expat mortgage

Mortgage Loans for Expats 

As the Netherlands attracts more and more people to move there each year, the housing demand is constantly increasing. So naturally, many expats are exploring housing options for starting a new chapter in their lives. Some of those find renting an apartment in the Netherlands the most convenient option.

However, getting a mortgage loan is also becoming increasingly popular as owning property is more appealing than renting to many others. Of course, as many laws are different for locals and expats, it’s logical to ask if getting a mortgage as an expat in the Netherlands is possible. The short answer is “yes”; you’ll be able to get a mortgage as an international and choose between the best locations for expats in the Netherlands

To do so, you must be aware of all mortgage options, fees, and documents you need to provide to get a mortgage loan successfully.

Types of mortgages in the Netherlands

types of mortgages netherlands

The Netherlands has a diverse mortgage program suited to every individual’s needs and budget; you can choose between these options.

The annuity mortgage (Annuïteitenhypotheek)

The annuity mortgage is a mortgage type where your monthly payments remain the same throughout the entire loan. The advantage of this mortgage type is that you’ll always know exactly how much money you’ll mark off each month for your bank loan payments.

When you choose this option, you’ll pay off most of the interest rate first. As time goes by, the interest rate decreases, so you start repaying the actual loan amount. For example, if you are paying 1000 euros each month for your loan, you will be paying 600 euros for interest and 400 euros for the actual loan amount. The interest piques in the first couple of years and slowly drops. 

The disadvantage of this option is a lot of interest that piles up over the years. Depending on the interest rate percentage, you can even pay 100% of the loaned amount through interest. But if you’re the type of person that likes stability and a lower monthly fee for the loan, this can be a great option.

The linear mortgage (Lineaire hypotheek)

The linear mortgage is the other standard mortgage type where you pay the same amount of the actual debt each month. The interest rate is the highest at the beginning, but it decreases over time.

With this mortgage type, you’ll consistently pay the same amount of the actual debt, which means you can close the loan sooner. However, you’ll pay a higher amount in the beginning as the actual debt and interest start at their highest. As time goes by, your interest rate will start decreasing, so the amount you’re paying will become lower.

The advantage of this option is that you don’t pay off as much interest compared to the annuity mortgage. The disadvantage is that you start with a higher price, and you don’t benefit from the decreasing interest rates.

Bank savings mortgage (bankspaarhypotheek)

When you opt for the bank savings mortgage, you only pay your loan’s interest, while the actual loan amount is accumulated in your bank account. With this option, your savings can grow tax-free while you’re paying off the interest.

This means that you’ll pay a lot smaller amounts monthly, as you only pay the interest for the entire loan while your savings grow. Once you gather enough money in your savings (or you reach the end of your mortgage term), you pay off the actual loan amount. 

Interest-only mortgage (aflossingsvrije hypotheek)

interest only mortgage

This mortgage type is very similar to the bank savings mortgage. However, you only pay for the interest, and once you reach the needed amount for the actual loan amount in your bank account, you pay it off. 

By choosing this option, you get to enjoy the low monthly fees of the loan and the lower interest rates. If you can’t pay the entire amount once your loan expires, you can extend it or sell the house to gather the money.

Credit-based mortgage (krediethypotheek)

The credit-based mortgage is flexible and fluctuates depending on your house’s value. You’ll still be paying the interest on the amount that you borrowed. However, it will be determined based on your house’s value.

Life mortgage (Levenhypotheek)

The life mortgage is a particular mortgage type made for the elderly population. It involves investing in a premium life insurance policy with a savings or investment portion, followed by the death risk portion.

Throughout the loan period, you only pay for the interest rates. Later, the amount you save on the life insurance policy is used to pay off the actual loan. With this option, the bank has a “safety net” that, in case of death, a part of your mortgage will be paid.

If you collect enough money before you pass away, you can completely pay off the debt.

Moveable mortgage (Verhuisregeling)

This mortgage type is very straightforward – if you decide to move houses while in debt, you can move the mortgage with you.

A hybrid mortgage (hybride hypotheek)

The hybrid mortgage is a combination of the investment mortgage and savings mortgage. You only pay for the interest throughout the mortgage term, followed by your deposits into savings or investments. 

You can even deposit payments into both funds. Then, once you reach the end of your mortgage term, you can pay off the debt with either account.

New rules for mortgages in 2023

mortgage rules 2023

The Dutch government always looks for new ideas for improving the country’s economy, technology, agriculture, and every other aspect of an advanced society. That is confirmed by the fact the Netherlands is the fifth most innovative country in the world. In coordination with banks, improving the mortgage loan conditions was one of the things they wanted to achieve. That being said, there were some changes in mortgage loan rules in 2023.

National Mortgage Guarantee

In 2023, the mortgage limit was increased to 405,000 euros, with the NHG premium staying at 0.6%. In 2022, this limit was 355,000 euros, which was increased due to increased house prices.

Interest rate deduction

The interest rates in linear and annuity mortgages are set to decrease in 2023. The tax-deductible interest rates have constantly been decreasing over the past ten years, and 2023 will be no different. In 2023, the tax rates dropped from 40% to 36.93%.

