The number of neighbourhoods with average property values of more than one million euros has increased dramatically over the last few years. Properties worth more than a million euros are becoming more popular among homebuyers in the Netherlands.
Do you have plans to purchase a property worth over a million euros? Then you are not a typical client. High-value mortgage applications work differently than standard mortgage applications. Some mortgage lenders even consider a mortgage of over 750.000 euros a high-value mortgage.
How does the process work?
The mortgage application process works in a similar way to a regular mortgage. The first step is to understand how much you can borrow and place a bid. When an offer is accepted, you have to submit documents for a mortgage application. Additional documents are required to submit a mortgage application of over a million. For this reason, the mortgage process takes longer than when it comes to a regular mortgage.
What types of interest rates are available?
There are various types of mortgages you can choose from:
- Annuity
- Linear
- Interest-only
Mortgage interest rates have decreased drastically over the last few years in the Netherlands. Declining mortgage interest rates pushed property prices up and increased the demand to borrow more in 2021.
Good to know
Here are a few things that are good to know if you are planning to buy a property of over a million euros:
Fewer mortgage lenders to choose from
There are more than 30 mortgage lenders in the Netherlands; however, not all the lenders have the necessary expertise to assess a mortgage of over a million euros.
Lower loan-to-value amount
When you apply for a regular mortgage, you can get a 100 percent loan-to-value mortgage as long as you can afford this. However, a lending restriction could apply to high-value mortgages. In most cases, mortgage lenders approve a mortgage up to 80 of 90 percent of the loan to value. The rest must come from personal assets.
Mortgage risk assessment
It takes more time to approve a higher mortgage due to the risk factors. Many banks and mortgage lenders have strict risk management procedures and capital requirements. This is because lenders aim to make sure wealthy clients have sufficient funds or security to afford the mortgage. For example, what happens if one of you passes away, loses their job, or can't work anymore? If you buy a million-euro home, you can be sure that your mortgage application will be reviewed separately by a credit committee or a risk management department.
Proof of personal wealth
If you plan to get a high-value mortgage, the bank will perform additional research to ensure you're not a risk to them in any way or form. Mortgage lenders, civil notaries, and mortgage brokers are obliged to identify the source of original funds to prevent money laundering and counter-terrorist financing in the Netherlands. Make sure you already have the paperwork to show the source of your funds, preferably translated into Dutch.
How long does it take to approve a mortgage above a million?
On average, mortgage applications for over a million can take from four to six weeks. A mortgage lender spends more time assessing different assets, including savings, income, or other investments and securities, as stated above.