What is a mortgage?
A Mortgage is a long term loan borrowed from a mortgage provider (a bank or pension fund), this is used to make payments on a property. You will pay off the mortgage (plus interest) in monthly instalments. Make sure you keep up with your mortgage repayments, otherwise the mortgage lender has the option of taking possession of the property and selling it on an execution sale.
What different types of mortgages are there?
In the Netherlands we have two main mortgages, the Annuity mortgage and Linear mortgage. With the Annuity mortgage, if you have a fixed interest on the loan, your repayments will remain the same, but the ratio of interest to capital changes. With the Annuity mortgage, if you have a fixed interest on the loan, your repayments will remain the same, but the ratio of interest to capital changes.
How much can I borrow?
As a rule of thumb you can calculate max 5 times your gross annual income, however this is dependent on several factors, if you have other financial commitments and loans, they will consider this into your calculation. The bank also wants to know what the property value is before offering you the loan, to ensure you don’t over borrow. In 2018 they will lend to a limit of 100% of the property value. This number will go down by 1% per year for the next 4 years.
What are the interest rates at the moment?
The interest rates differ with the type of mortgage you are acquiring. Your mortgage broker will know more about the different types of rates, though as of time of writing (May 2018) the mortgages rates vary between 2,5% - 3,5%.
How much money will we need to have saved upfront?
You will need to bring up to approximately 6% of the value of the house (for the buyers costs) - but of course it helps with your personal profile during the offer stage if you have further capital saved! As a part of our service, we can put you in touch with a mortgage partner who will be able to tell you more about what you will be able to borrow, and give you a better idea of your position in the market.