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Financing your home

As mentioned earlier, it is advisable for you to first have an exploratory interview with an expert mortgage adviser from V&W Adviseurs before going in search of a suitable home to buy. During this interview it will be clearly explained what the possibilities are in your personal situation.

Buy or rent?

Many first-time buyers in the housing market ask whether they should buy or rent a property. The main advantage of renting a property is that the maintenance is paid for by the landlord. Another advantage for the tenant is that a tenant is more mobile and does not have to pay costs with every transaction. But renting also has its drawbacks. Throughout the rental period, there is no capital build-up and every year the tenant will be faced with a rent increase. In addition, a tenant does not benefit from the rise in the property’s value, whereas a home owner benefits from inflation and value­ adding investments in his house. In the past the value of property has on average risen faster than inflation. But it also depends on the moment that you buy or have bought a property. The most recent banking crisis is well-known, but also the period that every house was sold in a couple of days. A further advantage for home owners is that the interest paid on the mortgage is deductible and at the end of the term the property may be debt-free. An important element when considering whether to rent or buy is the question of how much mortgage you can get on the basis of your present monthly rent. The answer to this question requires a complex calculation that we can perform and explain during a no­ obligation interview.


Below we set out the advantages of buying a property:

  • Possible increase in value of real estate
  • Tax-free build-up of capital
  • Interest deduction (maximum of 30 years)
  • Capital formation
  • Financing costs tax-deductible


Buying an existing property

You will see the letters k.k. after the purchase price of a property. This stands for “kosten koper”, which means costs paid by buyer. If you allow a figure of 5% for additional costs to be paid by the buyer (calculated on the purchase price of the property), you will be making a safe estimate. Examples of such costs are:

Transfer tax and new rules

If you buy an existing home, then you will have to deal with transfer tax. The transfer tax is a percentage of the purchase price that you must pay on top of the purchase price (as tax) once you become the owner of the property. The reduced transfer tax rate is 2% of the purchase price (self-occupancy requirement). There is an exception to this transfer tax rate for first-time buyers. Under certain conditions, you pay no transfer tax at all. There is a significantly higher rate for second homes and real estate investors than for private homeowners.

Transfer tax exemption for first-time buyers

An important change is that homebuyers between the ages of 18 and 35 will no longer have to pay transfer tax as if they meet the following conditions:

  • At the time you sign the deed of conveyance (key transfer), you are between 18 and 35 years old.
  • You are buying a house in which you are going to live yourself.
  • The purchase price does not exceed € 400.000 (2022) and € 440.000 (2023).
  • You have not previously had a starter exemption. Did you previously buy a home without a starter exemption and is this your next home, but you meet the conditions above? Then you are still entitled to the starter exemption for this new home.

Note: Are you buying a house together with someone else? Then you must both meet the conditions to both receive the exemption. If you do but your partner does not meet it, you will only receive the exemption (or vice versa). Suppose you both own 50% of the home. Then your partner only has to pay the 2% tax on 50% of the home.


Financing costs

Most people need to take out a mortgage. There will be costs for advising, applications, and assisting with a mortgage. These costs are tax deductible. And there may also be additional financing costs, such as the costs of the National Mortgage Guarantee (NHG), but also the costs of the bank guarantee.

Valuation report

In many cases, the lender will require a valuation report. An independent valuer who is not involved in the purchase or financing of the property has to estimate its value. This gives the lender the assurance that the value of the security (your property) falls within its mortgage-granting criteria.

Civil law notary’s fees

The civil law notary ensures that you become the owner of the property. To do this, a deed of conveyance is drawn up. If you need a mortgage, the civil law notary will also draw up a mortgage deed.

Costs of a structural report

This report uncovers any faults in the property and at the same time provides an indication of the costs that repairing them will entail.

Purchasing estate agent

As discussed previously, it can be highly advisable to take your own estate agent along to the property you are thinking of buying. He will charge a commission for his services.

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    Buying a new build

    The asking price for a new build is given with the letters v.o.n., meaning ‘no legal charges’. This means that the purchase costs (deed of conveyance and VAT) are already included in the purchase price. There will certainly be additional costs if you buy a new build. Plus, bear in mind that if you buy a new build you may have to put more money into the property. Examples of this are extra money for the kitchen, bathroom, floors and possibly laying out a garden. The advantage is that you can arrange the property exactly the way you want it. The additional costs are:

    • The financing costs (see also purchase of existing property)
    • The civil law notary’s fees for the mortgage deed only



    Interest during the construction

    You cannot usually move into a new build immediately. In many cases the property still has to be built. This means that when you go to the civil law notary the costs of the land have to be paid. The builder will also charge you costs as the building progresses. The lender settles the bills for the land and pays the builder. The lender does not lend you this money free of charge and will charge you interest. You can pay these costs yourself, but then you are faced with double (living) costs. You can also opt to have these costs financed. Roughly speaking we can say that the additional costs (excluding additional work) can be estimated at 6 to 7%. This will depend on how long the building work takes. But use this as a rule of thumb to be going on with.


