A lot goes into getting a mortgage in the Netherlands. Do you take out a mortgage from a bank or a mortgage broker? What about the additional costs (kosten koper)? Are you eligible for mortgage tax relief?
Mortgage broker or bank?
Mortgages can either be taken out directly from a bank (or other institution), or via an intermediary such as a mortgage broker. Both banks and mortgage brokers charge a fee of roughly 2.000 to 3.000 euros.
With both banks and mortgage brokers, it is important to enquire what services are covered. The first "orientation" meeting with a bank or broker is usually free.
Mortgages from Dutch banks
Dutch banks can provide you with a mortgage directly. They often divide their services into advice and handling fees, which you can find online under hypotheek advieskosten or hypotheek adviestarieven.
Working with mortgage brokers
Mortgage brokers prepare a financial overview, investigate mortgage options with different banks, correspond with banks, compile and submit documentation and offer insurance. Mortgage brokers usually charge a flat fee.
Additional costs when buying a house in the Netherlands (kosten koper)
The kosten koper (k.k.) are all the additional costs that the buyer is obliged to pay when purchasing a property. The total cost depends on the value of the property, which is around 6 percent of the house price (estimate 12.000 to 18.000 euros). The notary usually combines these costs and distributes the payments, so you only need to come up with the money, but check to be sure. Many of these costs are tax deductible.
Kosten Koper (k.k.) costs
- Mortgage broker fee (hypotheek advieskosten)
- Real estate agent fee (makelaarscourtage)
- Transfer tax (overdrachtsbelasting)
- Interpreter for settlement meeting at notary (tolk), if needed
- Building report if you are buying an older property (bouwkundig rapport)
- Notary fees including deed of property conveyance (kosten leveringsakte) and mortgage contract (hypotheekakte)
Note that the majority of listed property prices are excluding kosten koper, so you will need to calculate an extra 6 percent on top of the house price. Freehold or vrij op naam (v.o.n.) after a property price indicates that the extra costs are included in the listed price. This often applies more to recently built houses.
Mortgage tax relief (hypotheekrenteaftrek)
In the Netherlands, if you have an annuity or linear mortgage, then the interest on your mortgage is tax-deductible and you will receive an annual or monthly tax refund from the Dutch tax office (Belastingdienst). You are only eligible for mortgage tax relief when you are living in your property. If you are renting it out (while living abroad, for example) then it is considered an investment for which you can receive no tax deduction on interest.
If your income level places you in the highest tax bracket, the tax rate at which you may deduct your mortgage interest will gradually decline. In 2020, the deductible mortgage interest rate is 46 percent, down from 49 percent in 2019. This reduction will be accelerated by 3% annually from 2020, which means that in 2023, it will be 36,93 percent. Mortgages dating from before January 1, 2013, are not affected.
What is the National Mortgage Guarantee (Nationale Hypotheek Garantie)?
The National Mortgage Guarantee (Nationale Hypotheek Garantie or NHG) makes sure that you don’t take a mortgage out that is beyond your means. The National Institute for Family Finance in the Netherlands (NIBUD) has set criteria for responsible lending and borrowing. When you take out an NHG-backed mortgage, it will match these criteria. This means you will never borrow more money than you can actually afford.
If you can no longer afford your mortgage
If something unexpected happens and you can no longer afford your mortgage, an NHG-backed mortgage acts as a safety net. When you cannot pay your mortgage due to specific circumstances beyond your control, the NHG will step in. These specific circumstances include:
- The loss of your job.
- The ending of your relationship.
- The death of your partner.
- If you become disabled for work.
Online Dutch mortgage calculators
There are various online mortgage calculators available. You can use these to make a quick estimate of the maximum amount you can borrow: