Can I sell my property before the mortgage term ends? How does the process work?
Short answer: Yes, you can sell your home before the mortgage term ends.
Yes, you can sell your home before the mortgage term ends. The bank wants you to repay the mortgage debt without future interest payments. There is no penalty involved if you sell a property in the Netherlands.
Bank guarantee in the Netherlands
Short answer: When you find a dream home in the Netherlands, the next step is to put in an offer on the house. You sign a purchase agreement with a seller as soon as your proposal is approved.
Besides, you must pay 10 % of the purchase price to secure a deal. A deposit protects a seller if a buyer decides to back out of the agreement.
You have the option of paying the deposit with your own savings or obtaining a bank guarantee. If you do not have 10 % in your funds, your mortgage broker can arrange a bank guarantee. A third party charges a fixed fee to finance a security deposit.
For example, for a house costing €350.000, the bank guarantee can cost approximately € 350. Please note the bank guarantee fee varies per lender.
Some banks offer a bank guarantee; in other cases, a mortgage broker arranges it for you.
The deposit is transferred to the notary, not a seller. A notary handles administration and closing fees.
After signing a purchase agreement, the next step is to secure a mortgage.
A mortgage pre-approval does not exist in the Netherlands. For this reason, it is highly recommended to sign a purchase with a financial clause. If a mortgage lender doesn’t approve the finances, you can cancel the deal without losing a 10 % deposit. Find out how the financial clause works in the Netherlands.
Why is refinancing a bad idea?
Short answer: Refinancing your existing mortgage can be expensive.
First, you must pay the penalty to your mortgage lender because you decided to leave the deal before the fixed-rate term ends. If you fixed your mortgage interest rate for ten years and decide to refinance after three years, you still have seven years remaining.
Your mortgage lender could ask you to pay the remaining interest rate back. Secondly, you must pay mortgage-related fees for your new mortgage, including an appraiser, the notary, and other mortgage closing fees. So, it would be best to weigh the pros and cons of refinancing options in the Netherlands. Do you need help? Contact us to get up-to-date information about mortgage lenders and interest rates.
Short answer: You must pay the penalty when refinancing.
You must pay the penalty to your mortgage lender because you decided to leave the deal earlier. The amount varies per lender because each lender offers different conditions.
Mortgage brokers or bank
Short answer: Banks only present one product while the mortgage broker can compare 30 mortgage products.
Mortgage advisers represent your needs and find a mortgage that fits your financial situation. Mortgage advisers work with different mortgage lenders.
National mortgage guarantee (NHG)
Short answer: A national mortgage guarantee is a Dutch system that protects you and your mortgage lender.
When you participate in the NHG scheme, you can ensure that your income matches your mortgage. If you cannot make a monthly payment due to unemployment, disability, divorce, or your partner’s death, the NHG scheme can help you deal with difficult situations.
Deposit or bank guarantee
Short answer: Depends on your financial preferences.
When your bid is accepted, you sign a purchase agreement between you and the seller. Mortgage pre-approval does not exist in the Netherlands. After the purchase agreement is signed, the next step is to arrange your mortgage. The seller asks to deposit 10 % of the purchase price to protect themselves if you cannot get a mortgage approved. If you do not have 10% savings available, your mortgage advisor can arrange a bank guarantee. You pay a one-time fee to secure a 10% deposit.
How much savings do I need to close a mortgage in the Netherlands?
Short answer: Mortgage closing costs depend on the amount you’re planning to lend and the value of your property.
What is keep to let mortgage?
Short answer: When you plan to buy a home with a partner and want to keep your existing home, a keep-to-let situation occurs.
In the Netherlands, the keep-to-let trend is growing among private homeowners. For more information, please contact us.
Short answer: An increased mortgage registration means that you save money on legal costs if you plan to increase your mortgage with the same lender in the future. You can increase your mortgage without going to the notary again and without a new mortgage deed to be signed. If you have an increased mortgage registration and plan to switch mortgage lenders, you have to ask your current bank for permission.
How long does the mortgage process take?
Short answer: The time needed to complete the mortgage process varies by customer and lender because it includes gathering information from a customer, verifying that information, and processing the mortgage.
What is a bridging mortgage, and how does it work?
Short answer: The bridging mortgage is a short-term loan when you need to borrow the gap between selling your old home and buying a new one.
