Discovering the right time to invest in a house raises a common and valid question among potential buyers. While there isn't a one-size-fits-all answer, understanding crucial aspects is essential in order to make the right decision. Below couple of essential factors to think about before taking the leap and securing a mortgage in the Netherlands, let's get to it!
It would be a very good idea to think about not only your own future but also the future of your family. Overall they are also part of it. Buying a house and committing to a mortgage requires careful consideration. While you may have already decided that the Netherlands is the place to be, doubts about returning to your home country or relocating elsewhere may arise. Rest assured, solutions exist for potential future changes, ensuring flexibility throughout the years when staying in the Netherlands.
One crucial consideration is whether or not you intend to live in the house with your family. Why? Housing markets for primary residences (where you will live) and investment homes (where you will rent out the house or rooms) serve distinct objectives and have various financing requirements. For the most part, this is due to the potential influence of Dutch government restrictions.
These rules must be followed by lenders, limiting their discretion when deciding whether or not to provide you a mortgage for your primary residence or as a buy-to-let investment property. To cut a long tale short (more on this below), we think now is a fantastic moment to invest in a home. However, when it comes to purchasing a home as an investment, we are more hesitant.
Investing in a home now offers a number of benefits. First, the market has slowed considerably due to the increase in interest rates that has occurred over the previous year. Since the Dutch property market is still fluctuating, there is considerable "momentum" that might help you strike a bargain. This trend will continue until buyers and sellers alike realise that present interest rates are here to stay, at which point demand for real estate is expected to increase once again.
It's common knowledge that the interest rate is directly proportional to the regular monthly payment amount. Payments will increase proportionally as interest rates rise. A higher interest rate also means that the bank will lend you less money, so keep that in mind.
Here is some advice from the experts of Financial Consultancy Holland, when it comes to figuring out your mortgage payment. Your annual gross income is the primary factor in determining how much you are able to borrow. However, what you may not realise is that the Dutch government plays a major role in establishing your borrowing capacity. The annual mortgage payment cap is a proportion of your income set by the government. It's possible that, after accounting for inflation, that proportion will go down even while other costs go up. In other words, this may imply that your access to a loan may be limited in the years ahead.
It's no secret that the biggest cities in the Netherlands are feeling the effects of the country's severe housing scarcity. One of the reasons why home prices keep going up is because of this. King Willem-Alexander of the Netherlands made the announcement on September 19, 2022, that 900,000 new residences will be constructed between 2022 and 2030. This is a fantastic plan to alleviate the housing shortage in the Netherlands, and it will ideally level the playing field for first-time buyers. However, market analysts for the real estate industry believe that this is extremely unlikely to occur.
You've undoubtedly noticed that your rent, along with other living expenses like food and utilities, has gone up recently. The last one, where rent rises and falls with inflation, is the most intriguing. However, this is not the case if you are the property owner. Mortgages allow you to lock in interest rates for longer periods, providing you with greater budgetary predictability and basically knowing that your monthly payments will remain the same.
Do you have questions about your financial situation in the Netherlands or would you like to get in touch with us? You can do this via our contact form and we will contact you as soon as possible. Looking forward!