You decided that you are buying a house in The Hague. And you are looking at the financial side of the most expensive you will do in your life. Are you looking like the proverbial wide-eyed deer into the headlights when it comes to your financial perspective? Becoming an eligible buyer begins with exploring the financial world in the Netherlands.
Where do you start when you are making a long-term commitment? You definitely want to be as informed as possible. We are looking at a bond which might last as long as 30 years after all. Be prepared when you are going out to shop for a mortgage, that is why we have prepared a very handy mortgage checklist you will need when buying a house in The Hague.
But let’s start first with a brief summary of relevant mortgage types!
Mortgage with straight line redemption
The most important characteristic of this mortgage is that the loan is repaid yearly in equal installments (i.e. straight line). As a result of the repayments, the amount of interest payable diminishes every year. Since the interest expenditure decreases steadily, this mortgage is best suited for borrowers who cannot fully benefit from the tax relief on the interest payments.
Annuity mortgage
The chief characteristic of an annuity mortgage is that the yearly total of redemption and interest payments remains the same throughout its duration. Although the total remains the same, the mix of interest and redemption of course changes over the years. Owing to this balance between interest and redemption, the redemption is not on a straight-line basis.
In the first years, the amount paid by the borrower consists mainly of interest payments. Hence there is a large tax relief in the initial years. Consequently, an annuity mortgage is ideal for people who wish to have a large tax relief in the early years and expect to have a sufficiently high income in later years to be able to make the redemption payments that do not qualify for tax relief.
Now that you know of the 2 most chosen mortgage types mostly posed question we always seem to get is “But what is really important when to choose a mortgage and what should we pay attention to?”.
That is why we have put together a very handy checklist of critical points that you should consider when choosing your mortgage.
What to Pay attention to when you receive your mortgage offer?
• How long is the validity period of the quotation?
• How long can you extend the quotation at most? And how much do you have to pay for this extension (readiness fee)?
• How much is the compensation on your construction or renovation deposit?
What else should you pay attention to regarding the mortgage offer?
• What percentage can you repay annually without penalty?
• Can you extend the fixed-rate period?
• Can you take your fixed-rate period with you when moving?
• Is it possible to withdraw a previously redeemed portion? If so, what are the costs?
Are you looking for a new mortgage?
In that case, pay attention to the mortgage type if you want to be eligible for mortgage interest relief.
Are you refinancing your pre-2013 mortgage or is your fixed-rate period on this mortgage ending?
Then consider the conditions that apply to be able to make use of the mortgage interest deduction.
What major points should you pay attention to regarding the insurance in your mortgage?
• What are the monthly premiums for risk insurance and savings, life or investment insurance?
• Can the monthly premium be increased or decreased in the meantime?
• What percentage of the monthly premium is actually used for value accrual (investment percentage) and what part is costs?
• Is the promised return gross or net?
• What risk profile does the policy have?
How much are the purchase costs?
Generally, the costs of purchasing a house in The Netherlands amount to approximately between 6 to 7% of the purchase price of your new property, apart from your 10% down payment for the home.
Additional costs include
· 2% transfer taxes;
· Costs for registering the property in your name and having that information filed in the usual registers, done by a civil law notary;
· Notary fee;
· Ground book registration fee;
· Ground book investigation fee;
· Translator / Interpreter;
· Buyer’s agent costs;
· Mortgage advisor fee;
· National Mortgage Guarantee costs (if applicable);
· Appraisal costs for an independent financial report;
· Structural surveyor (if applicable);
· Bank guarantee cost (if applicable);
In conclusion, a house at € 500.000 will cost you an additional € 30.000 to € 35.000, on top of the purchase price.
We know that the mortgage language can come across as a lot of jibber jabber that is hard to conquer, especially the first time buying a house, we can understand that. All the documents are in Dutch, but no worries about that, we do have a solution for you. We will provide you with a translation of the deed of transfer.
Also, we will arrange a financial appraiser and a structural surveyor to make sure that your new home is in mint condition. On top of that you do need a translator / interpreter at the actual deed at the Notary, that is a requirement of the Dutch law. And we have a long list of translators / interpreters we can hire on your behalf.
Remember that the selling agent does not have your best interest at heart, because he or she are representing the seller. We, at Stark Real Estate are experts, and can offer you the service of a “buyer’s agent” whereby we will represent your interest and your interest only. That means that are advising you all the way through the purchase activity including negotiating the price and conditions for you. We do everything for you concerning the purchase of your new property, even help you with your utilities and in the end of the transaction, we will gladly walk you over the threshold of your new home.
Contact us, if you do need more information, insights or explanation about your mortgage or for that matter the purchase path. Or if you want a second or even third opinion. We are here to help you!
Karola Grünenbaum, director Stark Real Estate