• FAQ

    Mortgage questions and answers

Questions and answers about mortgages

What is a mortgage?
In basic terms, you take out a mortgage from a mortgage lender as a long term loan to make payments on a property.
The mortgage lender has the option of taking possession of the property and selling it on if the mortgage repayments aren’t made. This is so that the lender doesn’t lose money as they would be making it back from the property sale.
Any time you take out a mortgage, the loan is then split into two aspects. One of which is the interest , which is what the lender charges for lending the money. The other is the capital, which is the actual amount of money used to purchase the property.

What is a mortgage broker?
Mortgage brokers are specialist mortgage providers who will look for a suitable mortgage product on a client’s behalf in order to ensure they get the best possible deal.
Fees and success rates vary from one broker to the next.
Expat Mortgages works with a fixed fee, see ‘conditions of service’ (koppeling)
A bank will charge a fee when you would go direct without a broker. When using a broker you don’t pay the bank a fee for getting a mortgage loan with them, you only pay the broker.

What different types of mortgages are there?
There are two main types of mortgages when mortgaging your primary residence;

Annuity repayment scheme
The main characteristic of an annuity mortgage is that the yearly total of capital repayment and interest payments remains the same as long as you’ve fixed the interest on the loan. Although the total remains the same, the ratio between interest and repayment will changes over the years.

Linear or Straight Line repayment

Linear or Straight Line repayment scheme
The most important characteristic of this mortgage is that the loan is repaid yearly in equal instalments (i.e. linear). As a result of these repayments, the amount of interest payable decreases every year. Since the interest expenditure decreases steadily, this mortgage is best suited for lenders who cannot fully benefit from the tax relief on the interest payments and/or want to repay the principal as fast as possible.

Annuity repayment mortgage

How much can I borrow?
The actual amount you’re eligible to borrow will be determined by the value of the property you wish to purchase (Loan to Value) and by how much money you make per year gross (Loan to Income). Other variables like leasehold could have an impact as well.
The majority of mortgage lenders will offer a loan of up to 101% of the property’s value (figure 2017). Next year (2018) this amount comes down to 100% of the purchase price and hence you will need to pay for all costs related yourself.

There is a general rule of thumb that you can borrow around 4.2 up to 5.5 times the amount you earn annually. The actual figures depend on gross income and interest paid on the loan
All mortgage providers will use credit scoring methods. They will check the BKR (Buro of Credit registration) to see if you have loans outstanding and more importantly, if you have never defaulted on a loan.
If you’ve lived in Germany, Austria, Belgium or Italy, they will also do a credit check in that country.

What about my tax rebate?
If you pay interest on a loan that relates to your main residence, you’re eligible for a tax rebate on paid interest. Usually you pay your mortgage interest monthly. For that reason it is useful if you can also receive your tax benefit monthly. Expat Mortgages organizes the provisional refund for its clients free of charge for the first two years into the mortgage.
That way, the balance between your monthly mortgage expenses and the tax rebate becomes your net monthly payment.
For more information about taxes, please click this link

Additional costs related to a purchase?
The price of a house in the Netherlands is always followed by an abbreviation, either ‘KK’ or ‘VON’
‘KK’ means that all of the costs related to buying a house are paid for by the buyer (‘Kosten Koper’, or ‘purchasing costs payable by the buyer’).
‘VON’ stands for ‘Vrij op naam’, or ‘purchasing costs payable by the vendor’, which in most cases only applies if you are buying a newly build property.

Costs related to a ‘KK’ purchase:

• Transfer tax (2%)
• The costs of registering the property in your name and having that information filed in the usual registers (civil-law notary).
• The costs of your estate agent (if applicable)
• The fee of Expat Mortgages
• The National Mortgage Guarantee costs (if applicable)
• The costs of registering the mortgage in the usual registers (civil-law notary).
• The costs of the valuation/appraisal provided by an independent surveyor
• The bank guarantee costs (if applicable)
• The costs of an structural survey (if applicable)

Costs related to a ‘VON’ purchase

• The costs of your estate agent (if applicable)
• The fee of Expat Mortgages
• The National Mortgage Guarantee costs (if applicable)
• The costs of registering the mortgage in the usual registers (civil-law notary).
• The costs of the valuation/appraisal provided by an independent Surveyor (if applicable)
• The bank guarantee costs (if applicable)
• The costs of an structural survey (if applicable)

Am I allowed to make extra repayments?
Yes, you can make extra repayments. With most providers up to 10% of the original principal per year. Other windows to repay extra without fines:
– End of locked term on interest; you can repay as much as you like (or refinance without penalty)
– When selling you need to repay the outstanding principal
Depending on the locked term on interest, fines could occur when repaying more than the allowed amount.

Can I get a mortgage when being a non-Eu citizen with a temporary residence permit?
Yes, you can get a mortgage. How much will depend on your income situation and employment history in The Netherlands.

Can I get a mortgage when being employed with temporary contract?
Yes, you can get a mortgage. How much will depend on your income situation and employment history in The Netherlands.

How long do I need to have lived and worked in the Netherlands to be eligible for a mortgage?
In general you can get a loan as soon as you arrive. How much depend on your income situation and specific requirements of the different providers.

Does the 30% ruling impact my loan capacity?
It can. How much will depend on the remainder of your 30% ruling and gross annual income.

Can I rent my property when it’s mortgaged?
Only without written consent of the mortgage provider. In general mortgage providers will be reluctant to grant permission because it weakens their legal position in a default (foreclosure) situation.

Can I include funds for renovations?
Yes you can. How much will depend on your income situation in combination with the value of the property after renovations.

How long will the application process for a mortgage take?
On average 4 weeks from application to final approval.

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