Essential Dutch mortgage terms that all expats should know

In this article, De Hypotheker outlines and explains the most essential terms that you need to know if you are considering buying a home in the Netherlands as an expat.

As an expat, getting a mortgage in the Netherlands doesn’t have to be complicated. However, you’ll undoubtedly come across terms that might raise your eyebrows. No worries! De Hypotheker presents this list of the most important mortgage terms for you, along with helpful explanations:

Mortgage interest deduction (Hypotheekrenteaftrek)

Perhaps the most important term, as it can save you money. Mortgage interest deduction is a tax benefit for homeowners in the Netherlands. Simply put, if you own a home, you can deduct the mortgage interest you pay from your taxable income. This reduces the income you have to pay taxes on, resulting in lower taxes. You can choose to receive this amount annually with your annual tax return or opt for a monthly refund.

Types of mortgage

Homebuyers in the Netherlands can choose from three mortgage types when taking out a mortgage: an annuity mortgage, a linear mortgage or an interest-only mortgage.

Annuity mortgage (annuïteitenhypotheek)

With an annuity mortgage, you pay a fixed amount of repayment and mortgage interest every month. Initially, you pay mostly interest, and over the term, you gradually start repaying more each month.

Linear mortgage (lineaire hypotheek)

A linear mortgage works differently. Here, the monthly amount is higher at the beginning of the term but decreases slightly each month. Therefore, when the mortgage is almost paid off, you only have a small monthly amount left to pay.

Interest-only mortgage

Lastly, there is the interest-only mortgage, where you only pay mortgage interest and no repayment. This variant is not often taken out nowadays. Since 2013, it is no longer allowed to use the mortgage interest deduction with an interest-only mortgage.

National Mortgage Guarantee (Nationale Hypotheek Garantie)

When taking out a mortgage, you can opt for a mortgage with a National Mortgage Guarantee (NHG). With an NHG mortgage, you are protected under certain conditions if you can no longer pay the mortgage and need to sell your home at a loss. NHG then pays the difference between the selling price of your home and the outstanding mortgage. Another advantage of NHG is that you get a lower mortgage interest rate.

To qualify for NHG, your home must meet certain conditions. The most important one being that the selling price remains below a certain threshold. This threshold changes annually and is €435.000 as of 2024. Additionally, you pay a fee of 0.6 percent of the mortgage amount.

WOZ-value (WOZ-waarde)

As a homeowner, you pay annual taxes to the municipality. Some of these taxes, such as the property tax (OZB), are calculated based on the WOZ-value. This is the value of your home as determined annually by the municipality. The municipality considers factors such as housing price developments in your area. For the tax assessment, a percentage of the WOZ-value is taken to determine the amount of your tax.

Energy label (Energielabel)

Since 2024, the energy label of your new home has become especially important. This is not only due to sustainability considerations but also because it affects the amount of your maximum mortgage. How much you can borrow now partly depends on the energy label. The better the label, the higher your maximum mortgage. For a home with an E, F or G label, you cannot borrow any extra mortgage amount. For a home with an A++++ label, the extra mortgage amount is €50.000 and with the commonly-seen A or B label, you can borrow an additional €10.000.

Get advice from a mortgage advisor

If you’re buying a home in the Netherlands for the first time, there’s a lot to consider, and you might have several questions. If so, it’s a good idea to make an appointment with a mortgage advisor.

De Hypotheker is the largest independent mortgage advisor in the Netherlands. With over 35 years of experience, they are well-qualified to help you find the best mortgage for your situation. An initial consultation with De Hypotheker is always free, so make an appointment at a branch near you soon.