Here is everything you should know about the mortgage types in the Netherlands.
In the Netherlands, when contracting a mortgage (if you buy a house for instance) you will be presented with a choice: do you want a linear or annuity mortgage?
Only these two types of mortgages are eligible for the interest tax deduction (renteaftrek) in the Netherlands since 2013.
Know that it’s your tax advisor who will make the mortgage simulations and present you with both options, not your real-estate agent (makelaar).
I will (try to!) precisely explain what both options are, so you can be prepared to choose the best for you!
Because this is a complex topic, let’s first dive into the world of mortgages.
Keep in mind that a mortgage is made of two things:
The loan (debt): the money you need to buy the house.
The interest: the money the bank is asking for in exchange.
A mortgage also has a lifetime: it’s called a term or a maturity date. For instance, if you buy a house, the term or maturity of your mortgage will be 30 years. You will repay your mortgage to the bank within 30 years throughout monthly repayments that include the loan and interest. The mortgage is repaid once the maturity date is reached.
If I buy a house of €300,000 at 2% interest with a term of 30 years, my mortgage will be made of a €300,000 loan for the house, plus €99,189.03 interest (money the bank is making by lending the loan).
The annuities mortgage (annuïteiten hypotheek)
With an annuity mortgage, your monthly repayment (interest + loan) stays the same throughout the entire term.
It means that the amount of money you will pay back to the bank every month will be the same over the lifetime of your mortgage.
If I agree to a mortgage of €300,000 loan for a house with a 2% interest rate over 30 years, I will pay around €1,100 every month for 30 years.
Even if you don’t see it in your monthly repayments, among the total amount paid, the part of interest and loan you are paying back evolves.
At the beginning, you will mainly pay a lot of interest.
As the mortgage progresses, more money will go towards the repayment of the loan.
The linear mortgage (lineaire hypotheek)
With a linear mortgage, your monthly payments are not the same. You pay off the same amount of loan repayment, but not of the interest.
The interest you pay is the highest at the beginning of the mortgage. This means your monthly repayment is pretty high at the beginning at the mortgage. Step by step, the amount of interest you pay is getting lower and your monthly expenses will decrease.
Overall, you will pay less interest compared to an annuities mortgage. The downside of this mortgage is that you pay a high amount in the beginning of the mortgage.
If I agree to a mortgage of €300,000 loan for a house with a 2% interest rate over 30 years with a linear mortgage, I will pay around €1,600 per month at the beginning and the repayment amount will constantly decrease the closer I get to the end of the mortgage maturity.
Which mortgage type is the best?
It’s hard to say, it mainly depends on you and if you have the ressources to start with high monthly repayments or not. As yourself some questions:
Do I want to have the same monthly repayments for 30 years?
Do I need a lot money at the beginning for renovations in the house?
– Monthly repayments are the same all the way through the mortgage duration. – Lower monthly repayments than a linear mortgage at the beginning. – The high amount of interest is tax-deductible, so the net monthly cost is low at the beginning of the mortgage.
– The amount of loan you repay the same through the mortgage. – Your repayment decreases every month which also reduces the interest, so the costs will gradually decrease. – You pay less interest compared to an annuities mortgage.
– You pay more interest compared to a linear mortgage.
– The interest is very high at the beginning of the mortgage, so the costs are high.
Here is a clear guide about buying a house or an apartment in the Netherlands.
Congratulations, you’ve made the decision to become a property owner in the Netherlands (and I can understand why!!!).
Renting is only good on the short term, like if you are in the Netherlands for 1 or 2 years maximum. If you know you will be there for +5 years, do NOT waste your money on rent and invest in real-estate.
That’s what happened to my boyfriend and I in 2019. The article below is based on our personal experience and the challenges we faced. We (🇫🇷 and 🇳🇱) bought a tiny house in Amsterdam without a makelaar and went through the whole process ourselves.
I also made a ‘vocabulary cheat sheet‘ for you. It contains the main key words that will be used in the article (and probably your research), as well as their English translation.
If you have additional questions that are not answered in this article, please drop them in the comment section and I will try to answer them.
What are the steps to follow to buy property in the Netherlands?
1. Know your budget
The first thing to do is to know how much you can borrow from the bank. This is based on your income (and your partner’s if you are buying together).
Also look at your savings! How much extra could you go over the mortgage if needed? Do you have enough money to pay for the costs of buying a house or an apartment (I will explain below)?
2. Know what you want (location, type of property…)
Before you start looking for properties, going for viewings and so on… WAIT! No need to waste your time. Sit down, think and write down what are your must and desired features for the property.
