Purchasing a Home in the Netherlands: A Comprehensive Guide for Beginners
Tired of sky-high rent prices? Considering a move with your partner? Or perhaps you’re ready to establish roots in the Netherlands? It might be the perfect time to explore homeownership. But what exactly does it entail financially? Here’s a breakdown of the financial aspects of purchasing a home in the Netherlands.
Can Expats Secure Mortgages?
Absolutely. While having a permanent contract makes the process smoother, there are options available for those on shorter contracts or self-employed individuals. Even if you receive your income in a foreign currency, you may still qualify.
How Much Can You Borrow?
The amount you can borrow depends on your income and marital status. Utilize tools like the ABN Amro mortgage calculator to estimate your borrowing capacity and monthly payments. If you’re eligible for the 30% ruling tax benefit, it can boost your maximum mortgage amount. For precise figures, consulting a specialized mortgage advisor is advisable.
You may also qualify for additional borrowing if you purchase a property with a high energy label or commit to investing in energy-efficient upgrades.
Initial Investment Requirements
In principle, you can borrow up to 100% of the property value, necessitating savings to cover other essential expenses like taxes, surveys, and notary fees (known as “kosten koper” or buyer’s costs). These typically amount to approximately 6% of the purchase price. Certain costs, such as notary fees and valuation expenses, are tax deductible, while others like property transfer tax are not.
However, first-time homebuyers under 35 purchasing a property below €510,000 are exempt from property transfer tax, which is typically 2% of the purchase price.
Understanding Dutch Mortgages
Dutch mortgages come in various forms, but only annuity and linear mortgages allow for interest payment deductions from tax. These mortgages blend interest payments with loan repayment and typically span 30 years, though shorter terms are available. Choosing between fixed interest rates for one, five, 10, or 20 years impacts your monthly payments. ABN AMRO offers slightly reduced interest rates for properties with a minimum B energy label.
Tax Benefits on Mortgage Interest
For individuals residing in the property and holding annuity or linear mortgages, mortgage interest payments are tax-deductible for up to 30 years. The tax office automates this process, providing refunds monthly or annually. While mortgage interest tax relief is gradually diminishing, the deductible rate stands at 36.97% in 2024, resulting in approximately one-third of paid interest refunded.
Additional Homeowner Costs
Homeowners in larger complexes must contribute monthly to the owner’s association for maintenance and operational expenses. Local authority taxes (OZB) are also applicable based on property value. The eigenwoningforfait, or “own home forfeit,” is another tax calculated based on property value and mortgage debt size.
Is It a Worthy Investment?
While the process may seem daunting and costly, navigating it with a knowledgeable mortgage advisor, especially one experienced with expats, can streamline the experience. ABN Amro offers informative online webinars in English and provides free orientation meetings with English-speaking experts to address any queries.
