What mortgage types are there for expats in The Netherlands?

You generally have 3 different types of mortgages in the Netherlands you can choose from: annuity, linear or interest only.

Type 1: Annuity mortgage

Most expats in the Netherlands choose an annuity mortgage. With an annuity repayment scheme, you pay a fixed monthly amount to the bank during the whole course of the mortgage. This amount consists of interest and loan repayment. The ratio of interest vs loan repayment shifts as time progresses. During the first couple of years, your monthly payments largely consist of interest and just a small amount of loan repayment. However, over time and as your debt decreases, the amount of interest decreases, and your loan repayments increase.

With an annuity mortgage, you are eligible for a tax rebate of interest. You really take advantage of it but over time the tax rebate decreases. This means your net monthly payments increase over time (even though the gross mortgage payments stay the same).

Type 2: Linear mortgage

Your second option is a bit more straight forward, the linear mortgage. When you choose a linear mortgage your loan repayment is the same every month (30 years = 360 months: so you divide the mortgage amount by 360 to calculate the monthly loan repayment). Besides the loan repayment, you will also pay interest every month. As your outstanding mortgage decreases, every month so do your interest payments. With a linear mortgage, you initially start with high mortgage payments, and over time they decrease.

With a linear mortgage, you are also eligible for the tax rebate. As you are paying the mortgage back quicker compared to an annuity mortgage you will pay less interest over a 30 year period.

Type 3: Interest-only mortgage

Since 2013 interest-only mortgages kind of disappeared from the stage in The Netherlands due to new regulations. To summarize it, the tax rebate disappeared on newly closed interest-only mortgages and it is maximized at 50% of the total mortgage. Recent trends however show that they are making a comeback.

An interest-only mortgage means that every month you only need to make interest payments. As you do not have loan repayments it really decreases the monthly mortgage amount. But there is no tax rebate and at the end of the whole mortgage, you still have an outstanding debt that the bank will be keen to collect. With current low-interest rates, the tax rebate is not so high anymore, so the benefit of a linear or annuity mortgage compared to an interest-only mortgage without tax rebate is not as big as it used to be. If the rates would increase in the future it is likely that interest only mortgage becomes less appealing.

Which type of mortgage suits you best?

This really depends on what works for you. Overall we can recommend an annuity mortgage for young families with higher expenses or workers at the beginning of their career anticipating a higher income in the future. A linear mortgage fits people expecting a decrease in their income (i.e. want to work less in the future or close to their retirement) or with very high incomes. An interest-only mortgage (maximum 50% – the other 50% being annuity or linear mortgage) is for those looking for the lowest possible monthly expenses and will have other means to pay off the remaining debt at the end of the mortgage.

Sometimes a combination of mortgage types is recommendable, such as 50% annuity with 50% linear or 70% annuity with 30% interest only. Also, don’t forget with every bank you can pay off an additional amount (most often up to 10% of the mortgage) per year without a penalty. If you prefer some flexibility then opt for an annuity mortgage where you can decide at the end of the year if you want to put some extra savings towards the mortgage or another purpose.

Our advisors would happily show you some different mortgage scenarios and what your monthly expenses would look like.

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Why you CAN buy a house in the Netherlands (Even if you’re an expat and aren’t planning on staying forever)

Has it ever crossed your mind to buy a house in the Netherlands? Has the Netherlands become your home more than you consider your native country to be your home? So much so that you don’t ever see yourself leaving the Netherlands again. Or, are you just thinking about making a good investment by buying a house? Well, we’ve got great news for you in both cases!

Expats are allowed to buy property in the Netherlands. You don’t necessarily have to sell your house when you leave the Netherlands again because even if you’re not a resident you can own a home here. Renting out that home could make you a nice (2nd) income.

But, if you feel that’s too much trouble, you can also just sell your house because the bank doesn’t restrict or penalize you from doing that. There are plenty of possibilities to repay your mortgage early, even when you’re not selling your house.

Mortgages in the Netherlands

What mortgage options do you have if you’re interested in buying a house in the Netherlands? There are many types of mortgages being sold in the Netherlands but only two of those types (as of now), have the added benefit of making you eligible for the ‘hypotheekrenteaftrek’ ( tax rebate on the own residence mortgage interest).

The hypotheekrenteaftrek or mortgage interest deduction is a deductible that makes it possible to deduct the interest you’re paying for your mortgage from your annual tax filing. The hypotheekrenteaftrek lowers your annual gross salary which means you have to pay fewer taxes. You can even deduct your mortgage interest when you’re using the 30% ruling.

