Understanding Nationale Hypotheek Garantie (NHG) for Expats in the Netherlands

We understand that navigating this country’s mortgage market is not an easy task for expats living in The Netherlands. One important aspect to consider when buying a home here and applying for a mortgage is the Nationale Hypotheek Garantie, commonly referred to as NHG. NHG is a mortgage guarantee scheme designed to provide financial security to borrowers and lenders.

In this blog, we will explore what NHG is, its benefits, and how it can be beneficial for expats looking to buy a home in the Netherlands.

What is Nationale Hypotheek Garantie (NHG)?

Nationale Hypotheek Garantie, translated as National Mortgage Guarantee, is a guarantee scheme introduced by the Dutch government to promote responsible lending and homeownership. The primary objective of NHG is to protect both borrowers and lenders in the event of mortgage default, offering security and favourable terms for borrowers and reducing the risk for lenders. In our clientele it is often first-time buyers that are applying for a NHG mortgage.

Benefits of NHG for Expats:

Lower interest rates: One of the significant advantages of NHG is that it often allows borrowers to secure lower interest rates compared to regular mortgages without NHG. In regular mortgages without NHG it is the loan-to-value ratio that determines your interest rate with a mortgage provider. Often first time buyers are want to borrow 100% of the property value and their rate will be higher than in case they would put down a large down payment. The reason is that with a lower loan-to-value ratio there is less risk for a mortgage provider. NHG mortgage are generally classified in the utmost lowest risk category and having a mortgage with NHG can result in substantial long-term savings, making homeownership more affordable for expats.

With NHG, expats may have the opportunity to borrow a larger amount, as lenders typically take the lower risk associated with the guarantee into account. This can be particularly beneficial for those looking to purchase a higher-priced property or for those with limited funds for a down payment.

NHG also offers more favourable terms than with a regular mortgage for home-buyers. For example with NHG, if you can no longer afford to live in your property due to a divorce, unemployment, disability or partner death, and you are forced to sell your property but at a lower price than your outstanding mortgage debt, they could arrange a debt reduction or pardon with the mortgage provider.

Eligibility for NHG:

To be eligible for NHG, expats must meet specific criteria, including:

1. Maximum property value: The property’s value must fall within the NHG limits, which are revised annually. It is important to consult with one of our mortgage advisors to determine the current limits.
2. Maximum mortgage amount: The NHG guarantee has a cap on the mortgage amount, which is also adjusted annually. The maximum mortgage amount takes into account the value of the property and possible renovations or energy saving measures.
3. Primary residence: NHG is only available for borrowers who intend to use the property as their primary residence. It is not applicable to second homes or investment properties.
4. Mortgage affordability assessment: Expats must undergo a thorough affordability assessment by the lender to ensure they can comfortably repay the mortgage. The assessment typically considers factors such as income, expenses, and existing debts. An NHG mortgage application is generally more strict than a regular mortgage application.

There is however a downside to NHG mortgages, its not for free. You have to pay a one-off commission for NHG that is 0,6% of the initial mortgage amount. Like some other mortgage related expenses, this commission is tax deductible. For most clients this commission is earned back within three years. If you are not sure if you plan to stay in The Netherlands that long, you could opt to skip NHG for that reason.

No-obligations mortgage meeting

For expats planning to buy a home in the Netherlands, understanding the benefits of Nationale Hypotheek Garantie (NHG) is important. NHG offers various advantages, including lower interest rates, increased borrowing capacity, and enhanced security for lenders. By meeting the eligibility criteria and securing an NHG-backed mortgage, expats can enjoy favourable loan terms and greater peace of mind. To explore NHG options further, it is recommended to consult with our mortgage advisors who can provide personalized guidance based on individual circumstances.