Buying residential properties, e.g. an apartment or a house in the Netherlands, can be expensive. Therefore, unless you have a large amount of savings, you will probably need to take out a loan or mortgage with a lender to enable you to purchase your property. Even if you are only temporarily living in the Netherlands, it may be practical to purchase a property as your home during your stay. You will then have the option to either sell or rent out the property when you leave. If you want to rent your property out, you need permission of your bank. The type of hypotheken (mortgages) that you will be entitled to access will depend on your income level. The banks offer a wide range of mortgages but these are the elements that you should consider:

• the amount you borrow (the capital)
• the amount of interest you pay on the loan
• the duration or ‘term’ of the mortgage

By considering these three factors, you need to decide the most appropriate method for you to repay the loan. All the major Dutch banks provide mortgage lending facilities for individuals wishing to purchase a residential property.

The total amount that you will be allowed to borrow will be determined by your bank or mortgage provider. This will depend upon a combination of how much you can afford to repay each month and the duration (term) for repayment. A longer repayment term will typically reduce your monthly payments, but will ultimately cost you more in the total interest paid on your loan.

Due to recent stricter mortgage guidelines published by the government and the Financial Markets Authority, the Dutch banks and other mortgage lenders are now required to operate within a new code of conduct. This provides standards on how much you can borrow based on your income. This code ensures that the affordability of your mortgage is guaranteed. Through these measures, the number of people in the Netherlands with mortgage payment problems is one of the lowest in Europe.

If you are unsure of which mortgage is best suited for your needs, it is suggested that you seek advice from one of the following:

• a bank or mortgage lender
• an independent specialised hypotheek adviseur (mortgage broker)
• a professional financial advisor

In helping you to determine which mortgage is most appropriate for your circumstances, you need to ask yourself the following questions:

• How much do I want to borrow?
• How much can I afford to pay each month?
• How long do I want to take to pay off the mortgage? (This will be dependent upon a variety of factors such as your age, how long you intend to live in the Netherlands and the security over your future employment)?
• When, how much and how do I want to redeem my mortgage?
• Which risks do I want to be insured against?
• What type of mortgage do I want?
• How important are the overall interest costs, risks, flexibility and tax benefits to me?

The amount of interest you pay on your mortgage is based upon the interest rate agreed with your bank or mortgage lender which is applied to the value of the loan. Most Dutch mortgages are offered for up to a term of 30 years. Within the term, the bank will normally allow you to choose how long you wish to fix the rate of interest on your mortgage. This can typically be anywhere from one to 20 years. Hence, if you think the current interest rate will be reduced in the future, you may elect to fix the rate for only a few years. Conversely, if you think the interest rate will go up in the future, you may wish to fix the rate for a longer period. It should be noted that banks will offer a spread of rates depending on the duration that the rate is fixed. The interest rate quoted will typically rise with the increasing length of time that it is fixed; this is to cover the lender’s risk if the benchmark interest rate (set by the European Central Bank) rises in the future.

At the end of the fixed rate period, you are entitled to agree to a new fixed rate with your lender.

You usually begin repaying your mortgage within a month of completing the purchase of your home. The bank will normally collect your monthly mortgage payments by direct debit.

The requirements for getting a mortgage will depend on the bank or mortgage provider you choose. Generally, people originating from an EU member state country and who have a permanent employment contract do not experience any difficulties in getting a mortgage.

The bank or mortgage provider will want to know about the property that you wish to purchase. They may ask for you to pay for an independent inspection report on the property before they make any decision on whether to grant you a mortgage.

From January 1, 2017, homebuyers aged between 18 and 40 can receive the schenkingsvrijstelling (parental gift tax exemption). This is a gift of up to 100.000 euros and it is tax-free. It can be received from their parents or others as a contribution towards buying, renovating or paying the mortgage on a property.

For people from outside the EU, the bank or mortgage provider may want to consider the following aspects:

• The kind of residence permit you have
• The level of security afforded by your employment contract and what type of job you have
• Who is your employer? Generally, it is easier to get a mortgage if you work for a well-known, larger company than for a small company
• How much you currently earn after tax and pension deductions (take-home pay)
• What other significant expenses you currently have, e.g. paying for a car, any bank loans etc. and your general financial situation
• The nationality of your partner (is he/she Dutch or not?)