To cover the gap between two mortgages, we can request a bridging loan/mortgage from your new lender. For example, imagine you purchased an apartment a few years ago. The price increased, which means you have built positive equity, and you can use this equity to buy a second or new home.
What is mortgage tax relief?
Short answer: The Netherlands has put tax breaks in place for homeowners and homeowners-to-be. The paid mortgage interest is tax-deductible in the Netherlands.
For example, you can get a tax break on your mortgage’s interest, ground lease payments, or maintenance if your home is listed as a monument. Important to know that the amount of tax deduction depends on your income tax bracket. The more you earn, the higher the tax benefit you can get back.
Good to know that you pay more on interest with an annuity mortgage than with a linear mortgage. For this reason, the tax break is more significant on annuity mortgages.
Besides the ongoing tax benefit, you can deduct one-off-costs related to the purchase of a house. Tax-deductible fees include valuation report, mortgage brokerage and advisory, notary fees related to a mortgage, and mortgage handling fees.
When can I apply for a 30% tax ruling and mortgage
Short answer: Skilled employees who move to the Netherlands are eligible to apply for a 30 % tax benefit.
Employees need to meet the requirements to receive 30 % tax benefits. If the employer grants a 30 % ruling, the employee pays fewer taxes to Dutch authorities.
When you apply for a mortgage in the Netherlands, you can use a 30 % tax benefit. How does it work? The maximum mortgage amount is calculated based on your annual salary. A 30% ruling is included in the calculation for the period you are still eligible for the 30% ruling in future years. As soon as your 30 % tax benefit ends, your monthly payment will be based on the annual salary at that time.
What is LTI?
Short answer: To qualify for a mortgage, lenders look at the loan-to-income (LtI) ratio.
LtI is a ratio, expressed as a sum, after considering multiple factors such as your monthly income, employment history, and creditworthiness. One of our most valuable pieces of advice is that only you can determine the mortgage debt that you’re willing to bear. Mister Mortgage provides expert advice to assist you with how much you can comfortably afford to borrow.
What is LTV?
Short answer: LtV is a ratio, expressed as a percentage, of the requested amount of your mortgage divided by the purchase price or appraised value of your home.
To qualify for a mortgage, lenders will look at the loan-to-value (LtV) ratio. LtV is a ratio, expressed as a percentage, of the requested amount of your mortgage divided by the purchase price or appraised value of your home.
For example, if the home you purchase or refinance is appraised at € 500.000 and you are requesting a loan for € 400,000, the LtV is 80% (€ 400,000 / € 500,000). The maximum LtV in 2021 is 100%.
What does the term life insurance mortgage mean?
Short answer: When you buy a house with a mortgage, you are not obliged to take life insurance. However, based on your situation, we could advise you to take out term life insurance. Banks and mortgage lenders aim to protect themselves and clients from mortgage debts.
Term life insurance could cover the sum of the mortgage debt in the event of death. Term life insurance requirements differ per mortgage lender. For more information, please schedule a call with us.
In addition to term life insurance, it’s obligated to get building insurance covering any property damage. This insurance is mandatory, and it is an excellent addition to protect your property from any potential damages.
If you buy an apartment, the VvE (homeowner’s association) must take out building insurance. When applying for a mortgage, this is a standard check performed by Mister Mortgage.
What is NHG ?
Short answer: The National Mortgage Guarantee is referred to in Dutch as NHG or Nationale Hypotheek Garantie.
NHG is a unique government-backed insurance system that makes mortgages more affordable to average-priced properties. NHG is a safety net that protects you if you lose your job, get a divorce, become disabled, or one of the partners passes away. The national mortgage guarantee increased to EUR 325.000 in 2021.
What documents are needed to receive a mortgage estimate?
Short answer: View our list below to see a list of documents required to receive a Mortgage Estimate:
1. Your salary slip;
2. Your contract of employment;
3. Copy of your passport, and residence permit if applicable;
4. Confirmation letter regarding 30% ruling if applicable;
5. Additional information: Your marital status;
6. Overview of your assets, credits/loans, and extra income.
What is a mortgage estimate?
Short answer: Mortgage Estimate is an estimate of the closing costs, the maximum loan to income, and a table with the monthly payments over time.
Mortgage Estimate is an estimate of the closing costs, the maximum loan to income, and a table with the monthly payments over time. A pre-approval for a mortgage doesn’t exist in The Netherlands. However, Mister Mortgage offers an overview of your maximum mortgage (LTI) and the monthly costs. Free of charge and no further obligations.