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.
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