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Mortgage

9/2/2013 Henk Jansen Housing

Expats who come to the Netherlands often spend their first weeks in a hotel. In many cases, it is the employer who arranges this. And then they set out to find a place to live; almost always a rental home. There are two segments in the Dutch rental sector: short stay and long stay. Short stay periods are for about six months, long stay periods are, obviously, longer. The rental prices for short stay rentals are considerably higher.

After a while (this used to be two-and-a-half years, but now has become within the year), the decision is made whether to stay in the Netherlands longer or not. And this brings up the subject of living space again; not only rentals are considered, but also the possibility of purchasing a house.

Over the last couple of years, owning a home in the Netherlands has proven to be a good investment. Despite the current economic downturn, many expats are still deciding to buy a house. Between 2007 and 2009, the market switched from a seller's market to a buyer's market. There are a lot of houses on the market and there is room for negotiation. Furthermore, the short-term interest rate is at a historic low, so that it seems worthwhile to invest in a house.

So how do you, the expat, go about buying a house here? You are in a different country, with different customs, laws and regulations, you do not speak the language (yet) and you want to know which risks you are taking.

To help you along, I have set up a nine-step plan which will help you prepare for buying your new house.

Step 1: Can I take out a mortgage? How much can I borrow? What can I buy?
The first thing to do is to make an appointment with a mortgage advisor. Is it at all possible to take out a mortgage in the Netherlands? How does the purchase and mortgage system work? What does kosten koper mean? How much will you be paying per month? What types of mortgages are there? A good advisor will take you by the hand and go through your options with you.

Note: there is a mortgage solution for you, no matter where you are from, regardless of your residence status or type of employment agreement!

Step 2: Finding a nice house
You can find houses on websites such as: Funda, Jaap.nl or Makelaarsland. At the moment, there are more than 200,000 houses on the market. That is more than 50% more than during a normal period. In other words, there is a lot to choose from – which is good news for buyers. But how do you make optimal use of this? You can look for a house yourself, but you can also enlist the help of a professional: the real estate agent. Have a professional real estate agent inform you on the market, such as on the costs, the search, making an offer on the house – and the entire purchasing process.

Step 3: Buying the house
Once you have found something you like, negotiations start, until you have reached an agreement on the purchasing price. You now have a "verbal agreement". Congratulations! You've just bought a house. Your agreements will be put in a provisionary contract. Note: provisionary! You now have three (working) days to think things over – called wettelijke bedenktijd, or legally determined period of deliberation. The contract also contains dissolutive conditions. For instance, should you be unable to arrange a mortgage within four weeks (in some contracts it still says three weeks, but in the current market that is not enough time), then you can end the contract without any legal consequences or costs. You must be able to show two rejections issued by recognized money lending organizations. But we're getting ahead of ourselves. You have just agreed on a price; on to the next step.

Step 4: Requesting a mortgage
You make an appointment with your mortgage advisor and start discussing mortgages. Your advisor helps you decide on issues such as:

  • the amount you wish or need to borrow
  • the duration of the mortgage
  • the type of mortgage (or a combination of types)
  • the interest and the period of fixed interest
  • the desired or necessary related insurances (death, disability for labor and/or unemployment).

Step 5: The papers you need
You will need to submit a number of documents when requesting your mortgage. These regard:
  • you as a person
  • your financial situation
  • your new collateral.

When it comes to you as a person, we refer to your passport, or your residence papers. An employment contract, your salary slip or a copy of your 30%-ruling come in handy when determining your financial position. Also your financial position in your home country could be considered of importance. Do you have an assets, such as savings, another home, or pension rights there – or in any other country? And finally, you will have to show the documents regarding your new home. The provisional purchase contract, the original taxation report, any possible refurbishing plans, or a construction report, for instance.

Step 6: The notary public
In the Netherlands, mortgages and real estate movements are noted in the cadastral registry by a notary public. These notaries are considered independent parties. The buyer gets to choose who is to be the notary. We advise you to meet with a notary before you enter the purchasing and mortgage process. He can help you with other legal issues as well, such as a will or the Dutch law on matrimonial property. When the house is transferred to your name, an interpreter should be present should your command of the Dutch language not be sufficient.

Step 7: The tax office
One of the reasons the purchasing of a house is such a popular option in the Netherlands is the fact that you may be able to deduct the mortgage interest. In principle, interest in connection with the financing of a house is deductible. The tax office refunds the interest on a monthly basis. The one-time financing expenses are also deductible. This results in an additional tax advantage in the year of purchase.

Step 8: Insurances
As indicated in step 4, there are a number of insurances you might consider (or need): insurance in the case of death, insurance in the case of disability for work, and unemployment insurance. However, being the owner of a house, you should also arrange homeowner's insurance, household insurance and liability insurance.

Step 9: After-care
Not only your house needs the occasional upkeep; so does your mortgage. I would recommend that you, periodically, take a good look at your mortgage, or let a professional do this. Your personal situation could change, your fiscal situation could change or the types of mortgages available could change.

Anyone can buy a house in the Netherlands. For a long time now, owning your own house has proven to be a good investment. However, the buying of a house and the arranging of a mortgage do require sound preparation. We advise you to make an appointment with an advisor who can help you explore all your options and make all the necessary calculations.

We wish you lots of luck!

Henk Jansen, works for Expat Mortgages, www.expat-mortgages.nl.