Buying a house the Dutch way
5 things that are typical Dutch about the home buying process
Thinking about purchasing a property in Utrecht Region? You can. As an international you’re allowed to buy a house and get a mortgage. It's a good way to increase your living comfort and save on expensive rental costs. However, buying a property can be a challenging process, which probably differs from what you’re used to at home. Discover 5 things about the home buying process in the Netherlands that are typical Dutch.
1. Exclusive realtors
When searching for a house in Utrecht Region you can hire an estate agent. In the Netherlands dual agents, who work for both seller and buyer, are not allowed. You hire an agent exclusively. This way, you’re sure the realtor works solely on your behalf.Hiring a realtor is not mandatory, yet it’s recommended. A good estate agent strongly increases your chances of buying a property on the Dutch tight housing market, on which the coronavirus so far has had little to no impact. If you choose not to hire an agent, keep in mind that the seller’s agent is not your agent.
2. No mortgage pre-approvals
In other countries you can get pre-approved by mortgage lenders. That shows sellers that a lender has screened you and will lend you money. In the Netherlands there’s no such thing as a mortgage pre-approval. That’s why most buyers bid with a financial cancellation clause, so they can cancel the purchase without penalties if they don’t succeed in arranging the mortgage.
However, mortgage advice company Hanno can give you something quite similar to a mortgage pre-qualification. The Hanno Mortgage Promise is a thorough check of your maximum mortgage based on your financial situation. With this it’s often safe to drop the financial cancellation clause. That gives you an advantage while house hunting.
3. No down payment
In most countries mortgage lenders require a down payment: a part of the purchase price which you pay out of your own pocket. Depending on the country, as an international this payment can be 20% to 40% of the property’s value.
Mortgage lenders in the Netherlands don’t require a down payment. You’re allowed to finance up to 100% of the property’s market value (exceptions may apply to non-EU citizens). The only costs you have to pay yourself are purchasing and financing costs of about 5% of the purchase price.
4. Fixed interest rates
How long your mortgage interest rate will be fixed differs everywhere. It can be standard to get a fixed rate for the whole repayment term, or only for a few years. A Dutch mortgage has to be paid back within 30 years and the most common interest period is 10 years. Both longer and shorter are possible, but that might decrease your mortgage capacity.
5. Property transfer tax
Wherever you buy a pre-built home, you almost always have to pay transfer tax. This rate varies per country, from 0,0% up to 11,3%. Compared to the global average rate of 3,3%, the Dutch transfer tax rate of 2% isn’t that bad.
Mortgage advice company Hanno can be your guide to buying and financing your house in the Netherlands. Please contact their specialized Expat Mortgage Desk for a free appointment or sign up for their ‘how to buy a house’ webinar.