To be able to use the hypotheekrenteaftrek, your mortgage needs to be set up so that it’s completely repaid within 360 months. Currently, there are two types of mortgages that comply with that rule. Those are the annuity mortgage (where the payment is low and stable) and the linear mortgage (where the payment has a fixed higher repayment schedule, and where you pay back quicker which results in less interest overall).

Fixed interest rate period

It’s common in the Netherlands to agree on a fixed-rate period for your mortgage. Common periods to agree upon are 5, 10, and 20 years. As the rates are very low at the moment, people do tend to opt for longer rates as of 15-yrs+.

The biggest advantage of a fixed-rate period is knowing the interest you have to pay every month is the same and you have certainty over your mortgage payment for a long period. A disadvantage could be agreeing on a rate and the rates decrease so you’re paying more than you would have when you’d have a variable rate.

If you do agree on a fixed-rate period, the interest rate you agree on is a bit higher for a 20 year period than for a 5 year period. But since the current interest rates in the Netherlands have never been this low we think it’s smart to agree on a fixed-rate period. But this is also very dependent on your personal situation and views.

Mortgage rules

• As of now, your mortgage can’t be higher than your house’s value
• Costs like advisory costs, notary costs, and taxation costs can’t be financed into your mortgage loan.
• If you earn more than €33.000 a year, you can get a mortgage increase of a maximum of €9.000 when you buy an energy-efficient house. You can also finance things such as solar panels to make your house more energy-efficient with your mortgage.
• If your house uses as much energy as it creates, you can get an extra €25.000 on your mortgage.
• If a couple has two incomes, the second income is accounted for 80% of the mortgage.
• To protect homebuyers, mortgage brokers are required by law to give their clients 14 days to think about an offer they made. Within those 14 days, the offer can only be changed in favor of the client. The mortgage broker also needs to disclose the fine they will give their client when the client wants to repay their mortgage sooner than has been agreed upon. The fine can’t be higher than the costs the mortgage broker has of the early repayment.

That was a lot of information. Hopefully, it will help you on your journey to buy a house. If you need help with your mortgage, we’re happy to help you. Just contact us at info@inexpatfin.nl or give us a call at +31 (0)85-0580056. Since we’re licensed in the Netherlands to set up your mortgage, you won’t have to pay any other fee than the fee we’ll charge if you decide to take out your mortgage with us.

We can even help you set up your utilities, home insurance, and your home’s contents insurance after you’ve closed your mortgage. That way you can move into your new home and be safe, sound, warm, and secure right away.

We are happy to provide you with more

information or advice about mortgages

If you have any questions about expat mortgages in the Netherlands, types of mortgages, or need advice on what mortgage fits best in your situation, we are happy to provide you with valuable information.

Fill out the form below, and we will be in touch with you soon.

What costs do I need to be aware of when buying a house?

The costs are probably the least favorite part of buying a house. But being prepared can save you a headache later on. When you buy a house in the Netherlands, you can get a mortgage for up to 100% of the property value. Your mortgage comes a long way but up to an estimated 6% of costs will need to be paid out of your pocket. Need some more explanation?

We made a list of 8 items that you can expect when buying a house in the Netherlands. In our example, the costs are for a house valued at € 300.000.

1. Mortgage advice and mediation – € 2.395

This is us (our fee for first-time buyers). We work with fixed fees for different types of clients and offer a competitive rate in the expat clients market. All our fees are listed on our website so that you have a chance to view them upfront and compare them to other mortgage advisors.

2. Market value report – € 500

To obtain a mortgage the bank will always want the property value to be determined. A certified real-estate agent can conduct a valuation and submit a report on your behalf. The value in the report is not necessarily the same as what you agreed to pay for the house. If it is not the case, you probably need some extra savings. A market value report will generally cost between € 400 and € 600.

3. Notary costs – € 1.500

At the notary two different deeds will need to be drafted, one for the transfer of the ownership and one for the mortgage with the bank. Notary tariffs can differ hugely and therefore always advisable to collect a couple of different quotes. Besides the deeds you will also need to pay for the registration of the documents.

4. Bank guarantee – € 300

When you buy a house you will generally need to make a deposit of 10% of the purchase price. Often clients do not have this and therefore ask a bank to guarantee this amount instead. Most banks charge a fee of 1% over the amount they are a guarantee for.

