How to get a mortgage in the Netherlands

When it comes to a residential mortgage, the government’s role is to protect you from financial risk. They take this job seriously – as they should, because your mortgage will probably be the biggest debt you will ever have.

Here are a few highlights you need to be aware of:

• Every financial institution you will be dealing with is under strict supervision from the government.
• As a consumer, you are obliged to get mortgage advice from an expert upfront. With this, they guarantee that you will have a mortgage structure suited to your situation.
• There are strict guidelines for every mortgage provider and advisor to determine your borrowing capacity.

Time for action - Mortgage advice

Knowing that the mortgage process in the Netherlands is well organised, you can take the first step and delve into the relevant information. For official mortgage advice, you can go to a bank directly (some banks – not all – offer this service) or you can go to an independent mortgage advisor, who has access to multiple lenders.

You can view the main difference like this: banks will be able to inform you about their specific products (good – but limited), whereas an independent mortgage advisor can guide you in the housing market and set you up with the mortgage product that is best suited to your situation.

Let the maths do the talking

When it comes to financial risk, the government has a set of rules that determine your financial budget:

Loan to income

Your maximum borrowing capacity is based on your gross yearly income. The rule of thumb is that your annual mortgage costs cannot exceed a specific percentage of your annual gross income (approx. 25% - 30%). It is also possible for entrepreneurs to get a mortgage, but it may require a little extra work on your mortgage advisor’s end.

Loan to value

The mortgage cannot exceed the worth of the property (unless you are interested in energy-related investments).

A buffet of choices

Determining your mortgage capacity is one thing, getting the best fit for you is another. There is a lot to think about, like:

• How long would you like your interest rate to be fixed for?
• Do you need flexibility with your repayments?
• Do you need the 30% ruling taken into consideration?
• Are you buying a new build or a fixer-upper?
• And lots more!

Please note that although a mortgage seems to be a quite “standard” service, there are many small differences within the conditions when it comes to different providers, which can make a huge impact on your mortgage.

The key to success

Having a smooth process with a positive result is a lot like having a clear roadmap. With this, you can easily reach your destination without getting lost or encountering barriers that lead to delay, or even worse.

To get this clear roadmap, you will need to do some stocktaking, so get ready to make a checklist. All relevant documentation, such as your passport, residence permit, recent payslips, and employer statement, needs to be in order and presented in a way so that banks can process it efficiently and with comfort. After all, preparation is the key to success!

The final piece of the puzzle

In the Netherlands, the mortgage application begins after you have closed a purchase deal for a home. On average, you have four to six weeks to arrange your mortgage. Thus, it is crucial to be confident in your budget and have your documentation complete and ready up front and before purchasing.