Dutch mortgage rates explained: How to choose your fixed-rate period

Mortgage rates have been on the move lately. And since rates aren't just heading down, we've been getting more and more questions from our clients about what their options actually are. Makes total sense: whether you're planning to buy a home, or your current fixed-rate period is about to end, you want to know where you stand.

Let's explore how mortgages in the Netherlands work. That way, you can make a confident choice that fits your situation.

How are Dutch mortgage interest rates determined?

Let's keep it high-level; I will not bother you with every detail. Your mortgage rate comes down to a handful of factors:

• Fixed-rate period: Even though a mortgage is typically structured over 30 years, your interest contract gives you a choice between different terms (1 year, 5 years, 10 years, 20 years, and so on). As a rule of thumb: the longer you fix your rate, the more certainty you get, and usually the higher the rate.
• How much you bring in yourself: The lower your mortgage compared to your home's value, the less risk for the lender, and the better your rate usually turns out.
• Your energy label counts too: Sustainability has become a fixed part of the mortgage world. Lenders like to encourage you to make your home more sustainable, and reward it with a discount on your mortgage rate. In other words, the better the energy label, the more interesting the rate.
• Mortgage type: Lenders typically offer a lower rate for a repayment or linear mortgage compared to an interest-only mortgage.
• The type of lender: Banks have a different mortgage rate policy than, say, insurers or pension funds. So your choice of lender type has an effect on your rate too. Good to know: lenders compete with each other quite a bit (lucky for you!).

Bottom line: your rate isn't just a number, it's the sum of your choices and your situation. This also means that there's always room to sit down together and figure out what works best for you.

How mortgage rates impact your Dutch borrowing capacity

Your borrowing capacity is calculated partly based on the interest rate and the potential interest-rate risk. In other words, mortgage providers are obliged to factor potential interest-rate risk into your mortgage capacity. 

Here's what lenders look at:

	Upside	Downside
Short fixed-rate period	Lower rate	Higher interest-rate risk
Long fixed-rate period	Lower interest-rate risk	Higher rate

Your ideal fixed-rate period depends on your situation and what you're after. Going for maximum borrowing capacity? Then the 10-year rate is usually the sweet spot between rate and risk. Prioritising clarity and low risk instead? A longer fixed-rate period is a great alternative.

Mortgage flexibility: Changing terms and lenders 

Flexibility is how easily you can switch mortgage structure or lender.

As a rule, the longer your fixed-rate period, the less flexible you are. This matters most if you're expecting a renovation, or even a move, in the (near) future.

10-year vs. 20-year fixed mortgage rates in the Netherlands

Traditionally, the 10-year rate has been the most competitive one on the mortgage market. This is mainly because lenders need a competitive 10-year rate to be "in business" in the mortgage market. 

That said, some lenders are currently pricing their 20-year rate remarkably well too. Some providers deliberately offer sharp 20-year rates to stand out. 

Which one suits you best depends entirely on your personal situation, and that's exactly where mortgage advisors come in. 

Get in touch with Klår Finance

Choosing a fixed period: First-time buyers, movers & refinancing

Buying your first home and chasing maximum borrowing capacity? Predictability tends to feel good here: you want to know where you stand while you're still building things up. A 10-year rate usually gives you a solid mix of borrowing room and peace of mind for years to come.

Moving on to your next dream home? A different question tends to pop up: how long do you plan to stay, and how does that weigh against flexibility versus certainty? A longer fixed-rate period can fit just as well here, especially if the rates on offer are good.

Is your current fixed-rate period coming to an end? That's the perfect moment for a fresh look at your situation. Your current lender may have been the right call at the time, but once your fixed-rate period ends, you're free to switch lenders at no cost (if it's worth it).

Next steps: Getting personal expat mortgage advice

As you can see, there's more than one way to look at a mortgage rate. Sometimes talking through your personal situation and options can be incredibly helpful. And most importantly, help you find the home you love.