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The questions and answers you like to know when arranging a mortgage in the Netherlands

Being an expat comes with many challenges. Especially when it comes to financial matters such as arranging a mortgage for the purchase of your future home. Your goal may be to settle in a new country and buying property may be a good choice instead of renting a house. But how does that actually work, what do you have to think about, what are the possibilities and what is not possible? In addition, there are often different rules for expats depending on what your country of origin is, and then there is the language barrier. Of course, the Personce mortgage advisor will help you with these questions, however it is of course good to have an idea of how it works exactly in the Netherlands. In the next paragraphs you will find the Q and A list that matter!

  1. How long will I have to repay the loan (what is the common duration of a mortgage)?
    The loan term is how long you will have to repay the loan. This will affect your monthly principal and interest payment, your interest rate, and how much interest you will pay over the duration of the loan. In general, the longer your loan term, the more interest you will pay, and vice versa. Loans with shorter terms usually have lower interest costs however with higher monthly payments than loans with longer terms. A mortgage needs to be repaid in 30 years or less.
  2. Is the interest rate fixed or adjustable?
    Interest rates come in two basic types: fixed and adjustable. Your choice will affect whether your interest rate can change; the amount of monthly principal and interest payment and whether it can change; and how much interest you will pay over the duration of the loan. With a fixed-rate loan, your interest rate and monthly principal and interest payment will stay the same during this fixed period. Adjustable-rate mortgages are often less predictable but may be cheaper in the short term. The interest rates can change based on the market so your payments can go up and down.
  3. What type of loan am I getting?
    There used to be lots of different sort of mortgages available in the Netherlands, however only two allow you to deduct your mortgage interest payments from tax - the annuity mortgage (annuïteiten hypotheek) and the linear mortgage (lineaire hypotheek). The interest only mortgage (aflossingsvrije hypotheek) is also still available, here you are not allowed to deduct your mortgage interest payments from tax plus in the end the capital is not repaid.
  4. How much money do I need to put down for a down payment?
    Generally, the larger the down payment you are able to make, the lower the interest rate you will receive. How much you maximum mortgage is depends on income (loan to income) and house value (loan to value). Nowadays, if loan to income is sufficient, you can borrow 100% of the value of the house (determined by a valuation report). This is not the purchase price of the house! In a scenario where the valuation report equals the purchase price all additional cost should be paid from own savings. Common costs are transfer tax, valuation report fee, a fee for the arrangement of the mortgage, cost for notary and technical inspection. If the value of the house is lower than the purchase price you have to add the difference with the use of own savings.
  5. How long will it take to arrange a mortgage?
    On average, the complete mortgage process should take somewhere between 4-6 weeks. However how quick you are able to provide and upload all the needed information has influence on the process. Time of year and service level performance at the different loan providers influence the process as well.
  6. Is life insurance mandatory if you arrange a mortgage?
    In most cases it is not. A life insurance covers a certain amount for a certain period of time and will pay out if the insured person dies within this period. Nowadays mortgage lenders do not demand a life insurance however in most cases, especially when purchasing a house with a partner, is a recommendation.
  7. How much can I borrow?
    The maximum mortgage you are able to borrow depends on different factors. How high is your income, what is the duration of the mortgage, how long you are willing to fix your interest and at what rate will that be, is there a second income. And a really important question to ask yourself, what am I willing to spend a month? Like to find out your possibilities? Make an appointment with one of the Personce mortgage specialists to find out! Personce, guidance in personal finance

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