People born between 1996 and 2012 are now old enough to think about buying their own homes. While many in Gen Z know that the journey to homeownership can be challenging, some are gradually entering the housing market alone or with support from their parents.
The minimum age for securing a mortgage in the Netherlands is 18. However, for specific types of home loans, the minimum age requirement can be elevated to 21 or even 25 years. Lenders are allowed to establish their minimum age criteria for loan eligibility.
The mortgage amount is contingent upon your loan-to-income ratio. At the same time, the maximum borrowing limit for a property is determined by the loan-to-value ratio, which is set at 100% in the Netherlands.
One of the biggest advantages of purchasing a property earlier in life is that it saves you 2% on transfer tax. People aged 18 to 35 who buy their first property worth up to € 440,000 can benefit from the 2% transfer tax exemption in 2023. In 2024, the property value will increase to € 510.000. What does it mean? It would help if you had less savings to buy a home.
Property price: € 210,000
Closing fees: € 5,855
You save: € 3,750
Your Dutch parents or another generous donor may give you a maximum of € 106,671 for your own home without you paying taxes. If your parents have never lived in the Netherlands, there are no limitations on the donation amount.
There are many advantages to purchasing a house now instead of 10 years later.
Wealth accumulation: Buying a house at an early age means you start building equity early, which means your property builds up value over time. As you make mortgage payments, you increase your ownership stake in your home. Some mortgage payments may be lower than rent over time, so earning money in the long run is possible. The longer you become a homeowner, the more equity you build.
Stability: The housing crisis is the main struggle faced by youngsters. You might have to move out year to year, but finding a more affordable house is even harder. Therefore, purchasing your home, where you can reside without concerns, is pleasant.
Transfer tax 2024: On top of that, student loans will no longer hinder you from borrowing more mortgages because from 2024 on, anyone who makes additional payments on their student loans will qualify for a higher mortgage loan amount. On top of that, starting from 2024, people aged between 18 and 34 will save 2% on property transfer tax (overdrachtsbelasting) on properties up to €510,000 if you are a first-time buyer. So, buying a house now for Generation Z is a good choice, considering the benefits of these new regulations.
Investment Potential: Many homeowners choose to invest in Dutch real estate. For instance, they may move into a new house with their partner while keeping the old property for rental income (in such situations, refinancing is necessary). If you buy a house earlier, this strategy allows you to own two properties and generate additional revenue.
Predictable housing cost: In contrast with unstable rent, buying a house means you invest predictable fixed costs (e.g., mortgage, maintenance fee, taxes). Because you pay these fees, lenders do not increase rents.
Tax benefits: Each month, the government gives back on interest rates. If you have a mortgage, you can deduct the interest you pay from your annual taxable income, lowering your overall tax.
If you still need to decide about buying a house, schedule a free call with one of our financial specialists for expert advice on homeownership.