Expat? And you want to buy a house in the Netherlands?

You might think that you face a double hurdle: you do not hold a European passport and on top of that you have a temporary contract of employment.

So, what are the chances of obtaining a mortgage and buying your own house even though you do not hold an indefinite residence permit?

It always gives me great pleasure to tell our expat clients: Yes, you can!

Banks lending to non-Dutch

Most banks in the Netherlands have been defrauded in the recent past by untraceable expats who abscond, leaving behind them large unpaid mortgages. Consequently, many banks are cautious about lending to non-Dutch nationals.

However, information and data exchange between countries (especially European) has greatly improved and also expats today are generally highly educated.

Therefore, banks' faith is being constantly restored and as a result, their readiness to provide mortgage loans given that their mortgage application is handled professionally.

European or not, indefinite contract or fixed-term, 30% ruling or tax free salaries, it is usually possible to find suitable finance for most prospective home buyers, each with their own set of circumstances.

How much can you borrow?

How much you can borrow depends on your income and on the value of the property. For this reason, the bank will always need a valuation report drawn up by an independent property valuator.

Based on your income, an impartial mortgage advisor can tell you how much you will be able to borrow and thus, it is advisable to provide the financial advisors with your most recent salary slip. If you are self-employed, the bank will normally request (annual) figures of the last three years as well as your most recent income tax returns.

Do you qualify for tax relief on the mortgage interest payments?

Yes, but only if you pay taxes in the Netherlands. So, even if you are qualified for the 30% ruling, you can still benefit from tax relief on your mortgage payments and it is possible to receive this relief on a monthly basis, thereby reducing your monthly mortgage payments.

If you do not pay Dutch taxes because your salary is paid outside the Netherlands or because you enjoy a tax-free salary, you cannot claim this tax relief

However, if your partner pays taxes in the Netherlands, he / she can normally claim the full tax rebate even if you own the property together and under specific circumstances, even if the property is in your name only.

Can you qualify for a mortgage without an indefinite contract of employment?

In most cases, yes. Your employer will need to fill in a Statement of Employment indicating that you will be granted an indefinite contract after the current one expires. In case your employer is unable to make such a declaration, it will certainly help if you can show three years of previous income.

Furthermore, some banks will make special allowances for several international organisations for whom temporary employment contracts are a standard issue.

Procedure

After consulting your financial advisor, you will know (exactly) what your budget is. The next step is to find your dream house, generally with the help of your own real estate agent. Apparently, the real estate agent represents the interests of the seller. Thus, you may wish to consider hiring your own!

Once an agreement on the purchase price has been reached, an official Purchase Agreement will be drawn up. In Amsterdam, this is done at the Civil Law Notary’s office, but elsewhere in the Netherlands this is normally done by the real estate agents. After signing the Purchase Agreement, you have three days to change your mind. This is the so-called "cooling-off" period.

It is also common to have a financial contingency clause in the contract. This means that you have a couple of weeks to secure a mortgage offer from a bank. If you do not succeed, you can still get out of the Purchase Agreement by letting the seller (or his / her agent) and the notary know in writing before this financial due date. You will need two letters from two different banks denying you the mortgage loan. Your financial advisor will also be able to help you here.

Usually though, the mortgage applicant is rewarded with a mortgage offer and the next step is then to make a deposit of 10% of the house price. This 10% needs to be transferred to the Notary’s office or (in most cases) the mortgage bank will send a letter of guarantee to the Notary’s office for this 10%.

The final date in the Purchase Agreement is the actual date of transfer of ownership of the property. On this date you become the owner and all rights and duties related to the property will be transferred to you.

You must go to the Notary’s office to sign both the deed of transfer of ownership as well as the mortgage deed. An interpreter is normally present if you do not have a good command of Dutch. The dates in a Purchase Agreement should not be set too lightly or too tightly. The advice of a real-estate agent and that of your financial advisor can save you hassle and keep you safe from legal pitfalls.

Jose de Boer is an Expat Service Provider who helps internationals to feel at home in the world of Dutch finances. For inquiries and / or remarks comment below or visit her website.