So, you're thinking about buying a home in the Netherlands? That's an exciting and potentially life-changing decision. Whether you're looking to ditch those high rental costs, start a new chapter with your partner, or you want to put down some permanent roots in the country, getting a mortgage is the next step.
But figuring out the financial side of things can be a bit overwhelming. Don't worry, ABN AMRO has got you covered with this comprehensive overview of what you need to know when buying a house in the Netherlands.
Dutch mortgage structure: How does it work?
In the Netherlands, you've got a few different types of mortgagesto choose from, but only two of them let you deduct interest payments from your taxes: annuities mortgages and linear mortgages.
Both of these combine interest payments with loan repayments, over a typical term of 30 years, but shorter durations are possible too.
Annuity mortgage
With an annuity mortgage, homeowners make monthly payments which aremade up of interest and a smaller loan repayment. As your debt decreases over time, so does the amount of interest you pay. Therefore, towards the end of the mortgage repayment period, the balance becomes reversed and the interest payments are lowered while the loan repayments go up.
Linear mortgage
With a linear mortgage, homeowners pay a fixed amounteach month, including interest. As your debt reduces monthly, so does the interest. A linear mortgage is good for homeowners who want to pay off their mortgage quickly, but the initial repayments are usually high.
Fixed interest rate period
One big decision you'll need to make when selecting a mortgage is how long the period offixed interest rateshould be. It can be one, five, 10 or 20 years. This choice will affect your monthly payments, but don't stress because your mortgage advisor will help you out. At ABN AMRO, they offer a slightly reduced interest rate for properties with at least a B-energy label.
Mortgage eligibility and borrowing capacity
Expats are eligible for mortgages in the Netherlands, even if you're paid in a foreign currency. Having a permanent employment contract makes things easier, but there are options for those on shorter contracts, and for people who are self-employed, too.
How much you can borrow depends on things like your income and whether you're applying solo or as a couple. The ABN AMRO mortgage calculator can give you a rough idea of your borrowing capacity and monthly payments. Plus, if you benefit from the 30% ruling tax break, you might be able to borrow more.
And, if you buy a property with a high energy label or commit to making some energy-efficiency improvements, you could potentially increase your borrowing capacity even more.
Personal contribution and buyer's costs
While you can borrow up to 100% of the property value, you'll need to have some savings set aside to cover essential expenses known as kosten koper(buyer's costs). These additional costs usually come to around 6% of the purchase price and include things like taxes, a survey and notary fees.
Some of these expenses, like notary fees, valuation and mortgage advisor fees, are tax-deductible, while other expenses, such as the property transfer tax (overdrachtsbelasting) and estate agent fees, aren't. First-time homebuyers under 35 who are buying a property that costs less than €510.000 don't have to pay the 2% property transfer tax, which is a nice bonus.
Tax benefits and additional expenses
If you have an annuity or linear mortgage and live in the property yourself, you can deduct the interest paid on your mortgage from your taxes for a maximum of 30 years. In 2024, the deductible mortgage interest rate in the Netherlands is 36.97%, so you'll get about one-third of the interest you pay back as a refund.
If you own a home in a larger complex, you'll need to pay a monthly fee to the owner's association (Vereniging van Eigenaren) for maintenance and other property-related expenses. In addition, all homeowners have to pay local authority taxes (OZB) based on the property value, which help fund local services.
Lastly, there's the eigenwoningforfait("own home forfeit"), a type of asset tax calculated based on the property value (WOZ) and the size of your mortgage debt. It's a bit complicated, but usually tax advisors will handle this for you.
Is buying a home worth it?
Sure, buying a house might seem complex and costly, but it doesn't have to be. An experienced mortgage advisor who specialises in helping expats can guide you through the process. ABN AMRO offers regular online webinars in English to help you learn more.
You can also schedule a free, no-obligation orientation meeting with an ABN AMRO expert and have all your questions answered in English.
ABN AMRO: Experts in expats
For over 25 years, ABN AMRO has been the go-to financial partner for expats, diplomats, civil servants and international organisations. They provide products and advice for payments, savings, insurance, credit cards, mortgages, loans and investments. All the expat advisors at ABN AMRO speak fluent English and their website has tons of financial tips and information for expats (also in English).
Open a bank account without a BSN
For expats relocating to the Netherlands, one significant hurdle has been trying to open a Dutch bank account without a Citizen Service Number (BSN). Fortunately, ABN AMRO has recently made it possible to open a bank account in the Netherlands without a BSN.
This means that you can potentially set up your account before you move via the ABN AMRO banking app, so your first pay check or transfer can await your arrival.