Transfer tax increase

In 2022, first-time home buyers were allowed to loan up to 400,000 euros. In 2023, if you are 18-35 years old and are buying your first home, with its value going up to 440,000 euros. In addition, you are allowed a 2% transfer tax exemption. Furthermore, In 2023, the transfer tax for real estate investors will rise from 8% to 10.4%.

Mortgage for two earners

Beginning on January 1, 2023, mortgage lenders will be permitted to factor in the second income when determining the maximum mortgage for couples with two incomes. In 2022, the dual income was worth 90%. Now, both payments will be counted equally, summing to 100% of the property value. After that, a couple earning the same gross income as a single person can obtain the same mortgage.

Can I get a mortgage as an expat?

expat mortgage

You can absolutely get a mortgage in the Netherlands as an expat. With an increase of international workers moving to the Netherlands, and their demand for buying or renting property, you can get a mortgage just like any local resident. In addition, there are no special mortgages or added fees to expats – every Dutch resident chooses between the previously listed options.

However, some additional rules apply for expats that want a mortgage loan. Firstly, these are the requirements for EU citizens:

  • you’ve spent the last five years residing in the Netherlands;
  • you have a job and are self-sufficient;
  • there may be a deposit required;
  • the maximum amount of your mortgage may not exceed 90% of the value of the property;
  • you need to have a citizen service number (BSN).

If you’re an expat in the Netherlands who arrives from a country outside of the EU, there will be a bit more paperwork required. You’ll need the same documents as EU residents, with an addition of the following:

  • residence permit (not temporary but long-term);
  • permanent employment contract;
  • if you have a temporary employment contract, you may need a letter of intent from the employer;
  • net income over the past three years if you have your own business;
  • in a private company’s case, it must be registered with the Dutch Chamber of Commerce.

Naturally, the mortgage loan provider wants to work with applicants that intend to stay in the Netherlands for an extended period. Therefore, they’ll usually seek proof of you living and working in the Netherlands for at least six months to ensure that.

Of course, that doesn’t mean you can’t leave the Netherlands for any reason – just make sure that your leave isn’t too long. As long as your main job is in the Netherlands, you’re free to go on a vacation, visit your family, or whatever other reason you must travel abroad. 

Many expats are also interested in getting a mortgage to rent it out. If you’re one of them, unfortunately, that isn’t possible. The law states that mortgages are strictly for self-living purposes. The only exception is if you intend to switch your location for an extended period. In that case, you can submit a request for renting, but it does come with additional costs and higher interest rates.

How to get an expat mortgage?

mortgage loan

To get an expat mortgage in the Netherlands, you need to follow these steps:

  • consult with a mortgage provider to determine your budget and whether you qualify for a mortgage before looking for a property. You can determine whether you’re qualified at this point with reasonable certainty;
  • either on your own or with a real estate professional, search for a place to live. Be sure the building you select is in good condition, falls within your price range, and is situated appropriately;
  • make a bid for the property. If approved, you’ll meet the vendor to sign the purchase agreement at a notary’s office (koopovereenkomst). Upon signing the document, you may also need to make a deposit. This can be a bank guarantee or a transfer of money equal to 10% of the purchase price. If you can’t secure the funding, make sure there is a clause that the deal is not binding. Specify the settlement timeframe, which is typically 30 to 60 days;
  • apply for a mortgage;
  • collect and submit the needed documents. Apart from the mentioned documents needed for EU or non-EU citizens, you’ll need the following:
  1. a passport photocopy;

        2. resident permit (if applicable);

        3. a recent pay stub;

        4. the employment contract;

        5. overview of savings and assets;

        6. a summary of credits and loans.

  • attend the notary appointment for the settlement to sign the mortgage agreement with the bank and the property title deed with the vendor. The notary handles the transfer of funds;
  • start making your regular monthly payments, which should include any insurance premiums you chose.

Dutch Mortgage rates and fees 

Dutch mortgage rates

Regarding the rates and fees, you’ll have to prepare for the following expenses of getting a mortgage loan:

  • transfer tax that sums to 2% of the home’s sale price;
  • the cost of the valuation report, which is necessary if you’re applying for a mortgage;
  • the mortgage arrangement fee;
  • the cost of using a notary;
  • the bank guarantee or a 10% deposit.

With the national mortgage guarantee, you can loan up to 405,000 euros. The final transaction will require both parties to finalize the purchase in the civil law notary.

Dutch dream

Buying a property

Buying a property in the Netherlands is one of the best decisions you can make for various reasons. The Netherlands is a prosperous country, very welcoming towards expats, with numerous job and career-advancing opportunities, technological growth, and lifestyle freedom for every individual.

However, there are some setbacks you might encounter when getting a mortgage loan or finding the best property for your standards. Loads of paperwork, high demand for available houses/apartments, or language barriers are a couple of things that may complicate the process. 

If you’d like to bypass those issues, feel free to contact us and simplify the process. We’ll help you with all the paperwork, taxes, and legal issues to ensure that you don’t miss or forget a single document needed in the process. In addition, we can guide you in finding the perfect location and property type for your needs, budgets, and other criteria you may be interested in. Then, once everything is set, the only thing you’ll need to worry about is how to turn your new residence from a house into a home.

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