Every year, the conditions and requirements for getting a Dutch mortgage are updated. This article will set out the most important changes that came into effect on January 1, 2020. First, however, we will talk about the expectations for the housing market in general.
Over the past few years, house prices in the Netherlands have increased significantly. For 2020, the expectation is that house prices will increase further, but not as much as they have over the last few years.
Rabobank expects an increase of 5% for 2020 and 2,5% for 2021. ABN AMRO expects the price increase to be 4% in 2020.
At the moment, there are more buyers than there are houses for sale. Because of this, the expectation is that house sellers will wait until they have secured a new property before putting their houses up for sale.
If the house prices decrease, we expect that the gap between offer and demand will diminish, so the market is more balanced, which should result in a higher volume in transactions.
Nationale Hypotheek Garantie, also known as NHG, is the guarantee that your mortgage debt will be repaid if you can’t pay it back yourself. For example, if you get a divorce or you lose your job and have to sell your house but the outstanding mortgage is higher than what you got for the house.
For 2020, the maximum market value for NHG mortgages has increased up to 310.000 euros in the Netherlands. Last year, it was only possible to get a mortgage with NHG up to a market value of 290.000 euros.
Also, the costs of NHG mortgages has been reduced from 0,9% to 0,7%. So, if you’re looking for a mortgage with NHG for 2020, it’s possible to buy a property with a slightly higher purchase price.
Your main residence’s value as estimated by your municipality, known as the WOZ value of your house, will increase. Depending on the municipality, the increase is approximately 8,0% to 10,0%. Be aware that this results in higher taxes imposed by the municipality on homeowners.
However, the percentage eigenwoningforfait for 2020 has decreased from 0,65% to 0,6% for properties with a WOZ-value between 75.000 and 1.060.000 euros. This is the tax percentage of the WOZ-value that has to be paid for your house. So, in general, the WOZ-values are expected to increase but the tax percentage will be lower.
In 2019, homeowners in the highest tax bracket (income above 68.507 euros) could get a tax rebate on the paid interest of their mortgage at a tax rate of 49%. In 2020, this rate has been limited to 46%.
Based on the plans of the government, this percentage will decrease every year which means that in 2023, the tax rebate will be similar to the lowest tax rate of 37,05%.
In 2019, when dual earners applied for a mortgage, the bank took into account 100% of the highest income and 70% of the lower income. For 2020, this increased to 80% (lower income). This means dual earners can use a higher shared income to apply for a mortgage. However, Nibud changed the rules for the maximum mortgage amount based on income.
Based on the expected income increase they also adjusted the maximum amount that can be spent on mortgage costs. This could mean that the higher shared income doesn’t result in a higher maximum mortgage amount.