Buying a new house

There are many reasons for buying a new house. However, such a decision is not taken overnight. There are various financial affairs about which you will have to think and to decide. If you buy a new home, your old house will have to be sold in the end. Selling your current home first will give you financial peace of mind. After all, then you will exactly know what your situation is. However, what should you do if the house of your dreams is already up for sale? We will gladly think along with you, so that you can make the choices that suit your situation and personality. 

First, we will give you an insightful overview of the financial consequences of the (eventual) sale of your current house. If you sell your house for a higher amount of money than the mortgage debt, this will result in a capital gain. This capital gain will decrease the maximum of deductible mortgage when buying a new house; this is the so-called additional credit regulation.

If you sell the house for a lower amount of money than the mortgage debt, this will result in a capital loss. If you do not have own means available to compensate for this, you could take out a loan. Regulations for the financing of residual debt apply to this. 

Subsequently, we will make an overview together with you of what the investment for buying the house is. 

Finally, we will make an estimate of the total required investment to conclude both financial transactions. We will then decide with which means or sources we will finance the investment. Think, for example, of a mortgage with or without financing of the residual debt, of bringing in your own means, of a Personal Loan, a family loan or a gift. Combinations of these are possible, of course. 

When deciding on your mortgage we will consider the following topics:

 

Maximum mortgage

When determining the maximum mortgage, the lender takes into account:

1. Your income

Your monthly mortgage costs should fit your total income minus possible obligations. In the ´temporary mortgage credit regulation´ you can find the percentage of your income which the government allows to be spent on mortgage costs.

2. Market value of the house

The market value of the house to be bought can be determined in three ways:

• The purchase price of the house
• The purchase or contract price, possibly increased by the interest of construction, interest during the construction, the lump-sum on ground rent, additional work or the connection to a public utility
• The appraised value, potentially after a refurbishing

 

You can maximally loan 100% of the market value when buying a house. When you take energy-saving measures, the maximum loan may be 106%. For the time being, there are no plans to further reduce this.

 

Existing loans and/or obligations

A lender will always have the bureau for credit registration (Bureau voor Kredietregistratie, BKR) perform a financial test. He wants to know whether you already have financial obligations and what your payment behavior is like. If you already have a consumer credit, this will have consequences for the maximal mortgage sum you can apply for. This is because 2% of the credit limit is taken into consideration as a monthly financial cost. Some lenders are willing to test for the lower real costs of your financial obligation. If the charges are fixed during the term of a credit, the actual charges are usually held.

Do you have a study debt from before 1 July 2015? Then 0.65% of your debt will have to be considered as part of your monthly financial costs.

Study debts from after 1 July 2015 can be paid off in a period of 35 years. These debts count for 0.35% in the calculation of the maximum mortgage sum. 

The amount of these rates depends on the interest paid on study debts.

If you have a private lease contract, 100% of the total lease sum is included as a financial liability. 

If you pay partner alimony, this will have consequences for the maximum mortgage sum you can take out. During the period in which you pay partner alimony, this will be deducted from your test income.

 

Mortgage interest tax relief and mortgage types

Your current mortgage debt is relevant for calculating the duration of the mortgage interest tax relief and for calculating which mortgage types are allowed.

If you have taken out a mortgage before 1 January 2001, then the 30-year term for the loan with that sum started on 1 January 2001. In case of a new loan, a new 30-year term applies each time.

With the new mortgage regulations as applying since 1 January 2013, you might qualify for a transitional arrangement. If this is the case, you can continue your existing mortgage type. For a potential extra loan, the rules as established on 1 January 2013 apply. In that case, you can choose between two mortgage types: an annuity based mortgage or a linear mortgage.

 

National Mortgage Guarantee (NHG)

Under certain conditions, you can finance the home with the National Mortgage Guarantee scheme (Nationale Hypotheekgarantie, NHG). The foundation 'Waarborgfonds Eigen Woning' (Homeownership Guarantee Institution) will warrant. A National Mortgage Guarantee mortgage offers both you and the lender extra security. This will result in a more favourable interest rate than financing without the National Mortgage Guarantee.

 

Accidental death insurance

When buying a first home it is of importance that you cover the risk of demise well. The financial consequences of your decease could have a large impact on your partner and your children. Of course, you would like to leave them behind well taken care of.

To cover the risk of demise, you can take out an accidental death insurance. Some mortgage providers demand that you cover at least the surplus above the 80% of the market value of the home with deductible accidental death insurance on an annuity basis.

 

Living cost insurance

Unemployment or professional disability can have large consequences for your income. Naturally, you would like to be able to keep on living in your house. This is why it is important to map these risks well and - if necessary - cover them by means of a living cost insurance.

 

(New) Construction deposit loan

If you partly finance a refurbishing yourself, the lender will place the needed sum in a so-called 'construction deposit'. The bills you will have to pay or those that you have paid in advance can be claimed from this construction deposit. You will receive interest over the sum in the construction deposit. 

For newly built houses the lender will also provide a construction deposit, but in this case for the total investment. From this construction deposit, both the purchase of the land and the construction costs will be financed. The last mentioned will of course be financed in phases as the construction advances.

Besides this, there are possibilities to finance potential double costs (loss of interest) during the construction.

 

Higher mortgage inscription

When taking out a mortgage, it will be inscribed in the so-called mortgage register at the Cadastral Agency. 

If you can get a higher mortgage than you need, you can choose for a so-called heightened inscription of the mortgage. The sum in the register will be inscribed higher than the mortgage amount you take out in reality. The advantage of this is that when you, for example, want to finance a refurbishing after a couple of years, you can increase the loan from the lender up to the amount of inscription, without having to go to the notary again. You should consider that the lender would look at your financial situation again, if you ask to increase the loan privately. You can never loan more than what is possible, your income and the value of the home considered.