Buying your own home is one of the most important decisions you will take in your life. Given this fact, it is better to be well-prepared for all the questions you may face.
This page explains in ten steps what you will have to remember, when it comes to buying a house in the Netherlands.
Please consult us if you need more information about your mortgage. The first meeting is always at our expense!
Buying a house in the Netherlands
Step 1: WHAT IS THE MAXIMUM I CAN SPEND ON THE HOUSE OF MY DREAMS?
Step 2: THE SEARCH FOR THE HOUSE OF YOUR DREAMS
Step 3: THE NEGOTIATION PHASE
Step 4: STRUCTURAL SURVEY
Stap 5: THE PRELIMINARY CONTRACT OF SALE WITH LET-OUT CLAUSES
Step 6: PUTTING A DOWN-PAYMENT ON THE HOUSE
Step 7: APPROPRIATE LOAN
Step 8: ASKING FOR A QUOTATION
Step 9: THE NOTARY
Step 10: AFTER TRANSFER OF OWNERSHIP
1: WHAT IS THE MAXIMUM I CAN SPEND ON THE HOUSE OF MY DREAMS?
Once you have decided to buy a house rather than rent, you will probably want to start looking for potential purchases straight away. You may have already visited an estate agent. Even so, it is advisable to identify the price segment you should be
looking in first. In other words, what monthly housing costs are you able and prepared to pay and what is the corresponding mortgage? The first thing you need to do is to draw up an analysis of your monthly income and expenses. You can then discuss this with a mortgage advisor, who will use this information to calculate the maximum amount you can borrow. In cases where there is a double income, you need to decide whether the mortgage is to be calculated on the basis of the total amount of the two incomes or a percentage of that amount. If you expect to lose one of the incomes permanently or temporarily, because
you want to start a family for example, you should allow for this when calculating the mortgage.
YOUR INCOME AND EXPENSES
The items listed below will help you to identify your income and expenses. With the assistance of your mortgage advisor, you can use this information to provisionally calculate how much you can borrow.
- salary, income from your business, or state benefit;
- extra salary elements (profit-sharing, holiday pay, fixed bonus for unsocial hours);
- second income;
- other income (e.g. income from rented property, annuity)
- current housing expenses;
living costs, groceries, gifts, clothing, hairdresser, etc.;
- car expenses (insurance, road tax, depreciation);
- school fees;
- interest and loan repayment obligations;
- child day care;
- costs of subscriptions (newspaper, magazines, clubs and associations);
- telephone and internet charges;
- gas, water, electricity charges;
- other expenditure.
Step 2: THE SEARCH FOR THE HOUSE OF YOUR DREAMS
Once you know the maximum amount you can borrow, you can start looking for the house of your dreams. It is important to decide what kind of house you want to buy. For example, do you want to buy a pre-war house or would you prefer to live in a new house? How many rooms do you need and what are your requirements in terms of area and facilities (for example, the distance from the schools, shops, main arterial roads and the railway station)? Obviously you can gather information on your own to start with. For example, you can look at houses that are offered for sale by estate agents or ask colleagues and acquaintances if they know of any houses for sale. Newspapers, estate agents’ magazines and internet are also sources of
Once you have a rough idea of what you are looking for, you can ask an estate agent to register your requirements in a search profile. You will be informed immediately as soon as a house that meets your requirements is offered for sale.
Note that most estate agents will charge you for setting up a search profile.
THE ESTATE AGENT’S ROLE
Once you have a good picture of what you are looking for, the next step is a visit to the estate agent. Of course you can decide to buy a house without the help of an estate agent, but you should appreciate that you lack his expertise and market knowledge. A good estate agent (such as an NVM-affiliated estate agent) knows exactly what houses are on sale and focuses
on looking for houses that fit your profile. You can also rely on him to assist you with financial and legal issues and to draw up all the contracts that are required. He advises and helps you throughout the purchase process and continually acts in your best interests. He assesses the asking price, the structural condition of the building and checks whether there are any
development plans that will affect the value of the property. Moreover, he conducts all the often stressful negotiations for you and acts on your behalf to obtain the lowest possible purchase price. He is able to maintain an objective and businesslike approach in situations where you would have much greater difficulty in doing so. Understandably, because it is your dream house after all! In brief, an estate agent’s assistance makes the process of purchasing a
house much easier and less stressful for you.
