So you bought a house in the Netherlands – maybe yesterday, maybe a few months ago or a few years back in time when Brexit was still just a weird phrase. You might be taking steps, moving again, having kids or – sadly – getting divorced. But one thing is clear, you need to figure out your mortgage situation.
Change is an inevitable part of life. You might be packing up and leaving the Netherlands, or having more kids, or getting divorced. Good changes in life or bad, you will have practicalities to take care of: one of them would be to know what to do with your house after you’ve already bought it.
That’s why DutchReview and Expat Mortgages are teaming up once again and bring you seven things you need to know about your Dutch mortgage, and what to do with it. Yes, it’s aftersales time!
|Expat Mortgages are the experts for all things related to a mortgage for any expat in the Netherlands. When it comes to everything you could think of life after securing that mortgage in the Netherlands you need to drop by at Selina van Beek. She’s an absolute pro when it comes to that aftersales process and helped us with all the technical things AND questions in life a homeowner could have.
Alright, let’s get into what you need to be prepared for when change inevitably knocks on the door of your new home.
Here are 7 things to know about your Dutch mortgage and what to do with it AFTER you’ve got it and bought that Dutch house
Your partner or you just got pregnant again – congratulations! You need a bigger house, so now what?
As we all know housing prices are pretty high here in the Netherlands right now, so maybe just staying where you are is your best move. Say you just had a second kid and you can use a little more space, a renovated bathroom and some of those extra windows in the attic – you might want to get some of that sweet extra mortgage money. Is that a possibility?
It could possibly be, but it is all up to the bank. They check your credentials and you have to go through the whole process once more. Considering this all comes with some costs; interest, consultation fees and most importantly – your own precious time – it’s not recommended to look into this possibility if you need anything less than 15,000 euro.
Now what to do when you need to sell your house if you’re moving to another country? And do you actually need to sell?
What to do with your mortgage in the Netherlands if you’re moving back to your home country
So you’ve decided to move back to your home country and you don’t want to own any property in the Netherlands anymore. You want to stop paying your mortgage, or you’re just looking to upgrade. Whatever your reason may be, most of the time you will have to sell your home in order to stop paying a mortgage in the Netherlands.
Selling your home in the Netherlands has a lot of important steps. Firstly, you might want to find yourself a registered real estate agent. They should be associated with the trade association, Dutch Association of Estate Agents (Nederlandse Vereniging voor Makelaars or NVM). It is a recognised supervisory body that will be able to give you a list of registered agents in a specific area.
Once you’ve done that, they will do an assessment of your property for you and give you a figure for the value. Once both of you have settled on the asking price, you will then have to negotiate on the commission fees, start-up costs, and the agreed-upon sale price.
The agent will then put the word out through different channels (social media or websites like Funda) so that potential buyers hear about your place. As and when they find people who want to view your property, the agent will accompany them (so there’s no need for you to be there at all, handy if you’re in some other country prepping for a move to that place)
Once a potential buyer makes an offer, the agent will negotiate on your behalf. You don’t have to accept any price you don’t want to. You can even give a counteroffer, so don’t worry about not having control over the negotiations. Once an offer has been accepted, a purchase agreement is drawn up in consultation with a notary. The buyer can withdraw their offer without any penalties within three days of signing the agreement. Once this has passed, the lawyer will set a date for completion. On completion, the property is signed off to the buyer through a Transfer Contract. Once you have this piece of paper, you can stop paying money towards your mortgage.
If you still want to have some income on the side to pay off your mortgage, or if you plan to come back to the Netherlands, you might actually be considering to rent your home out. But is that an actual possibility?
How about renting out your house in the Netherlands?
So you have invested in real estate but you no longer can or need to live in the property you bought. If you don’t want to sell it, you might be thinking of renting it out. It could seem like a sweet deal where the money you get through rent might be higher than what you pay for your mortgage, but hold your horses there! It may not be the best deal for you.
If you’re under the impression that you will be getting more money out of this, reconsider. When you’re looking to rent out your property, it is always best advised to do it through a rental agent and agency. Like a real estate agent, they will do everything on your behalf: property management, finding risk-free tenants and helping you determine the rent amount. However, they do cost money. Additionally, any maintenance cost that has to be carried out will be paid for through your bank account.
Also, if you do rent out your property in the Netherlands, then you will be taxed on the value (WOZ value) of the property. The rate of taxation will be around 30% annually but it all depends on whether you’re living in the Netherlands, the WOZ value and more. For more information, check out the Dutch Tax Authority’s website on investing in immovable properties.
It might seem like a sweet deal on paper but the numbers don’t always add up. Your income would be through the monthly rent, but your expenditure would be your agency costs, maintenance costs, and your mortgage.
