31 October 2017
Mortgage types in the Netherlands
Sezer Yilmaz
Founder & Financial Specialist

What are the mortgage types in the Netherlands?

The main two types of mortgages in the Netherlands are a government-guaranteed mortgage or 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 a risk with the banks.

Why should you pick a mortgage with NHG?
Mortgage lenders offer a better interest rate for mortgages that are guaranteed by NHG 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 term of NHG.

Flexibility or a low interest rate. Which one should I pick?

Conventional mortgages

Banks, lenders, and savings institutions offer and guarantee conventional mortgages in the Netherlands.

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.

See what you know and where you can improve your mortgage approach. Make an informed decision about the terms of your mortgage. Need advise? Feel free to schedule a call with us.

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