Keep to let Mortgage
The so-called keep-to-let proposition is becoming very popular among homebuyers and Expats living in the Netherlands. Investing in real estate can be a lucrative opportunity, and this option offers a way to finance and generate income from rental properties. We will explore the keep-to-let mortgage option offered by ABN Amro Bank NV. We'll discuss what a keep-to-let mortgage entails, how it works, the benefits and considerations, and the application process. Let's delve into the details!
Understanding the Keep-to-Let Mortgage in the Netherlands
A keep-to-let mortgage, also known as a buy-to-let mortgage, allows property owners to finance the purchase of a property with the intention of renting it out to tenants. ABN Amro Bank NV offers this option, providing financing solutions tailored specifically for regular homebuyers on the Dutch rental market to transfer their existing property into a keep-to-let mortgage.
The main advantage of keeping your property is that the rental income is not taxed since it shifts from box 1 (taxable income: work and owner-occupied house) to box 3 (capital tax: savings and investments). Furthermore, maintaining the property does not incur significant additional expenditures. In addition, the rental property is transferred from box 1 (labour and revenue) to box 3 (assets).
How Does a Keep-to-Let Mortgage Work?
With ABN Amro's keep-to-let mortgage, you can transfer your existing mortgage loan in order to be able to rent out your property. The rental income generated from the property can contribute towards repaying the mortgage and generating cash flow. ABN Amro Bank NV typically offers loans of up to 75% - 80% of the property value in a rented state, although specific terms may vary based on factors such as your income and state of the property.
Mortgage rates for keep-to-let homes are higher than those for regular mortgages, with a 1% difference as a general rule. So, your existing interest rate will stay active and increased with 1%. This is a huge opportunity as the regular buy-to-let mortgage interest rates are roughly 5% up to even 7%.
Benefits of the Keep-to-Let Mortgage Option
1. Investment Opportunity: The keep-to-let mortgage option allows you to invest in real estate and potentially benefit from property value appreciation over time.
2. Rental Income: The rental income from the property can help offset the mortgage costs and provide a steady cash flow.
3. Flexibility: Being able to rent it out anytime that suits you, based on Dutch rules and regulations.
Things to consider and the risks that come with renting out a property
1. Property Management: Being a landlord requires time, effort, and expertise in managing tenants, maintenance, and legal obligations. Consider whether you have the capacity to handle these responsibilities or if you'll need assistance from property management services.
2. Rental Market Analysis: Conduct thorough research on the rental market in your desired location to assess the potential demand, vacancy rates, rental yields, and regulatory considerations.
3. Interest Rates and Costs: Take into account the interest rates, fees, and additional costs associated with the keep-to-let mortgage. Understand the impact they may have on your cash flow and investment returns.
4. Property Valuation and Insurance: Adequate property valuation and insurance coverage are crucial to protect your investment. ABN Amro Bank NV requires property valuation as part of the mortgage process.
Applying for a Keep-to-Let Mortgage with ABN Amro Bank NV
We are happy that you have made the decision to apply for a keep-to-let mortgage via us. See below for an overview of the steps and costs.
1. Research and identify the property that you wish to transfer into a keep-to-let
2. Gather the necessary documentation, such as proof of income, financial statements, valuation of property and property details.
3. Contact us to discuss your requirements and initiate the application process.
4. Provide the requested documentation to support your mortgage application.
5. ABN Amro Bank NV will evaluate your application, including factors like your financial position, credit history, and property analysis.
6. If approved, you'll receive a mortgage offer outlining the terms and conditions. Review the offer carefully before accepting.
7. Complete the necessary legal and financial arrangements, including property valuation and insurance, and finalize the mortgage process.
The keep-to-let mortgage option via ABN Amro Bank NV presents a valuable opportunity for homebuyers looking to enter the Dutch rental market. By considering the benefits, risks, and application process outlined in this guide, you can navigate the process with confidence and embark on a successful property investment journey. Remember to conduct thorough research, seek professional advice when needed, and make informed decisions based on your specific financial goals and circumstances.
Get in touch with us to start your rental journey now!
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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