Our team often answers one of the most frequently asked questions:" Is it the right time to buy since the interest rates have increased?"
While interest rates and home prices can impact your decision to buy a home, your personal and financial position plays a more critical role when becoming a homeowner.
In this article, we go over the actions you may take to determine if this is the ideal time for you to become a homeowner in the Netherlands.
Before answering the question, you should understand how equity works.
One of the benefits of being a homeowner is that you accumulate wealth when owning a home (in a stable or increasing market).
When you rent a home, you pay rent to a landlord with no return on investment. While monthly mortgage repayments gradually increase home equity.
There is no capital gain tax on the profit you make when selling your home in the Netherlands. You can sell your house in the future and consider the equity as your profit.
Sometimes it can be challenging to predict how the economy will behave in some situations. However, keeping up with economic news might help you decide whether to act. For instance, when the pandemic hit, borrowing rates were at an all-time low, making homeownership more attractive.
At the same time, it was unclear what would happen in the market later. In the summer of 2022, interest rates sharply increased. With the ongoing conflict in Ukraine and the still-recovering economy following the pandemic, rates are expected to drop or remain unchanged. Also, the ECB ( European Central Bank) increased interest rates to fight inflation in July and has already planned another increase in September.
What does the future hold? According to a recent report of ABN AMRO, it is expected that:
1. Short term: interest rates will go up.
2. Long-term: interest rates will go down, then up again.
Even though it seems like the significant era of low-interest rates is finished, for the time being, it is good to know that they are still historically low. In addition, interest payments are deducted from taxes in the Netherlands, and the Dutch tax authorities give refunds of tariffs annually or monthly.
It is essential to organize your finances before you start the home-buying process. Before making a big financial step, you must feel comfortable and know your options.
First things first: consider all the fees you need to cover: mortgage closing fees, purchase fees, renovation, credit card debts, lease agreements, etc. Do you have trouble sorting your finances? Ask our mortgage specialists to help you. No matter the rates, we can help you find the best deal and conditions because we work with more than 30 mortgage lenders.
Our professional mortgage specialists help you set up your finances and provide a comprehensive breakdown of your maximum mortgage, required monthly payments, and closing costs.
Purchasing a property might take anywhere from a month to a year. If you are lucky, you might be able to buy a home more quickly. Thorough planning helps you save time and nerves.
If you are not in the position to buy and want to postpone to the future, you can already prepare for the big step:
Get a mortgage report. We offer a personalized report including maximum mortgage, monthly payments, tax-deductible, and closing fees.
Plan a free consultation with a real estate agent. As a Mister Mortgage client, we give you access to our network.
Start saving if necessary.
Start repaying debts/credit cards if necessary.
Start exploring Funda and the neighborhood where you want to live.