How can I decide which mortgage is best for me?

Posted on by Katerina Triantafillou

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?

What are the types of mortgages available in the Netherlands?

Posted on by Katerina Triantafillou

From 2018, you can only take out a mortgage that is a maximum of 100% of the value of your house – including 2% overdrachtsbelasting (property transfer tax). This is referred to as ‘Loan to Value’ (LTV).

At first glance, the variety of mortgages on offer from the banks may seem bewildering. However, most of these mortgages come in one of two general categories: capital repayment and interest payment; and only interest-only repayment .

Capital repayment and interest payment

Mortgages which are based upon repayment of both the capital (value of the loan) and interest are tailored by the banks to provide various repayment profiles. In essence, they all expect you to pay both the interest on the original loan and the value of the loan itself within a given time period (term). A typical mortgage term can be up to 30 years, but will depend on your age and circumstances.

One popular type of capital and interest repayment mortgage fixes the amount that you repay each month on your capital loan over the term of the mortgage and is termed a lineaire hypotheek (linear mortgage). Hence, in the beginning, the amount that you pay each month will be high, as you will be paying off a fixed amount of your capital and a relatively high amount of interest (relating to the amount of capital owing). However, the monthly payments will decrease over time as the capital of the loan is paid off and the corresponding interest reduces. The benefit of this type of mortgage is that it can be repaid relatively quickly. However, as the size of the interest repayment reduces with time, you will find that you will not be able to claim as much tax benefit (as the payment of the capital is not tax deductible).
An alternative type of capital and interest repayment mortgage is an annuïteitenhypotheek (annuity mortgage). With this mortgage, the total amount that you pay each month is fixed over the repayment term. The benefit of this type of mortgage is that the repayment remains the same each month and thus makes it easier for you to manage your monthly expenditures. In the beginning, most of the monthly repayment will be just the interest on the loan, whilst later in the mortgage term you will start to pay off a greater proportion of the capital. Tax is only deductible on the interest of the mortgage. Hence, you will find that the proportion of your monthly repayment – on which you can claim a tax relief – will reduce during the given time period.

Remark: currently annuity mortgage and linear mortgage are the only kinds of mortgages that are eligible for hypotheekrenteaftrek (interest tax deduction), whereby the loan is repaid within 30 years.

Interest-only repayment

With an interest-only repayment mortgage, you only pay back the interest on the value of your mortgage each month. The benefit of this mortgage is that the payments you make each month will be lower and thus more affordable. However, as you are not paying off any of the capital (value of the loan), you are not in a position to own your house; that is, unless you are confident that you will have sufficient funds to pay off the original loan as a lump sum at the end of the mortgage term.

It should be noted this kind of mortgage is no longer deductible from your income for tax purposes. Banks are no longer eager to offer this type of mortgage anymore. However, you can take over your old mortgages to your new house and continue having an interest-only or bank savings/investment mortgages or a combination and keep the eligibility of the interest deduction.

There are other types of mortgages based upon payment into an investment fund. The idea is that you only pay off the interest on the loan and at the same time contribute into an investment fund. At the end of your investment term, you should have acquired a sufficiently high return on your investment to (hopefully) be able to pay off the capital of your mortgage.

Other mortgages link repayment of the interest on the loan to paying for an insurance product, such as life insurance, or paying into a savings policy. The idea is essentially the same as above, in that you acquire sufficient funds over the term of the mortgage to pay off the original loan.

Remark: These products are not available anymore within the mortgage advice for starters. Existing mortgages containing these kinds of products may be continued.

Are there restrictions on how much I can borrow for my mortgage?

Posted on by Katerina Triantafillou

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.

How do I get a loan for buying an apartment or a house?

Posted on by Katerina Triantafillou

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.

I have signed my rental contract but I realise only now that some things in the contract are not fair. What can I do about it?

Posted on by Katerina Triantafillou

When you have signed a rental contract, it is final. However, if there are any issues in the contract that are against the law, the law is always binding. If you think this might be the case, it is best to seek legal advice. You should, of course, discuss the issues with your landlord and see if he is willing to change the contract.

How can I get water, electricity and gas connections?

