31 March 2023
How mortgages work for newly built properties?
Egle Kemezyte
Growth Marketer

There is a common misperception that securing financing for a newly built property could be more complex. In this blog post, we aim to clarify the process of obtaining a mortgage for newly built properties and outline the steps you must take in this journey.

Where to start? 

The first step is to find a property and apply for an option on a project. If applicable, register for the lottery if the demand is high. When the order is lower, e.g., when the construction has yet to start, you immediately secure a new build project by visiting the site or contacting the developer.

Regardless of the outcome, whether you win the lottery or have your reservation approved, the next step is to sign the purchase and building agreement and arrange your mortgage.

How is the mortgage calculated? 

Arranging a mortgage for new build properties works similarly to mortgages for existing homes. The first step is to calculate how much mortgage you can afford. For newly built properties, the maximum mortgage amount is also limited to 100% loan-to-value.

Factors that determine your mortgage capacity: 

  • Basic income + holiday pay + variable pay (depending
    on the lender)

  • Interest rates + interest fixed period

  • Current debts / Financial obligations

Besides your income, the market value of your newly built property is considered.

The market value of newly built

The market value for newly built properties is calculated based on the purchase/contract price, including the land cost, construction costs, and any additional work.

  • When purchasing a new-build home, you must sign a purchase/contract agreement. The agreement states that you buy both: the land and the house and includes an agreement with the contractor who will construct the house according to the building plan. The full purchase/contract price is incorporated into the property's market value.

  • Finance additional work: newly built properties are typically delivered unfurnished or incomplete ( no floors or bath tiling ). Good to know: other work increases the overall market value of your home. You can co-finance the costs of additional work with your savings or by including it in your new-build mortgage, as specified in the contract.

  • Lost of interest during the construction period: What does it mean? Once you have secured a mortgage, you start paying your mortgage, including the interest rate, before your house has been completed. The funds will be put in a building account at the mortgage bank. From this account, the invoices from the constructor will be paid. The mortgage lender pays you interest on the funds deposited into your building account. As the construction of your new-build home progresses, the amount of money in your building account decreases, and you receive less interest from your lender. The difference between the interest you are paying and the interest you are receiving from your lender gradually increases, resulting in interest loss during the construction period.

During the construction period, you have to cover double payments for your mortgage and rent; it is possible to co-financing your double costs with your mortgage. 

When can you start the application for the newly built?

When you sign your new-built house's purchase or contract agreement, your mortgage specialist starts your mortgage application.

What is the cost of buying a newly built one?
  • Additional work, such as a custom kitchen or extra electrical sockets, can be carried out during the construction of your house on top of the standard delivery.

  • Mister Mortgage advisory fee € 3.399. Mortgage application management from start to end.

  • Mortgage deed at the notary: € 900.

  • NHG deposit (if applicable): 0,6% of the mortgage (max. value € 405.000)

Example of a newly built property calculations: 
Are you looking for a newly built property?

Schedule a free call with our team

Meet the team
Sezer Yilmaz
Egle Kemezyte
Growth Marketer
Robin Uijtdehaage
Client Director & Financial Specialist
Lisa Grondsma
Financial Specialist