Buying a house without a financial clause: The benefits and the risks

While buying a home in the Netherlands is an exciting step, it is definitely a complex process. This is especially true for expats who may be unfamiliar with how the Dutch system works. There are lots of idiosyncrasies and unique ways in which the Dutch property market works, and when houses are in such short supply, it can be easy to feel pressured into making a decision before you understand all the implications.

Understanding the financing clause

One of the most unusual and important factors to consider when placing a bid is the financing clause (voorbehoud van financiering). This clause gives buyers the legal right to cancel the purchase without penalty if their mortgage application is rejected.

Why buyers want to include a financial clause

In the Netherlands, it’s common to make an offer on a property before your mortgage has been officially approved. To ensure you aren't lumbered with a house you can't afford to buy, it is very common to include a financing clause in your offer. This allows you a window of time (usually 4-6 weeks) in which to arrange your mortgage. If your mortgage application is declined within that period, the clause allows you to withdraw from the contract without any financial penalty. 

Why sellers prefer bids without a financial clause

Unfortunately for buyers, sellers often prefer offers that don’t include this clause, as it reduces the risk of the sale falling through. In the past, most offers included the financial clause, but as the housing market has become more competitive, an increasing number of buyers are willing to forgo the clause to make their bid more appealing to the seller.

Buyers who waive the financing clause often stand out in the bidding process - but they also take on much greater risk.

Find out how Bidding Without Worries insurance can allow you to make an attractive offer without the risk.

What are the risks?

In today’s cut-throat housing market, you might be tempted to waive this clause to make your offer more attractive. However, doing so comes with serious financial risks that you need to make sure you take the time to consider.

If your mortgage isn’t approved, you could be required to pay a penalty of 10% of the purchase price. That is a large sum of money that you would have to pay from your savings, leaving you in a much worse financial position when preparing to bid on your next property.

Mitigating the risk

It is possible to invest in insurance that covers this risk for you. With this policy in place, if your mortgage is declined despite reasonable efforts to secure financing, the insurance will cover the penalty fee. This means that you can confidently bid on a home without a financing clause, knowing that you're covered if your mortgage ends up being rejected.

Making the right choice for you

Bidding without a financing clause may seem risky, but with the right protection in place, it becomes a powerful advantage. Sellers are far more likely to accept offers without a financing clause, since there’s less chance the deal will fall through. This gives you a competitive edge, which is especially valuable in a tight market where homes often receive multiple bids.

Financing clause insurance allows you to combine this competitive advantage with financial security. You won’t need to worry about worst-case scenarios, and you’ll show sellers that you’re serious and prepared.