THE ESTATE AGENT’S FEE
The estate agent charges a brokerage fee for his services. This fee is a percentage of the purchase amount. Some estate agents work on a ‘no cure, no pay’ basis. This means that you only pay a fee if the estate agent succeeds in buying a house for you. Other estate agents charge a fixed amount for the search profile and a set rate for the purchase of a house.
While the fee may seem like a large amount, you do get a lot for your money. The fee can often be recovered by successfully negotiating a lower price. The estate agent knows exactly how to go about negotiating the lowest possible purchase price. And he supplies a range of additional services, like drawing up the contracts.
STEP 3: THE NEGOTIATION PHASE
The negotiations start as soon as you have found a house that satisfies your requirements. There is no need to negotiate with the seller when you buy a new house as the price has been determined beforehand. However, if you want to buy an existing house, your estate agent will start the proceedings by making an opening offer. This offer is generally lower than the asking price in order to create room for negotiation. After all, the objective is to buy the house for the most favourable price possible. Whether or not you succeed depends on a variety of factors. Is it a popular area, are there a lot of potential buyers, how long has the house been on sale, is the seller in a hurry to sell, etc?
In a market where demand is high and houses are in short supply, a house may sell at or even above the asking price. If the supply of houses is more ample, there is generally more room for negotiation. Decide what your financial reserves are and just how far you want to go beforehand.
Even though it is too early to think about a preliminary contract of sale during the negotiation phase, you should consider any let-out clauses that may apply at this stage. These may affect your offer. For example, your mortgage application may be affected if the seller indicates that it will probably take a year before you can take possession of the house. The results of a structural survey may also influence your offer. More information can be found in steps 4 and 5.
STEP 4: STRUCTURAL SURVEY
Even if the inside and outside of a house seem to be in good condition, there may still be concealed structural problems. Defects are not always clearly visible, hence the origin of the term ‘hidden defects’. So a structural survey during the negotiation phase is a must. The structural survey will reveal any possible defects and also provide an estimate of the cost of repairs or overdue maintenance. These costs may affect your offer. Your estate agent will include the results of the structural survey as a let-out clause in the preliminary contract of sale. This will allow you to withdraw from the sale if any defects are discovered that will result in costly repairs.
Furthermore, as a buyer, you have an obligation to have the house properly surveyed. If you are unfortunate enough to discover a defect once the sale has been concluded and a dispute arises with the seller, you need to be able to provide a structural survey report.
STEP 5: THE PRELIMINARY CONTRACT OF SALE WITH LET-OUT CLAUSES
As soon as the sale of an existing house has been agreed, the estate agent will draw up a preliminary contract of sale to reflect the agreements that have been made. This contract is signed by the seller first and then by the buyer. After receipt of the contract, you have three working days to reconsider your purchase. This is a legally stipulated period. You can withdraw from the contract of sale within this period without incurring any costs. Make sure that the date on which the period of reflection starts has been confirmed in writing. The preliminary contract of sale includes the following:
- the price;
- the handover date;
- the date on which the notary must have received the deposit or the bank guarantee;
- any let-out clauses and the date on which they no longer apply;
- The so-called movable property included in the price. You do not have to pay transfer tax on the value that is agreed for the movable property. However, note that if you include the movable property in the mortgage, the interest relating to the purchase price of the movable property is not tax-deductible.
Once the period of reflection has elapsed, you may only withdraw from the contract of sale without incurring any penalties before an agreed date if you have included let-out clauses in the contract and decide to use them. You or your estate agent must notify the seller of this in writing. The most common let-out clauses are:
- the availability of adequate financing of a suitable kind;
- Nationale Hypotheek Garantie [Dutch National Mortgage Guarantee Scheme] approval;
- the availability of a housing permit;
- the results of the structural survey;
- the sale of your current home before a defined date.
If you want to withdraw from the contract of sale after the three day period of reflection and have not included any let-out clauses in the contract of sale, you will generally have to pay a penalty of 10% of the purchase amount to the seller.
If you buy a house without the assistance of an estate agent, you have to provide the preliminary contract of sale yourself. A notary can provide standard contracts. Standard contracts are also available from the Dutch Consumer Association (Consumentenbond, www.consumentenbond.nl).
