How to reduce the stress around buying a house in the Netherlands

A Dutch mortgage involves a huge amount of money – maybe many times more than people borrow in your home country. There are multiple unfamiliar steps. And, worst of all, all of the documentation is quite literally in double Dutch.

So how on earth do you deal with the natural anxiety that many internationals feel when buying a home in the Netherlands?

It’s a matter of finding the right experts, asking your questions and listening, says Matthijs van der Heijden, mortgage consultant at Expat Mortgages. “At the end of the day, it’s about surrounding yourself with the right people to kind of take away that stress,” he says. “Even though there’s a lot that you do during the process of buying a house, there’s not that much that you have to do yourself. A lot of people try to reinvent the wheel but a mortgage is a complex financial product – which means that you will always need an adviser to take out the eventual product.”

Get your finances in order first and understand how much you can reasonably borrow, so that you are bidding on houses at the right level and to avoid disappointment later. By all means, turn up at that first meeting – which at Expat Mortgages is free – with a list of questions for your mortgage advisor. But then listen and, if you feel you have a competent adviser, delegate to them to avoid taking unnecessary stress onto yourself.

“I speak to a lot of people, some from South Africa, and the loan here could buy a small village there,” he says. “Prices might be higher than in many EU countries, although nowadays they’re not that much higher. Of course, a lot of people are a little scared of the monthly cost as well but usually once we tell them about the tax advantage that we have here, it’s not so bad.”

There has been a lot of discussion about the mortgage interest tax relief in the Netherlands, and it has been reduced significantly over recent years – but Matthijs points out that no change will happen overnight. “Even though it’s a point of argument now about whether it is going to be brought down a little bit over the years, at least a current buyer can enjoy it for the horizon that they plan to spend in the Netherlands. Even if it is reduced, we’re probably still looking at a 15 to 20 year period.”

Another thing that people worry about is the extra costs on top of buying a house, which are sometimes estimated at 4% to 6% of the purchase price. Matthijs points out that while this is a rough rule of thumb, certain costs actually don’t rise in line with the price of a property: the notary fees, for example, are roughly the same. If you buy a cheaper property and are younger than 35, you may be entitled to 0% transfer tax and if you are buying a property to live in, this will be 2%. You might have a real estate agents’ fee, and the cost of raising the mortgage, but with the right planning from the start, this is all factored into your budget.

Repayments are another question for foreigners. A typical loan is 30 years, which is longer than some other countries and indeed many decades to hold a significant debt. With standard mortgages in the Netherlands, each year, you can pay off an extra 10% of the capital that you borrowed without any extra charges. Any additional payments you make don’t just eat away at the interest – they reduce the entire loan, so if you have a bonus, this might be worth doing.

“A lot of people think there’s a penalty if you pay your mortgage off when you sell the property, which in the Netherlands is not allowed by law,” says Matthijs. “Banks cannot impose a penalty if you pay off the mortgage when selling, so it’s only when we’re refinancing or making an extra payment of more than 10% from savings that there could be a penalty in play.”

While there is no pre-approval process for a mortgage in the Netherlands, as there is somewhere like the US, Expat Mortgages goes through a thorough process to know exactly what your loan capacity will be, which means that the final loan can be completed in as little as two to four weeks.

In some countries, you might just go to a bank and organise the mortgage there but because the loan is judged a complex financial product in the Netherlands, you will almost certainly need (and pay for) a broker – so going direct to a bank will mean you just have to pay a broker of their choice. “If you go to one bank, they should theoretically give you the same loan or at least roughly the same loan as another bank out there,” he says. “But the only banks who have advisers in house are the big banks. There are a lot of smaller lenders as well, which can be pension funds, investment funds or even insurers, who can give you a mortgage but don’t have their own adviser: you can only go to them through an independent mortgage broker, which is why it’s not always a given that if you go to the bank that you bank with, you will get the best deal.”

A mortgage broker in the Netherlands must by law be genuinely independent, he adds. “It’s actually illegal for banks to still pay a commission to mortgage brokers and for mortgage brokers to take it.” Another tip is to make sure that your savings are available, and already transferred into euros, so that there are no surprises when it comes to making the 10% down payment for the house or paying the share that you want to invest.

With the finance box ticked, what do you need to consider to reduce your stress around buying a house? You should do everything you can to acquaint yourself with the area, because in a hot market, you may not get even a second or third viewing for what is a huge and life-changing purchase. “You should always do a technical inspection,” says Matthijs. “If you have doubts about the location, whether or not the area is a good investment, it can be smart to engage a real estate agent.”

Currently, houses are being put on the market for a low price in general, because agents know people are looking below their maximum price and they hope for competition to drive up the final sale price. But don’t read too much into statistics about overbidding because another strategy is to put a house on the market for a very high price just to see if anyone bites. “If you apply the same logic that you have to overbid 10%, you’ll end up grossly overpaying on that property,” says Matthijs. “Buying agents will get you an indication of the value of a house so that you make a fair bid instead of only a winning bid. Anybody can win a bid, but you don’t want to be paying €50,000 more than the second person.”

And when you’ve found the house of your dreams, take the time to knock on the neighbours’ doors – you’d be amazed how keen they are to tell you if there are actually problems that you should know about! And another tip is to arrive early one morning and do your commute to work so you understand what the traffic is like and how it will feel to live there.

Turn up with your notebook of questions, and be prepared to employ the right people to put your mind at ease. “People often have a million questions that don’t need a billion answers!” But a problem shared with a good mortgage adviser is also a problem halved.