When you have a job lined up for a longer period of time, you may be thinking about buying a home. The Netherlands is a great place to buy a house, since housing prices are relatively low compared to other large European cities and interest rates are extremely stable. Before you buy a house in your new home town, make sure you understand the market. There are many agents in The Hague and surroundings that can help you find your ideal place.
The choice of property is either freehold (eigen grond) or leasehold (erfpacht). Make sure to read up on housing rights. Also, it is advised to first meet with a mortgage advisor at your bank or an agency. This will give you a realistic picture of what you can afford.
Where to find houses for sale
You might get lucky when you are walking down the street and see a house or apartment advertising that it is for sale. The sign will often direct you to a website with further details. Obviously, this is not the most convenient way to find your ideal housing. There are several independent sites that have a selection of apartments and houses that are currently for sale:
Real estate agents
Most of the real estate agents in The Hague are very familiar with internationals looking for a place to live. If you enlist the help of a NVM agent (Netherlands Association of Estate Agents), you are guaranteed of their expert knowledge of the market. An agent will negotiate on your behalf to find a place that meets your needs, which saves you a lot of time and effort. As they work on commission, you will want to check beforehand how much you can expect to pay for their services.
In order to buy a house, you need to get a mortgage (hypotheek). Getting a mortgage will be based on your income, your savings and the property you have in mind. It is advised to explore the available options before committing to buying a house. Here is an insight into the Dutch mortgage market.
Annuities mortgage (annuïteitenhypotheek)
In the early years of paying for your mortgage, an annuities plan often requires low monthly payments. Mostly, you will be paying the interest but a small portion of the actual loan. This means that your interest rate will go down as you pay off more over time. Towards the end of the mortgage period, this balance reverses, meaning you will pay lower interest payments and higher loan repayments. Your net housing costs will increase slightly since only the interest on the loan is tax deductible.
Linear mortgage (lineaire hypotheek)
Unlike the annuities mortgage, the linear mortgage is a fixed amount per month by which you will repay the initial loan. You will pay interest on top of this, but these payments will reduce over time as you are paying off the initial loan, which eventually leads to decreased interest payments. This is ideal if you want to repay your mortgage as soon as possible, or if you are expecting a reduced income over time. Be aware that initial repayments will be relatively high and you will not take full advantage of the tax-deductible mortgage interest.
Other repayment models
Most alternative Dutch mortgage models will be variations on annuities and linear mortgages. If you chose one of these models, you will not be entitled to mortgage tax relief. Talk to a financial adviser to find out what the best mortgage is for your situation.
- Credit mortgage (krediethypotheek)
This mortgage is like a flexible loan: you can deposit and withdraw money, like a bank account. You pay monthly interest on the money that you borrow, which will depend on the value of the property you have bought.
- Interest-only mortgage (aflossingsvrije hypotheek)
Under certain circumstances the bank will allow you to only pay interest on a monthly basis and to repay the capital at a later date from savings or investment accounts.
- Investment account mortgage (beleggingshypotheek)
You invest a premium into a stock market account through an investment account mortgage. This can be done with a one time, monthly or annual payment.
- Hybrid mortgage (hybride hypotheek)
A combined interest-only and life insurance mortgage. You are able to switch from a mutual fund with investment risk to a guaranteed return on your money.
- Life insurance mortgage (levenhypotheek)
You will pay a monthly or annual premium, which can include a life insurance. Under certain circumstances, this policy be may tax free.
Savings account mortgage (spaarhypotheek)
- By linking a savings account to your mortgage, you pay monthly interest and deposit money in your savings account with a fixed interest rate. Since this interest rate is equal to your mortgage interest, you can repay the mortgage fully from your savings account at the end of the mortgage term.
The wide variety of options in the Dutch mortgage market can make the situation overwhelming for those who are not familiar with the possibilities. The above information explains the basics but it is always advisable to seek advice from your bank or financial advisor before making a decision about a mortgage.