Buy to Let Mortgage
In the Netherlands you are able to buy a property for yourself and the family to live in. But you also have the option to buy a property as an investment and rental purposes. The application process, however, is fairly different and it does have tax implications as well. In general, you are able to finance a property and invest your savings for a passive income stream.
The differences between your own home and a buy-to-let mortgage
A residential property is based on a mortgage for individuals who are planning to live in the property and don’t have any intentions to rent it out to others. With a residential property you are able to finance up to 100% of the market value.
A buy-to-let mortgage is mainly for individuals that are planning to buy a property for investment purposes. By buying a property for rental purposes, you are be able to generate passive income for yourself and the family. In the Netherlands you are able to finance such a property up to 70%, 80% and even 90% of the market value in a rented state.
Requirements of a buy to let mortgage 2022
In general, and as rule of thumb, the contribution for a buy-to-let mortgage is approximately 30% from your own savings. In addition, you have to pay 8% transfer tax in 2022 for a property that you’re buying for investment purposes. In 2023 the transfer tax will increase to 10.4%. You can imagine that the costs will be significant compared to a property that you’re buying to live in. Lastly, you have to be registered in the Netherlands and live and work. Contact us to receive more information about the possibilities.
An example of financing
The numbers below are indications and no rights can be derived from this.
Purchase price: € 300.000
Transfer tax (8% 2022): € 24.000
Appraisal report: € 900
Real estate agent: € 3.000
Financing costs: € 3.000
Total costs: € 30.900
Market value in a rented state: € 210.000
(Always much lower than regular market value)
80% financing option: € 168.000 mortgage amount
Total savings needed: € 132.000 + € 30.900 = € 162.900
How does it work and what are the conditions
The buy-to-let mortgage is mainly suitable for long-term rent and not allowed for short-term rentals such as holiday homes or Airbnb. You are also not able to live in the rental property yourself, as this has tax implications and it won’t make really sense as the benefits are not included.In order to apply for a buy-to-let mortgage, we need documents and review the possibilities. Our mortgage advisors are certified to inform you about the process and the options. Please contact us to discuss the options.
Different lenders on the Dutch market
In the Netherlands different lenders have different requirements for investment mortgages. The buy-to-let mortgage market is, however, pretty small in the Netherlands. We have couple of lenders such as Dynamic Credit, ABN AMRO Bank, NIBC, Domivest, RNHB, Woonfonds and Nationale Nederlanden.
Box 1 and box 3
Home owners with a mortgage are taxed in box 1, meaning that you are living in the property yourself. Property investment mortgages are taxed in box 3, no interest deductibility is allowed for box 3 financing.
Refinance your own property to a buy-to-let mortgage
For many expats that have bought a property, this is could be a great chance to keep their property. If, for example, they have lived for 3 years in the Netherlands and they are planning to leave and rent their property in the Netherlands. You have to keep in mind that some banks/ lenders do not offer investment products or are not able to transfer your regular mortgage into a buy-to-let mortgage. Please make sure to ask for the condition with your current lender/ bank and contact us to discuss further options.
Mortgage Types
Frequently Asked Questions about Mortgages in the Netherlands
What types of mortgages are available in the Netherlands?
The main types are annuity mortgages (annuïteitenhypotheek), linear mortgages (lineaire hypotheek), and, under strict conditions, interest-only mortgages (aflossingsvrije hypotheek). Each type has a different repayment structure and impact on your monthly payments.
How much can I borrow for a mortgage?
Your maximum borrowing capacity depends on your gross income, financial obligations, and the market value of the property. Generally, you can borrow up to 100% of the property’s value.
What is the National Mortgage Guarantee (NHG) and what are its benefits?
NHG is a government-backed guarantee that provides extra security for both you and the lender. It often results in a lower interest rate and can protect you if you cannot pay your mortgage due to circumstances like divorce, job loss, or disability.
Is mortgage interest tax-deductible in the Netherlands?
Yes, interest on your mortgage for your mainresidence is tax-deductible, provided the loan is used for buying or improvingyour home and is fully repaid within 30 years.
What additional costs should I expect when buying a house?
Expect to pay transfer tax (overdrachtsbelasting), notary fees, valuation costs, advice and mediation fees, and possibly a bank guarantee. These costs are usually 4–6% of the purchase price.
Can I get a mortgage if I am self-employed or a freelancer?
Yes, but you will need to provide extra documentation, such as annual accounts and tax returns for the past three years. Lenders typically assess your average income over this period.
How long does the mortgage application process take?
The process generally takes 4 to 6 weeks fromapplication to final approval, depending on your situation and the lender’srequirements.
What documents do I need to apply for a mortgage?
Commonly required documents include proof of income, recent payslips or annual accounts, identification, bank statements, and details of the property you wish to buy.
Can I repay my mortgage early without penalty?
Most lenders allow you to repay up to 10–20% of the original loan amount per year without penalty. Early repayment above this limit may incur a fee.
What happens if I can no longer pay my mortgage?
Contact your lender as soon as possible. With NHG, you may be eligible for support. The lender will try to find a solution, such as a payment arrangement or, as a last resort, selling the property.
How does energy efficiency affect my mortgage options?
Energy-efficient homes may allow for a higher borrowing limit and sometimes qualify for a lower interest rate. There are also special loans and subsidies for making your home more sustainable.
What is the difference between an annuity and a linear mortgage?
With an annuity mortgage, your monthly payment stays (almost) the same, but the interest portion decreases over time. With a linear mortgage, you pay off a fixed amount of the principal each month, so your monthly payments decrease over time.
Can non-residents or expats get a mortgage in the Netherlands?
Yes, many banks offer mortgages to expats and non-residents, though extra conditions and documentation may apply.
How do interest rate periods (rentevaste periodes) work?
You can fix your interest rate for a certain period (e.g., 5, 10, 20 years). During this period, your interest rate and monthly payments remain stable.
What happens if I want to move before my mortgage term ends?
You can usually take your mortgage with you to a new property (portability), or you may need to repay your mortgage early, which could involve a penalty depending on your lender and contract.
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