Professional advice when drawing up a preliminary contract of sale is by no means a superfluous luxury. The term ‘preliminary’
is in fact a little misleading as you do in fact commit yourself to the purchase by signing the preliminary contract of sale.
COSTS PAYABLE BY THE PURCHASER (KOSTEN KOPER)
When a house is purchased, various costs such as transfer tax and notary’s fees are incurred. These are not included in the selling price and have to be paid by the purchaser.
Including other associated costs such as the mortgage handling fee, the notary’s fees for drawing up the mortgage deed, the fees charged by the estate agent and the valuation fee, these costs generally amount to 5% of the selling price.
NO COSTS PAYABLE BY THE PURCHASER (VRIJ OP NAAM)
When you buy a newly built house, you don not have to pay any additional costs. This is called ‘vrij op naam’. This means that the VAT (BTW) and the notary’s fee for the deed of transfer of title are already included in the price. You do have to pay other associated costs however, such as the mortgage handling charge, the notary’s fee for the mortgage deed and interest incurred during construction (bouwrente). Bouwrente is the Dutch term used to describe all the interest costs that you have to pay during the construction of the house. This includes mortgage interest during the construction phase. The total extra costs for a newly built home amount to 5% of the selling price.
THE VALUATION REPORT
A valuation report is generally a mandatory requirement when applying for a mortgage for an existing house. The valuation must be performed by an independent estate agent or a certified real estate assessor rather than your own estate agent.
The party performing the valuation assesses the house and writes a valuation report that establishes its value. The house itself is not the only factor that determines the results of the valuation; the assessor also takes the condition of the house and the area into account. You should always inform the assessor of any plans you have to modernise or refurbish the house. He can allow for the value of the house after the planned work has taken place in his report. This may allow you to include the costs of
refurbishment in your mortgage. Generally, a valuation report costs between € 350,00 – € 500,00.
The official handover takes place at the notary’s office on the date that has been agreed in the preliminary contract of sale
(see <a href=”#nine”>Step 9</a> for further details).
When you buy a newly constructed house, rather than entering into a contract of sale with the seller, you enter into a contract of sale/construction contract with the builder or a real estate developer. This contract describes all the agreements relating to the design of the house, the materials used, the construction period, handover and size of the plot. A guarantee and warranty scheme is generally also included in this agreement. This describes your rights if the construction company should be unable to meet its obligations (such as making the property available for occupation on the agreed handover date). The Dutch national Home Warranty Institute or Garantie Instituut Woningbouw (GIW), which is accredited by the Dutch government, carefully selects the construction companies who are allowed to offer their houses under the terms of this guarantee scheme. The guarantee also applies to the materials used. If any defects come to light in your house within the guarantee period, the construction company has an obligation to effect repairs.
STEP 6: PUTTING A DOWN-PAYMENT ON THE HOUSE
As security for the purchase, the seller includes a clause in the preliminary contract of sale that stipulates that you, as the purchaser, have to put a down-payment on the house. This deposit is generally the same as the penalty that you would have to pay if you were to change your mind and withdraw from the purchase without being able to exercise any let-out conditions.
The deposit is generally 10% of the selling price. As you may not be able to finance such a large amount from your savings, you may also choose to submit a written bank guarantee to the notary. Banks do charge for supplying a bank guarantee.
STEP 7: APPROPRIATE LOAN
After you have signed the preliminary contract of sale, you need to proceed with arranging finance. As you have already gained advice about the maximum mortgage for which you qualify, taking out a mortgage is unlikely to prove a problem. Moreover, you have most likely signed the preliminary contract of sale subject to your ability to arrange appropriate finance. The next step is to decide which type of mortgage matches your requirements and personal situation best.
But how? There are so many different options! Section 2 contains a clear explanation of the most common types of mortgage. Have a look at this section to decide which type of mortgage appeals to you the most.
DUTCH NATIONAL MORTGAGE GUARANTEE SCHEME (NHG)
You may qualify for the Dutch National Mortgage Scheme (Nationale Hypotheek Garantie or NHG). The advantage of the NHG is that you can borrow money at a more attractive interest rate, as the credit institution will always be repaid even if you are unable to meet your repayment obligations in the future. This is because the Dutch Home-ownership Guarantee Fund
(Stichting Waarborgfonds Eigen Woningen) guarantees repayment of the loan (mortgage) to the credit institution. Obviously, this Fund will try to recover the debt from the mortgagor (the customer).