Decide on an area you would like to live in:
5 min. bike ride from work
Within the ring
Close to a park
Close to your favourite gym
Close to a school…
Then you can to make a list of things you want your place to be like or have:
House or apartment
Between X and Y sqm
1 or more bedrooms
New or to be renovated…
Put all these in an Excel spreadsheet and colour-code it or label it with “Must have”, “Would be nice”…
Would be nice
Within the ring
Extra guest room/office
3. Start looking for places on Funda.nl
Download the Funda app and use the info above as a filter. I advise you to only tick the option « published in the last 24h » and check the results everyday. If you find an interesting property, directly call for a viewing.
Know that a lot of places are listed on Saturdays and that most places that have been on Funda for 1-2 weeks are probably already sold or might have something wrong.
4. THE viewing
Awesome, you found a place you like on paper, called the agency and made an appointment for a viewing. Sooo exciting!!!
Be aware: manage your expectations! I know sometimes it feels like THIS ONE is THE ONE, but you have go to the viewing with the mind of a harsh critique. Remember that you will be in debt for a long, LOOOONG time (30 years!), so do not make concessions. Also, be aware of the “bidding war” going on in certain cities of the Netherlands like Amsterdam. Even if you make a very good bid, your dream property might be sold to a wealthier person who made a better offer. I know it sucks and I cried when my first bid was not accepted for our dream apartment, but it’s what it is and in the end we ended up buying a place we love 100 times better. So no regrets!
Tips the viewing:
Do your homework: research the cost of a similar place in the same area. You can use Funda Verkocht for that. It will give you a feel of the value of the property in the neighbourhood, also if it is going up or down.
Expect to be with a lot of potential buyers at the same time during the viewing (some even bring their makelaar). It can be overwhelming, but it’s also a strategy to put pressure on the bidders (you will place a higher bid to beat the other offers if there are many people interested and you REALLY want the place).
Stay close to the makelaar of the seller and ask many questions!!!!!! Like:
When is the place available for move in?
Are there bids/offers already? What are they (approximately)?
When is the deadline for the bid?
Can you send me additional docs via email?
Did you do a taxatie report (valuation) for the house? How much was it?
How much money do the seller want exactly (very important)?
If you are not speaking Dutch, bring a friend who does. Sometimes it’s super helpful as other people ask also interesting questions or some makelaars are not so willing to translate everything.
5. Making a bid (bod)
You like the place and want it? Here is how to make a bid.
There are two options: 1. If there is a deadline for the bid: The makelaar of the seller will probably email you a link you need to use to make your bid.
2. If there is no deadline for the bid: You can just send an email to the makelaar of the seller with your offer.
Sometimes you can just pick a form during the viewing. You can fill it in with your bid and then give it (or email it) to the makelaar of the seller.
What to put in your bid:
The price you are offering for the property (what you are willing to pay for it).
Always put the following some dissolving clauses (ontbindende voorwaarden) to protect yourself when you bid.
Reservation of sale of own home (voorbehoud verkoop eigen woning)
This states your offer if valid if you are able to sale your own home.
Subject to constructional inspection (voorbehoud bouwkundige keuring)
If you buy an old house, you can conduct an inspection to make sure everything is fine.
Under the condition of financing (voorbehoud van financiering)
In English: “I bid €200,000under the condition I get the mortgage for €190,000 within 8 weeks after the signature of the buying agreement”.
In Dutch: “onder voorbehoud van de financiering van €190,000 binnen 8 weken na ter hand stellen van de koopovereenkomst”.
If you do not have this clause and end up not getting the mortgage you can get a fine (10% of the price).
Know that some people can and will place a bid without this clause to be more attractive to the seller. Still, I find it very risky and advise you not to do so.
The date at which you would like to move in.
I advise you to just say: move in date in accordance with the seller.
That you will have the choice of notary (if possible).
In Dutch write: “Keuze notaris: aan de koper.”
Example of a written bid in Dutch:
Amsterdam, 15 maart 2019 Betreft: Bod Prikkerstraat 115, Amsterdam
Op 14 maart 2019 hebben wij voor de eerste keer uw woning bezichtigd. Het gaat om de woning aan de Prikkerstraat 115, Amsterdam. Wij hebben besloten om een bod uit te brengen van €200,000 (zegge tweehonderdduizend euro) kosten koper.
Dit bod geldt onder de volgende ontbindende voorwaarden: – Onder voorbehoud van de financiering van €190,000 binnen 8 weken na ter hand stellen van de koopovereenkomst. – Oplevering: voor 1 augustus 2019. – Keuze notaris: aan de koper.
Wij horen graag van u. Met vriendelijke groet, SIGNATURE
My tips for you:
Know the asking price is never what you can bid. Be aware of how much extra you can put (your savings).
If there is a deadline, put your bid 5 min before it expires. Otherwise, some makelaars share the amount of the highest bid with others so they can overbid.
You can add more details: that you want to move in at a certain date, that there is some furniture you want to keep… but know the more you add the less easy you get the place because other people bid with less restrictions.
If it’s accepted you get a buying agreement (koopovereenkomst) to sign with the seller. You have 3 days to pull out.