    Maximum loan amount

    The maximum amount that you can borrow depends on a number of factors, such as your income, the value of your house, your age, interest rates, and (study)loans. Usually, you can borrow a maximum amount in respect of the value of the property. Your age also affects the maximum loan amount. The lower the interest rate, the more you can borrow. However, the most important factor is your gross income. The higher your gross income, the more you can borrow. This is based on your fixed income. Your holiday pay and a fixed, guaranteed 13th month are also included in this. Variable income is not always or only partially included in the calculation. It is not possible to give a clear indication of the maximum loan amount. This depends on interest rates, level of income, etc.. As a rule of thumb you can assume that you will be able to borrow 4 to 5 times your annual income. Higher incomes can borrow up to 5 times their income and lower incomes might be restricted to borrow less than 4 times. On the internet you can find a tool to calculate this maximum amount, but we advise people who are planning to buy a new property to come to our office, because every situation is personal. As remarked earlier the maximum loan amount also depends on the value of the house. With a good income you might get a higher loan but it can be restricted due to legislation. The maximum mortgage (amount) that the lender may arrange is 100% of the value of the property.


    For people who are not Dutch nationals

    If you are not a citizen of the EU then the possibility of obtaining a mortgage is easier if you have a permanent residence permit in The Netherlands. This condition applies to anyone whose income is required to obtain the mortgage. If your income is not required to obtain the mortgage, it is sufficient to have a temporary residence permit. In short, if you are from outside the European Union your residence status in The Netherlands is a crucial factor. If you have a permanent residence permit, there is no problem. There is also no problem if you have a temporary residence permit, but you are married to someone whose nationality is Dutch. If you have a temporary residence permit there are still possibilities. What kind of residence permit you have exactly? Do you have funds of your own? What is your level of education? What is your expected income trajectory? How long have you lived in The Netherlands, etc.? However, whether a lender is prepared to grant you a mortgage will depend on your specific situation. We should point out, though, that the lender will be more likely to grant a loan if the buyer can contribute a considerable amount of his own funds. Get in touch with us so that we can look at the possibilities that apply to you.

    For people with temporary contracts (without a letter of intent)

    According to the lenders’ general acceptance guidelines the borrower must have a permanent income. If the borrower has a temporary contract the lender will be willing to regard this as a permanent contract if the employer declares that this temporary contract will be changed to a permanent contract (a so-called letter of intent). Please note that the letter of intent to renew the employment contract for a temporary period will not be valid. There are some employers, such as all Dutch universities, who refuse to issue this letter. This applies to phd-students, postdocs or other scientific staff. Another group that doesn’t get a letter of intent are employees in a hospital with a medical license but waiting for a position to become a medical specialist (AIOS/ ANIOS). We have close contacts with several lenders and our experience is that a mortgage is also possible for employees who do not have a letter of intent. This also depends on the borrower’s circumstances. Here again critical factors are; the level of education of the buyer(s), the expected salary growth, etc.

    Additional loan regulation (important for home owners with surplus value on the housing market)

    The additional loan regulation became law on 1 January 2004. Briefly, what this regulation amounts to is that the tax authorities expect you to put the surplus value that you have accumulated when you sell your house, you put back into your new property, (if you buy this new property within 3 years). The additional loan regulation can be very complex. For instance, people who are divorced and have made a surplus value and wish to buy a new property with a new partner. For more detailed information we can schedule a meeting.

    National Mortgage Guarantee

    The National Mortgage Guarantee (NHG) is issued by the Home Ownership Guarantee Fund Foundation. This guarantee fund might guarantee the repayment of your mortgage (amount) to the lender provided the forced sale is due to no fault of your own. For example if your income falls because you are made redundant or become incapacitated for work or if you have to sell the house due to a divorce. In addition, a mortgage with a National Mortgage Guarantee has almost always the lowest interest rate. We will ascertain for your individual situation whether you qualify for this. It is best to go for this option if available.


    First-time Buyer’s Loan

    First-time buyers can qualify for a First-time Buyer’s Loan. A First-time Buyers’ loan is a form of subsidy and this is provided by the municipality. Feature is that the municipality provides for three years an interest-free loan. However, a limited number of municipalities participate and each municipality has its own rules. The First-time Buyers’ loan, offered by SVn and your municipality covers the difference between the cost of your new home and the amount you can borrow up to the standards of NHG. The height of the buyers’ loan depends on your income, your assets and the terms of your municipality. Whether you qualify for a First-time Buyer’s Loan will have to be ascertained during a personal advisory meeting.

    Per 1/1/2023 cost of the threshold is raised to € 405.000. Every year, the cost of the threshold will depend on the average market value of properties. When you also invest in energy-saving facilities, the cost of the threshold is € 429.300.


    The Labor Market Scan

    From 2020 a mortgage based on the Labor Market Scan will be available and flexworkers will have more options for a mortgage. The aim of the Labor Market Scan is to offer more flexworkers a responsible and affordable type of mortgage based on their chances on the labormarket. The aim is to stimulate flexworkers to buy a property. With the introduction of this Labor Market Scan, mortgage lenders will not only look at the current income and employment history of employees, but especially at their perspective on the labor market and opportunities to earn sufficient income in the future. NOTE: Be aware of the fact that now the scan can only be made if the diploma is approved by a Dutch institute (DUO).