The scheme requires you to pay a one-off, fixed percentage of the mortgage amount. These costs are soon recovered though as you pay a lower rate of interest. And these costs are also tax-deductible.
Visit www.nhg.nl for more information about the Dutch NHG scheme.
THE BRIDGING LOAN
If you are already a home owner and want to move to a new house, you obviously want to sell your current house before moving into the new one. If you unable to do so, you will have to pay costs for both houses for a time. As you are unable to use the surplus value in your current home for as long as it remains unsold, you may need to apply to a credit institution for a temporary loan, which is know as a bridging loan. Each credit institution has its own terms and conditions for this type of loan. If you have already sold your house, but the new house has not been transferred to you, or if you want to undertake major refurbishment first, the bridging loan will generally be based on the actual value less the remaining mortgage debt. In some cases a bridging mortgage may be required, for example if the transitional period exceeds a few months. A mortgage deed has to be drawn up by a notary in situations like this.
STEP 8: ASKING FOR A QUOTATION
Because of our collaboration with nearly all the credit institutions in the Netherlands, Hypotheek Haarlem is able to offer nearly all types of mortgage at competitive rates and on attractive terms. If you have already selected a type of mortgage and all the details of your new house are available, the advisor can request a quotation for you.
After receiving your application, the credit institution will decide whether or not to provide a mortgage based on the following criteria:
- are the monthly payments reasonable in comparison to your income and fixed expenditure;
- the assessed value of the house you wish to purchase (collateral for the loan);
- any debts (loans, late payment history, history of default on payments, etc.) registered with the Dutch Credit Registration Office (Bureau Kredietregistratie or BKR) in Tiel;
- type of employment contract (permanent employment contract, temporary contract, independent businessman, etc.).
If the credit institution approves your application, a quotation is drawn up and sent to your mortgage advisor. The quotation specifies the exact mortgage amount, the interest rate, the fixed-interest period and the monthly costs.
The quotation is valid for a limited period. The quotation also specifies a loan expiry date, which can be prolonged if required. If you decide to accept the quotation, you must sign it and return it within the specified period. By doing so, you enter into an agreement with the credit institution.
STEP 9: THE NOTARY
Dutch law stipulates that the transfer of ownership of a house must always be arranged by a notary. Before the transfer of ownership, the notary verifies how the house and any surrounding land are entered in the land register. This clarifies exactly what will pass into your possession. The notary also arranges all the transfers of funds between the credit institution, the buyer and the seller.
DEED OF TRANSFER
Once the loan has been arranged and any let-out clauses no longer apply, the preliminary contract of sale becomes final and the notary can draw up the deed of transfer. The deed of transfer specifies the details of the buyer, the seller and the house. The deed also establishes the date on which transfer of ownership will take place and – in the case of a newly constructed house – when the building will be available for occupation.
When everything has been arranged, you can make an appointment with the notary. The buyer, the seller and the estate agent(s) all attend this meeting unless the seller has authorised the notary to represent him.
The second deed that the notary draws up is the mortgage deed. This deed describes the details of the mortgage, the credit institution and the terms of the loan. This deed is signed by the purchaser, the credit institution and the notary. In many cases, the credit institution authorises one of the notary’s employees to sign the deed.
The visit to the notary does not generally last more than an hour. The notary charges a fee for his services. Notary’s fees are no longer regulated and they can set their own prices. It is often possible to agree a special price.
STEP 10: AFTER TRANSFER OF OWNERSHIP
Congratulations! You are the new owner of the house.
You have a busy, but rewarding period to look forward to, as you will need to plan the move and you may want to redecorate or refurbish the house before moving in. Once you have settled in though, you will steadily become less involved in how the house is financed. After all, you have done your best to arrange a favourable mortgage. But you may have the odd question about your mortgage from time to time in the future. As time passes, your personal circumstances may change. For example, because of a salary increase, a new baby, school-going children or an inheritance. And the interest rate and tax legislation also change on a regular basis. So it is worth checking whether your mortgage is still in tune with your personal situation about once every three years.
Please consult us if you need more information. The first meeting is always at our expense!