Mortgage advice for internationals
Decreasing interest rates increased the demand to purchase a home in the Netherlands. In 2021, housing prices increased on average by 10.4 percent, which is the highest increase in price since 2019.
Many people have a hard time finding a home in the current market. The increasing number of buyers usually results in overbidding. When mortgage interest rates are low, people push to get the maximum mortgage to win a bid on a house. The rising property prices have not deterred buyers from overbidding —more than half of the properties in the Netherlands were sold for more than the asking price.
How to win a bid in the current market?
The housing market remains tight in the Randstad area as more people want to buy than listed houses exist for sale. If you want to win a bid, it is highly recommended to work with a real estate agent. Real estate agents have extensive knowledge of the Dutch real estate market, including housing prices, building conditions, and area. Cooperating with a real estate agent gives you more chances to win a bid.
Reasons to work with a real estate agent:
- Attends viewing with you and helps you to inspect the property.
- Guide and support through the buying process.
- Negotiates the final price, term, and conditions.
- Help you to place a competitive bid based on the current market value.
- Real estate agent gives you insights and advice about building foundation, VVe, and neighborhood.
- Arrange paperwork: written offer, closing deed, and conditions.
- Helps to arrange a technical inspection.
How does the process of bidding work?
All potential buyers can submit their best bid on a property; after the deadline, the seller selects a winner.
The purchase price is a necessary part of winning a bid; however, other factors can influence sellers’ choice to select a bid winner. For example, your flexibility or financial situation to get a mortgage can also play a crucial role in winning a bid.
If your bid is too low, it may not be accepted; if it is too high, the seller may question your financial situation. Please note your maximum mortgage is based on loan to value in the Netherlands.
The asking price is € EUR 500.000
Offer accepted € 550.000
Property value report: €540.000
Maximum mortgage: € 540.000
The next steps when offer is accepted
As a buyer, you can protect yourself by signing with a seller a financial clause. A financial clause gives you a right to withdraw from the agreement. For example, if a mortgage lender rejects your application, you have no consequences of leaving the deal.
If you sign a purchase agreement without a financial clause, the seller is better protected than you. If your finances are not in place by the handover date and the transaction fails, you must pay 10% of the property price.
Getting and closing a mortgage takes time. You must find a mortgage lender, choose a type, obtain a mortgage offer, and have your property appraised. If the bank declines your mortgage application, you must start all over again. In this case, it’s highly recommended to work with a mortgage broker. Mortgage advisers work with a variety of mortgage lenders, whereas banks only represent themselves.
Another necessary dissolving clause is the technical inspection clause. This one allows you to cancel the transaction if the technical inspection results fall short of your expectations. Both of these clauses provide you with additional security.
It is necessary to indicate the transfer date in the offer. Some sellers are more already have a specific date when a property can be available; some sellers are more flexible in moving out as soon as possible. Together with a real estate agent, you can negotiate the moving date and other terms and conditions.
Housing market insights 2021
- Decreasing interest rates increased the demand to purchase a home.
- The existing housing shortage pushed housing prices up of owner-occupied homes.
- The amendment of the transfer tax (2%) bill for people aged 18-35 created more opportunities to become homeowners.
- The outgoing pandemic also encouraged people to rethink their living situation and focus on their living place.
- Lending criteria were relaxed for people with two incomes and students with loans.
- One of the biggest banks in the Netherlands ( Rabobank) predicts that residential properties will decline shortly. The decline of sales is related to an existing housing shortage. There were fewer permits issued for newly built projects in the last year. Also, people are less likely to sell their homes and move to new build homes because of the lack of new homes.
- Despite that, the trend suggests that more people are interested in living in villages or outside the big cities