6. Get financial advice
The hardest was done!!! Now, what’s next? In the Netherlands, you need to have financial advice to buy property.
You can use an independent advisor or an advisor from a big bank directly.
The one at the big bank (ING, Rabo, ABN AMRO) will help you get a mortgage at this bank.
If you choose an independent advisor, he will look at different (smaller) banks and the different interest rates so you can choose.
Your financial advisor will be the one asking you all the documents you need and dealing with the bank for you. He will also advise you on the different types of insurance you might want to get.
7. The valuation report (taxatie)
This is a document the financial advisor will ask you because it determines the value of the property you are buying and thus the amount you can borrow from the bank. It is done by a third (independent) party.
IMPORTANT: in the Netherlands, you can only borrow up to 100% of the value of the property which is determined by the taxatie report.
This value is calculated based on the neighborhood and similar properties sold. It’s the taxatie report which will tell you how much you can borrow from the bank. If it’s less than the money you bid, you will have to pay the difference yourself (from your savings).
You bid €200,000 under the condition €190,000 gets financed by a bank through a mortgage. You already know you will have to pay the extra €10,000 from your pocket.
However, if the taxatie report shows the value of the property is only €180,000 then you can only borrow that amount and have to pay the extra €20,000 yourself. If you do not have that money, you can pull out from the agreement thanks to the financiering condition you put in your bid and the buying agreement.
It could also be that the taxatie report is €200,000, which means you will be able to borrow more than you thought (if you can in accordance to your income of course).
There are exceptions for how much you can borrow:
+2% if you want to make your house more eco-friendly.
You can have a bigger mortgage if you plan to renovate the place.
The report takes 1-2 weeks to be produced and then you need to send it to your financial advisor for him to build your file for the bank.
8. Find a notary and pay the deposit
This step is pretty easy: you can look online for notaries and their rates.
Be aware that if you are not a Dutch citizen (or your partner is not) you will need to pay a translator to come to the notary with you and translate the act of property.
Once you have found a notary with a good price, you have to transfer a deposit to their office. It amounts to 10% of the price you are paying for the property.
My bid is €200,000, so the deposit I need to send to the notary is €20,000.
All the extra costs (costs not included in the mortgage from the bank) will be deducted from this deposit.
If you do not have that money, you can ask your bank to edit a document for you that you can send to the notary instead. It’s called a bank guarantee and will add some fees.
9. Get the mortgage from the bank
This is basically done by your financial advisor. You only need to send him/her some documents he/she needs and choose the type of mortgage you want.
Make sure you get the mortgage within the time you indicated in your bid and the buying agreement (always put minimum 8 weeks).
10. Get the place!!!
This is IT! After months of looking and weeks of stressing out about every single step, this is the moment you get the keys: D-DAY.
So what exactly happens now?
Well, first you will go to your future home and do a last inspection.
If everything is in order, you will go to the notary with the seller and sign some paperwork.
The deed of transfer (akte van levering).
The mortgage agreement (hypotheekakte).
That’s it! You get the keys and the house is yours. It will be registered in the Kadaster (Dutch Cadastre, Land Registry and national mapping agency in the Netherlands) under your name.
What are all the costs of buying a property in the Netherlands?
With costs, I mean the costs outside of the money you borrow from the bank (your mortgage).
Know that a lot of the extra costs are tax deductible, so keep the receipt!!!
The money bid over the valuation
Depends on your bid.
Ex: If asking price is €200,000 and you bid €220,000, but the valuation is €210,000, the you have to pay the €10,000 difference yourself.
The taxatie report (valuation of the property)
It’s around 400€.
A professional house inspection (facultative)
It’s around 800€.
The transfer tax
It is 2% of purchasing price of the property
To be paid via the notary
From April 1st 2021, first-time buyers between 18 and 35 will not have to pay this transfer tax.
Ex: I bid €220,000, my transfer tax will be €4,400
The makelaar (if you have one)
Around 2% of the price of the property
It’s around €1,000-2,000
The financial advisor
The bank guarantee for the deposit (facultative)
It’s either money from your savings (no administration costs) or you can pay your bank to give you an official document for it called a bank guarantee.
It costs around €300.
A translator at the notary if you are not Dutch
Sometimes your notary can arrange it for you.
These costs do vary a lot depending on what you bid, if you hired a makelaar or not and the price of the property.
I would say plan on spending between €10,000 – €14,000 for these costs.
What documents do I need through the process?
You will need to send a bunch of documents to the different parties involved with the process.
Simulation from financial advisor
Werkgeversverklaring if you do not have a permanent contract
If you have a temporary contract you have to ask your employer to give you this document. It is valid 3 months and declares that if your performance stays the same your employer has no reason not to renew your contract.
Your bank statements
From other parties:
The buying agreement (koopovereenkomst).
The valuation report (taxatie report).
Is a makelaar worth it?
A makelaar is a like a real-estate agent. He/she is there to guide you in the buying process.