higher NHG limit for mortgages

 

NHG is a financial safety net designed to protect homeowners who face difficulties in paying their mortgages due to unforeseen circumstances, such as passing away of a partner or divorce. At the moment NHG covers mortgages up to € 435,000. However, from 2025, the NHG limit will be raised to € 450,000. This increase reflects the rising house prices across the Netherlands, providing more homeowners access to the program.

 

Moreover, if homeowners take energy-saving measures such as installing insulation, solar panels or HR++ windows, they will be allowed to borrow even more. In these cases, NHG limit will be raised to € 477,000, encouraging sustainable home improvements.

 

NHG as a safety net for homeowners

 

The primary purpose of the NHG is to protect homeowners from being burdened with residual debt if they can no longer meet their mortgage payments. If homeowners fall into financial distress, a mortgage advisor can possibly provide more assistance to work out an arrangement that allows the homeowner to remain in their home.

 

NHG also provides an advantage by reducing the interest rate homeowners pay to the bank. This is because the Dutch government guarantees the NHG, which lowers the risk for banks, translating into lower interest rates for borrowers. Often the interest rate is with NHG is 0,5% lower vs the rate of a regular mortgage when financing 100% on the value of the property.

 

Reduced participation costs

 

One of the key changes coming in 2025 is the reduction in the fee homeowners must pay to participate in the NHG scheme, known as the guarantee fee or “borgtochtprovisie.” This fee will be reduced from 0.6% to 0.4% of the mortgage amount. For someone taking out a mortgage at the new maximum limit of € 450,000, this reduction translates into savings of approximately € 1,000.

 

NHG’s widespread usage and growing fund

 

Around 40% of all homeowners in the Netherlands have a mortgage secured with an NHG guarantee. Despite the growing popularity of the NHG program, it is notable that the increase in the NHG limit does not fully keep pace with the rapid rise in housing prices. While the NHG limit is set to rise by about 3.5%, house prices in 2024 have risen by approximately 12%.

 

The reason for this discrepancy is that the NHG limit is calculated based on house prices from the past 27 months, which are lower than current market values. As a result, the NHG cap doesn’t fully align with today’s housing costs, potentially leaving some homeowners outside the program’s coverage range.

 

NHG’s expanding role

 

The rising house prices have also resulted in a growing reserve fund managed by NHG. This fund, which now stands at € 1.7 billion, is set aside to assist homeowners in financial distress. In 2023, only 30 homeowners who encountered mortgage problems required help from this fund. As the reserve continues to grow, NHG is exploring new ways to use the money to address broader housing challenges.

 

Conclusion

 

The changes to the National Mortgage Guarantee in 2025 aim to make homeownership more accessible and affordable for Dutch buyers, especially given the rapid increase in house prices. The higher mortgage limit, combined with lower participation costs, provides a stronger financial safety net for homeowners. As of the end of December 2024 home buyers can make use of the new NHG limit and lower fee. If you want more information reach out to us to schedule a call with one of our mortgage advisors.

Request a free intake meeting

 

If you would like to discuss the current housing market and mortgage landscape, you can always reach out to us or to Nick from Your Dutch Home for an online intake session. These sessions are always free of charge.