So you bought a house in the Netherlands — congrats! But life happens and things have changed. You may need a bigger home, you may have decided to move country or you may be getting a divorce. Good changes or bad, you’ll have practicalities to take care of: one being what to do with the home you own.
That’s why DutchReview has teamed up with Expat Mortgages to address some situations that you may find yourself in after buying your home. Yes, it’s aftersales time! 💪
Expat Mortgages are the experts for all things related to a mortgage for any international in the Netherlands. When it comes to everything you could think of about life after securing that mortgage in the Netherlands you can talk to Joyce Pepping.
She’s an absolute pro when it comes to that aftersales process and questions in life a homeowner could have.
🍼 You’re expecting again? Congratulations! Now you need to make your house bigger
Say you just had a second kid and you can use a little more space and you might be tempted to find yourself a new home. However, 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.
How can you stay put but also get some extra space? Simple, by renovating your home! “Well, duh,” we hear you say, “that’s easier said than done.” But did you know that you can use your current mortgage to fund that extra space you need?
Now we’ve got your attention. How do you do this? There are two main ways that homeowners can make the most of their current mortgage and fund some home refurbishment and renovation:
- Bouwdepot — This is a loan that can be taken out of your Dutch mortgage to finance the renovation or construction of your home. Think of it as a loan that you organise alongside your mortgage. A certain amount of money is put aside which can then be used to finance a facelift for your house.
When setting up your bouwdepot, you may have to pay notary costs. Joyce recommends that you speak with a mortgage advisor to determine whether or not this is the case.
- Refinance your mortgage — While it is possible to arrange for a bouwdepot even after you have settled the conditions of your mortgage, many current homeowners opt for this option in order to fund a little more wiggle room. By refinancing your mortgage, you can reduce your monthly payments. This additional equity can then be used to fund the renovation of your home or even finance a snazzy new car or holiday home!
📦 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.
Selling your home in the Netherlands
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, your agent 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.
- Once they find people who want to see your property, the agent will accompany them on their viewings (so there’s no need for you to be there at all, which is handy if you’re in another country prepping for the move.)
- When 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.
- When 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, or if you plan to come back to the Netherlands, you might actually be considering renting your home out. But is that an actual possibility?
Can you rent 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.
Note: It’s also important to remember that if you are no longer living in the house yourself, and will not do so for a long time, you are going to have to refinance your residential mortgage as an investment mortgage.
♻️ Switching mortgages in the Netherlands, is it a good idea?
Speaking of refinancing, let’s talk about changing your mortgage. 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 — especially if you hope to use the additional equity to better your home.
But the question is whether there will be any additional equity. Sadly we don’t live in a land built on fairytales and you need to be realistic when making the decision to switch mortgages. You signed a 10, 20, or 30 year contract with a bank for a fixed mortgage rate — and they’re not going to let you hop onto another mortgage very easily.
We can write an entire article about switching mortgages, but let’s focus on two main reasons why you may not want to change your current Dutch mortgage.
The costs of switching mortgages
First, remember that there are also certain costs involved when switching mortgages. When you decide to switch mortgages during your contract, you must pay a ‘penalty fee.’ The fee is often a reason why some people will choose not to refinance their mortgage as it can be quite high and sometimes outweighs the benefits of reduced monthly payment.
However, Joyce points out that there is the possibility that you can actually use your new mortgage to finance this penalty fee! On top of that, you can also deduct this penalty fee from your taxes. Your mortgage advisor will advise you on your options surrounding this — and it’s definitely worth looking into. 👀
On top of this fee, there’s also consultatory fees and notary fees to pay. So changing your mortgage is only worth your while if you have significant decreases in your mortgage rate to look forward to.
Are the interest rates worth it?
This brings us to the second thing to consider, namely your current mortgage rate. An extremely blunt rule of thumb would be that it isn’t worth changing your mortgage if you secured a mortgage in the Netherlands after 2016 — that would likely mean that your interest rate is already pretty low.
Unsure of whether or not this is a worthwhile option? Reach out to Expat Mortgages for a free consultation with their experts on having a Dutch mortgage as an international.
The ‘loan-to-value’ ratio: how it can help your Dutch mortgage
The concept of loan-to-value ratio (LTV ratio) is a little complex, but it’s can be a great way to save yourself a bit of money once you have settled into your mortgage. We’ve got a simple explanation to get you 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 — cha-chingg. 💶
What could this look like? Joyce lays out a helpful example for us, “For example, if you took out a loan of €200,000 for a €200,000 property, you have an LTV ratio of 100%,” she explains, “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.”
💔 Getting a divorce? Here’s what will happen to your Dutch 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 sorry to hear that.
Along with dealing with the emotional trauma, you have to take care of some practical matters when it comes to your home.
One of the main things you will need to concern yourself with is a financial evaluation. You will have to submit yourself for this at your bank. They will then determine how well 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 to a year before it is processed.
Until one of you takes over the mortgage or refinances it, both you and your partner will remain responsible for paying the mortgage — regardless of who remains in the house. However, it is recommended that one partner eventually takes over the mortgage on a house, if both remain liable, then the chances of you or your partner taking out a second mortgage on another property can become complicated.
I need more help with my Dutch mortgage
Want to get in touch for an 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 online and 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!
Feature Image: monkeybusiness/Depositphotos