5. NHG commission – € 2.100

NHG translates to National Mortgage Guarantee. This is an insurance that in case you are not able to pay your mortgage a government-supported foundation will help out. As of 2020 you can apply for NHG if you bought a property up to € 310.000. The commission you pay is a one-off 0,7% of the mortgage amount. means less risk for the bank and you will be awarded a better interest rate. For homes over € 310.000 there is no NHG.

6. Real-Estate agent – € 3.000

Having a real-estate agent by your side is definitely recommendable. Particularly if you’re an expat as you often don’t speak the language nor have the experience of buying a house in the Netherlands. The costs for a real estate agent can vary quite a bit between them and also depending on how many services you require. On average the fee is 1%. You are however not obliged to use a real estate agent. If you think this amount is too steep and are capable to hunt for places on your own, we also offer a purchase guidance service at a reduced rate.

7. Technical inspection – € 350

Buying an older house or want some extra security regarding the state of the house? You can request a specialist to conduct a technical inspection. He or she will amongst others check for mold, cracks, rust, woodworm, asbestos, and safety issues.

8. Transfer tax – € 6.000

When buying a home you pay transfer tax to the government. The transfer tax is currently at 2%. You do not pay transfer tax when buying a newly built home.
Most of these costs are due when you go to the notary to sign the deeds and collect your keys. On the plus side, all costs related to the mortgage are tax-deductible (mortgage advice, the market value report, mortgage deed, and NHG commission). You just need to find someone to help you with that tax application!

We are happy to provide you with more

information or advice about mortgages

If you have any questions about expat mortgages in the Netherlands, types of mortages, the costs of buying a house in the Netherlands or need advice on what mortgage fits best in your situation, we are happy to provide you with valuable information.

Fill out the form below, and we will be in touch with you soon.

What is ground lease and how does it work?

Are you about to embark on a new adventure? Have you decided to move to the Netherlands to work as an expat? That is undoubtedly very exciting. Perhaps it’s also a bit stressful since there are so many things going through your mind right now. There are a lot of things you need to arrange and consider before actually getting on that plane. One of the most important arrangements to make involves housing. Because well, you don’t want to live under a bridge, now do you?

Maybe you’ve already heard from friends or acquaintances that the prices for housing in the larger cities in the Netherlands are quite steep. But don’t worry, you’ll find a comfortable home away from home. To support you on your quest, let’s take a look at the ground lease system in the Netherlands. What is it and how does it work?

The definition of ground lease

So, what is ground lease? In Amsterdam, the capital of the Netherlands, the vast majority of properties are built on land which is owned by the city. This means that the municipality charges a fee for the use of the land. This, in a nutshell, is the ground leasing system. You’ll find this system in many large cities in the Netherlands. In fact, you can compare long-term ground leases with leases. When you buy an apartment, you don’t buy the ground on which the apartment stands. You instead sign a lease for the right to use the ground for a certain period, a timeslot. You pay the City a fee to do so, which is called the ground rent.

Type 1: Continuous ground lease

There are two types of ground lease in Amsterdam. Let’s have a look at the first type: the continuous ground lease. As the name already suggests, this type of lease is continuous. This means that the ground rent is adjusted only every 50 or 75 years. Towards the end of this timeslot, the value of the ground will be recalculated.  Based on the adjusted value of the ground, the ground rent will be adjusted. So if the value of the ground has risen significantly, the ground rent will increase accordingly.

Type 2: Perpetual ground lease

The second type of leasing ground in Amsterdam is the perpetual ground lease. If this lease agreement is in place, fixed ground rent is agreed upon. This fixed ground rent will remain the same permanently or in perpetuity. Whereas the ground rent can be adjusted in a continuous ground lease, it will never be adjusted in the perpetual ground lease. Even if the value of the ground increases in value after a period of time, the ground rent will not be affected. There will never be any sudden, major increases in ground rent. Thus, the risk of future fluctuations in ground rent is annulled with perpetual ground leases.

Hopefully, you’ve gained some insight into the ground leasing system in the Netherlands, and especially large cities such as Amsterdam. With this information, you will be able to make the necessary arrangements and find your home away from home!

We are happy to provide you with more

information or advice about mortgages and insurances

If you have any questions about expat mortgages in the Netherlands, types of mortgages, expat insurances or need advice on what mortgage fits best in your situation, we are happy to provide you with valuable information.

Fill out the form below, and we will be in touch with you soon.