You will need a variety of documents, depending on your individual situation, and some of them may be in Dutch. They include an employers’ statement – werkgeversverklaring - which outlines the terms of your employment contract, a salary slip, a copy of your passport and residency permit (if you are non-EU), recent bank statements, a valuation report and proof of any additional assets you may own.
As a rule of thumb, you can borrow 4.5 times your gross annual income, including holiday pay and regular bonuses. If you are buying a house with a partner, 90% of their gross annual income can be added to the total. Different rules apply if you are self employed, and if you have the 30% ruling, you can borrow more. In all, it can be complicated. If you want a better idea of the maximum you can borrow, ask your mortgage advisor to calculate it for you.
You will also need to reserve around 5% of the cost of the property to pay for all the other items associated with buying a house. These include all the legal fees, estate agents’ fees, the cost of a valuation report and transfer tax (overdrachtsbelasting). Transfer tax is the equivalent to 2% of the purchase price (non-negotiable), for the over-35s buying a house to live in rather than as a buy-to-let investment.
If you are under the age of 35 and buying for the first time, you are in luck. You won’t have to pay any transfer tax at all. You can find out more about the fees in the FAQ section of the MyDutchMortgage.online website.
There are lots of different sorts of mortgage available in the Netherlands, but only two allow you to deduct your mortgage interest payments from tax - the annuity mortgage (annuïteitenhypotheek) and the linear mortgage (lineaire hypotheek).
If you own a property in the Netherlands and you use it as your main residence, then you may be able to claim tax relief on your interest payments. In 2022, the maximum against which you can deduct the mortgage interest is 40% and the maximum period you can claim for is 30 years.
If you live in a leasehold property, you can also deduct the cost of ‘renting’ the land on which your property has been built (erfpacht) from tax.
If you are fluent in Dutch, super confident about dealing with banks and understand the intricacies of the housing market in the Netherlands then of course you can do it alone. But if you are none of those things, then it really is sensible to get the experts to do their stuff.
In practice, buying a house in a foreign country can be pretty challenging. A financial advisor will help you set financial goals and priorities, and then recommend specific steps to meet them - and that includes buying a home.
And yes, of course it costs money to get proper advice. But it may well also save money in the long run. The MyDutchMortgage.online fee is about the same as one month’s net mortgage repayment, if you borrowed €600,000 to buy a house in Amsterdam.
Some would argue there has never been a worse time to try to buy a house in the Netherlands. Interest rates have been rising, there is little choice and prices have never been so high. But that does not mean you should give up, especially if you are living in an expensive rental.
The experts see change ahead, with all sorts of official bodies and organisations highlighting the fact that the growth in house prices has been slowing since the start of the year. The Dutch real estate agents’ association NVM also says that rising interest rates are tempering price rises.
And yes, while interest rates have been rising, they are still pretty low historically, as José de Boer, financial advisor and CEO of FVB De Boer Financial Consultants explained in a recent column.
You may have to compromise a little on that dream home – why not look outside the big cities but within easy commuting distance to the office – for example? But if you have got the money and if you are planning to stay in the Netherlands for a few years, it is probably still the right thing to do.
Think you know all there is to know about buying a house in the Netherlands? MyDutchMortgage.online has put together a quiz to test your expertise. And for more questions and answers, check out the website FAQs