Posted on by Katerina Triantafillou

In many cases, the utilities (gas, water and electricity) will already be available in your home and you only need to transfer them into your name. Your makelaar (real estate agent) will usually help you with transferring contracts of your new home to your name. We suggest you to bear in mind the following:

  • Note and check the meter readings when moving into another house as bills are based on the previous year’s consumption for the property. Discrepancies are corrected at the end of the year and refunds or additional bills are issued accordingly
  •  Gas and electricity are both supplied by the same provider; water is arranged separately
  • If the rent is inclusive, check your contract carefully for what is covered

Should you need to set up a account see below the pre-requisites:

  • A passport or ID card (proof of identity)
  • Proof of occupancy (rental contract, house deeds)
  • A bank statement or proof of residence available from the municipality’s personal records database (Basisregistratie Persoonsgegevens (BRP))

Please note that he Dutch energy market is privatised, thus enabling you to choose or change your supplier. Regulatory authorities ensure fair practices and tariffs.

Products, tariffs and services may vary from company to company. Should you decide to change company, remember to check and be aware of the conditions for cancelling a contract or switching providers. Here some tips for choosing a service provider:

  • Check the term of your contract to know when you can switch for free. If you want to switch immediately check the cost of doing it before the term in the contract ends
  • Check what you’re paying for electricity and gas as opposed to what you consume
  • Compare the prices and contracts of various energy companies
  • Determine whether you want the contract for a definite period or indefinite
  • Check whether you want grey or green energy
  • Check whether you have a fixed price or variable price to pay
  • Keep an eye on special promotions or discounts
  • Check the terms and conditions of the contract carefully
  • Check whether there are any hidden costs, for example, energy tax, standing charges and transportation costs
  • Check the payment options, for example what is the cost of paying by giro

Useful links

  • Find out which water company is covering your area at www.vewin.nl (enter your postcode on the top-right box ‘Zoek uw waterbedrijf’)
  • Compare energy suppliers in the Netherlands on  comparison sites such as www.pricewise.nl/energie-vergelijken/ (Dutch only) , www.gaslicht.com (Dutch only)  and www.independer.nl/energie/intro.aspx (Dutch only)
  • To know more about how to connect to all utilities and billing-related queries check Expatica on www.expatica.com/nl/living/household/utilities-netherlands-100581/

How can I get connected to telephone, Internet and TV?

Posted on by Katerina Triantafillou

In the Netherlands, telephone, Internet and TV are available digitally and/or via cable. Many providers offer bundles of all three services. It is important to bear in mind the length of your stay and your location, as not all providers have a complete country network. Satellite television is also an option, but you need to fix a satellite dish in the right direction and there are regulations covering this

For both landline and mobile telephone, there are several providers offering subscriptions. For mobile phones, you can also choose for a prepaid option instead of a subscription but they are usually more expensive. Top-up cards can be bought at most telephone stores and supermarkets. It is also possible to top up your prepaid credit via the Internet and by phone. Nowadays, if you have a subscription with a mobile company in an EU country you can use internet and phone calls at the usual rates. Calls within the EU have no roaming costs anymore.

It is advisable to compare price, quality and always read the small print. You can compare tariffs and conditions at the following websites:

  • For All-in-1 bundles & Internet+phone subscriptions visit: Breedbandwinkel.nl/expats (in Dutch only)
  • For a comparison of prices of different providers visit: Bellen.com (in Dutch only) or Prijsvergelijken.nl/compare-broadband

For your information 0800 numbers are toll free; 0900 numbers are charged (per call or minute).

Are there any special rules for collecting household waste?

Posted on by Katerina Triantafillou

In many cities households have two separate waste containers: green for waste from vegetables, fruit and garden (groente-, fruit- en tuinafval, GFT) and grey/brown for all remaining waste (restafval). Both containers are emptied once a week or alternating weeks. If your municipality has decided that household waste should be compulsorily separated, you will receive a fine for non-organic waste placed in the green container.

You need to put your waste/bins outside your house at the time set by your municipality. If you don’t, you may be fined.