Furthermore, and perhaps not what you heard around the watercooler, but you do officially need permission from the bank in order to sublet your house. And, as you can imagine, that’s not as easy as just a quick call.
Anybody who rents a place in the Netherlands has ‘rental protection’ (huurbescherming) – which means in practice that the renter has a pretty good amount of rights. Whatever the rental contract says, the banks don’t like this and consider a property to be worth a bit less when it’s rented out.
Switching mortgages in the Netherlands, is that possible and a good idea?
With the low interest rates of today, you might think it’s a good idea to get another mortgage with lower interest rates. And yes, that’s indeed a good idea. Sadly we don’t live in a land built on fairytales and well-wishing and you signed a 10/20/30-year contract with a bank for a fixed mortgage rate. And they’re not going to let you hop onto another mortgage with you paying some kind of fixed sum – some would even call it a fine. But even then it could make sense to get another mortgage.
We can write an entire article about switching mortgages, but let’s keep our eye on two things. First, remember that there are also certain costs involved when switching mortgages. Not only is there the ‘fine’, but there’s also consultatory fees and notary fees. So it’s only worth your while if you have significant decreases in your mortgage rate to look forward to.
Which brings us to the second thing to look at, namely your current mortgage rate. An extremely blunt rule of thumb would be that it isn’t worth it if you secured a mortgage in the Netherlands after 2014 – that would probably mean that your interest rate is already pretty low.
But yeah, again, if you want to get some tailored advice about all of this, it’s best to ask Selina from Expat Mortgages about all this – all without any fees if you can’t get a better mortgage of course!
What you need to know about the ‘Loan-to-Value’ ratio.
The Loan-to-value ratio is a little complex, but we’ve got a simple explanation to get your started:
When you first apply for a loan the bank considers what risk is involved. They’ll compare the ratio of the requested loan to the value of the house. This gives the client a risk level, called the Loan-to-Value (LTV) ratio. The higher the loan is in comparison to the house value, the higher the risk for the bank, and the higher the eventual interest rate for the client.
But, the LTV ratio decreases as the loan is slowly paid off, or as the house gains value. That means that once the LTV ratio has changed you can request a discount from your bank for being a less risky customer.
For example, if you took out a loan of 200,000 euros for a 200,000 property, you have an LTV ratio of 100%. But, after five years of paying off that loan and your property increasing in value, perhaps your LTV is now only 85%. That could give you a sizable discount on your loan repayments if you request it from your bank.
If you’re interested in saving some money this way, get in touch with Selina to discuss the full process, benefits, and things to know.
Getting a divorce is sad, here’s what will happen to your mortgage as an expat
Did you and your partner take the plunge together to put your names down for a joint-mortgage – but then took another and decided to get a divorce? We’re so sorry to hear you had to get a divorce in the Netherlands. Along with dealing with the emotional trauma, you have to take care of some practical matters too. Go to the bank where you have to submit yourself for financial evaluation. They will then determine how you or your ex can carry the load of paying the mortgage. You do have to be patient with this process though: it could take anywhere from three months to up till a year before it is processed.
I need more help with aftersales
Have we not covered something here or does the process look a little complicated? Did this article make you pause and realise there’s still a lot for you to research?
If you can resonate with any of these points or you’re in any of the situations described and you want to get a move on, you may have to approach a professional to help you. We’ve only touched the tip of the iceberg. So unless it’s a very simple task where an afternoon of searching on Google would help, you might want to consider getting an industry expert to give you a hand.
|Need to get serious on one of these points? Unless it’s super simple, you want to get Selina from Expat Mortgages to help you out!
As an expat you will need some help to secure a mortgage in the Netherlands and this process is already complex for a Dutchie So get help! There’s no party better to ask than Expat Mortgages who already have 12 years of experience in the mortgages advisory business and have helped thousands of expats from different nationalities.
Since they only work with expats and internationals (Dutchies have been asking them for help too, but no dice!) they really know their stuff when it comes to all the specific details and peculiarities that come into play when it’s a foreign person trying to get a mortgage in the Netherlands. Or trying to sell a house or switch mortages as we’ve discussed in this article.
Want to get in touch for an offline appointment? Well, they can meet you for a no-strings-attached meeting in which you can ask everything about the mortgage possibilities. Or just drop by at one of their events, also conveniently held throughout the country!
Have you done aftercare for your Dutch mortgage? Thought about switching mortgages? What did you change? Let us know in the comments below!
Also, we’re proud of our nifty infographics about selling your house in the Netherlands, so here it is once again. Print it out and frame it for your bedroom, or pin it on pinterest like a normal person in 2020 would do: