31 October 2017
Mortgage types in the Netherlands
Sezer Yilmaz

What are the mortgage types in the Netherlands?  The main two types of mortgages in the Netherlands are a government-guaranteed mortgage and a conventional mortgage guaranteed by a banking institution.

Government-guaranteed mortgages

The Stichting Waarborgfonds Eigen Woningen (WEW) provides the coverage for NHG. WEW was established in 1993 to realize that buying a home is more affordable. They do this by sharing risk with the banks.

Why should you pick a mortgage with NHG?

Mortgage lenders offer a better interest rate for mortgages than NHG guarantees because of the shared risk. Because mortgage lenders don’t need to include the shared risk in their pricing.

Why shouldn’t you pick a mortgage with NHG?

NHG guaranteed mortgages have a maximum sum of €310000 (2020).  In 2021, the NHG will increase to €325000. It’s hard to find a house in Amsterdam that meets this NHG term.

Conventional mortgages

Conventional mortgages typically refer to traditional home loans offered by private lenders without government guarantees. These mortgages are not insured or subsidized by the Dutch government and are subject to the lending standards and criteria set by private financial institutions. Borrowers seeking conventional mortgages in the Netherlands generally need to meet stringent creditworthiness requirements, provide a down payment, and adhere to the terms and conditions set by the lending institution. These mortgages are a common means for individuals in the Netherlands to finance the purchase or refinancing of residential properties through private financial institutions.

Why should you pick a conventional mortgage?

Mortgage lenders are more (in)flexible when they don’t need to meet the criteria and terms of NHG. While this will be an advantage in some specific cases, in other cases, it can be disadvantageous.

Why shouldn’t you pick a conventional mortgage?

The possibility of borrower default poses a risk for mortgage lenders. Therefore, the risk causes higher interest rates than government-guaranteed mortgages. As a result, banks charge a higher interest rate.

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