Glass, paper, plastic and clothing/textiles, medicines and batteries, small electrical appliances and bulbs can be deposited in special containers in your neighbourhood.  Bottles and cans should be returned for cash. Other types of waste (oversized household waste, domestic chemical waste etc.) can be brought to one of the city’s garbage and recycling stations.

If you live in an apartment building with rubbish bins or underground containers, you can throw away your rubbish in these containers anytime. Be aware of any specific rules that may apply to the tenants of the building.

What factors should I take into account before buying a house or apartment?

Posted on by Katerina Triantafillou

A very important factor when buying a property is that you are clearly aware of the property’s legal standing. This means that you need to check whether it is eigen grond (freehold) or erfpacht (leasehold) property. If your potential house is freehold, then you fully own the plot and the house. Leasehold would mean that you only own the house but not the plot (this is the case for apartments as well). This means you will be paying an annual fee for renting the plot. Your real estate agent can provide this information.

Existing houses are usually sold as ‘kosten koper (kk)’. This means that all additional costs such as overdrachtsbelasting (property transfer tax) and notariskosten (notary costs) must be paid by the buyer.

New houses are usually sold as ‘vrij op naam (V.O.N.)’. This means that the purchase price includes BTW (VAT), property transfer tax and notary costs.

Bouwtechnisch onderzoek (construction inspection)

It is strongly advised to ask an expert for a bouwkundig onderzoek (construction inspection). This person will check things such as:

  • crawl space (if accessible) and floors, drainage, ventilation, piping in crawl space
  • state of the facades, roof, chimneys, window frames, gutters, roof, and chimneys
  • determination of the presence of lead pipes and risk carbon monoxide
  • fire safety and asbestos suspected.

The real estate agent who sells the house often recommends someone to do this. However, this person may not be independent. Therefore it is best to ask your own real estate agent for an expert. If you don’t have a real estate agent it may be useful to ask advice from the Vereniging Eigen Huis https://www.eigenhuis.nl/#/ (Dutch only). This is an interest group for home owners

Things to consider when buying a house or apartment

When buying a house or apartment, take the following things into consideration:

  • Research appropriate neighbourhoods considering: housing prices, access to public transportation, green spaces, distance/time to your work, location of schools
  • View properties during the day then again in the evening to notice any potential problems and have a sense of the area
  • Limit your viewings each day
  • Be sure to take photos and jot down notes
  • Ask questions and strike up conversations with the estate agent, the seller and people in the area
  • Take into account your estate agent’s advice
  • Inquire about: who owns the property, how long it has been on the market, how many viewings there have been, how many bids have been made, why it is for sale, and how quickly it needs to be sold
  • If possible, do not get into a bidding war and avoid sealed bid offers

What costs are involved in buying a house or apartment?

Posted on by Katerina Triantafillou

It pays to visit a bank or mortgage broker for free advice before you start considering buying property to get an idea of the total costs involved. In general, about 10% of the purchase price will be needed on top to pay for various taxes and fees:

  • Hypotheekkosten (mortgage fee): around 1%
  • Taxatierapporten (valuation/appraisal costs): if a mortgage is needed. Costs between 300-1,000 euros
  • Makelaarkosten (real estate agent fees): not always involved but if it applies, costs vary between 1-2 percent of the price of the property
  • Notariskosten: the notaris (notary) is needed to register the sale and the mortgage. It is usually between 1,000-3,000 euros

Note that the deposit on the property is 10% of the purchase price, paid six weeks after the purchase agreement has been signed. This may be replaced by a bank guarantee issued by a Dutch bank.

Which process should I follow when buying a house?

Posted on by Katerina Triantafillou

Buying a property in the Netherlands is relatively straightforward but there are some steps you need to take.

Finding a makelaar (real estate agent)
Buying a property without a makelaar is legal but not advisable. In the Netherlands you can work with only one  makelaar, unlike other countries. When house hunting, submit a list of the characteristics you are looking for in a house to your makelaar. This enables your makelaar to make a selection of interesting properties for you to visit. To make sure that you get proper help, contact a makelaar who is experienced at buying houses for expats.

The makelaar can help you from the beginning to the end of the house hunting process, including the technical inspection, the negotiations, the understanding of the bidding system along with the administrative work that comes with buying a house.