The Most Common Questions Asked When Buying Your First House
Are you planning to buy your first house in the Netherlands and don’t know where to start? Or do you have so many questions about the process that you feel you are going around in circles?
At MyDutchMortgage.online, the team is used to answering first-time buyers’ common questions about every aspect of getting a mortgage and sealing that dream home deal. Here are five of the most common questions asked by those buying their first house in the Netherlands.
What documents do I need?
You will need various documents, depending on your individual situation, and some may be in Dutch. They include an employers’ statement – werkgeversverklaring – which outlines the terms of your employment contract. The documents also include 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.
How much can I borrow (and what other costs should I consider)?
As a rule of thumb, you can borrow 4.5 times your gross annual income, including holiday pay and regular bonuses. If you buy 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 you can borrow more if you have the 30% ruling. 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.
You will also need to reserve around 5% of the property’s cost to pay for other items associated with buying a house. These include all the legal fees, estate agent’s fees, the cost of a valuation report and transfer tax (overdrachtsbelasting). Transfer tax is 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.
You are lucky if you are under 35 and buying for the first time as 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.
What about tax?
There are lots of different sorts of mortgages available in the Netherlands. Still, only two allow you to deduct your mortgage interest payments from tax – the annuity mortgage (annuïteitenhypotheek) and the linear mortgage (lineaire hypotheek).
Suppose you own a property in the Netherlands and use it as your primary residence. In that case, 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 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.
Can I do it alone, or do I need a mortgage advisor?
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, getting the experts to do their stuff is sensible.
In practice, buying a house in a foreign country can be pretty challenging. A financial advisor will help you set financial goals. They can also prioritise and recommend specific steps to meet them, including 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 would be about the same as one month’s net mortgage repayment if you borrowed €600,000 to buy a house in Amsterdam.
Is now the right time to buy anyway?
Perhaps the most common question we hear from those looking to buy their first house in the country. 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 live in an expensive rental.
The experts see change ahead, with all sorts of official bodies and organisations highlighting that the growth in house prices has slowed since the start of the year. The Dutch real estate agents’ association NVM also says that rising interest rates temper 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 the money and 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 common questions about buying your first house and their answers, check out the website FAQs.