Mortgage news: Outbidding & more possibilities for double-income couples

Finsens Mortgages specialises in financial planning for individuals and families in the Netherlands and provides full support during the entire mortgage process, from start to finish.

Thanks to low-interest rates and the limited availability of houses for sale, the housing market in the Netherlands is booming. Housing prices have increased over recent years and banks expect to reach the peak of the pre-crisis price levels in 2018.

An overheated housing market?

There are some signs that this booming market is starting to get overheated. One of these signs is the unprecedented number of cases where buyers outbid the seller's asking price to make sure that they get the house.

Currently, on a national level, 28 percent of buyers pay thousands of euros above the seller’s asking price. A frustrating situation for people looking to buy a house, because it is difficult to tell which price will make you the highest bidder.

Bidding above the asking price only occurred in 9 percent of all transactions in 2008.

Outbidding is becoming the norm in Amsterdam

Unsurprisingly, in Amsterdam, the situation is the worst. In 79 percent of all transactions, buyers bid above the asking price in an attempt to be the highest bidder. Utrecht is second with 65 percent, followed by Groningen (64 percent) and Haarlem (63 percent).

Don’t forget about the appraisal value

Be aware of the asking price in relation to the property’s appraisal value. Sellers may have already priced their house above the market value. As of 2017, buyers can get a loan-to-value of 101 percent of the appraisal value, so if you outbid an already high asking price, you will have to use a large amount of your own savings.

Financial grace period clause

Desperate times call for desperate measures, and therefore some buyers sign a purchase contract without the financial grace period clause. Normally, this clause is a safety net; you sign the contract, but you can still get out of the deal if the bank does not approve your mortgage. Please note that without this clause you are stuck with the purchase, even if your mortgage falls through.

Good news for double-income couples

As of 2018, double-income couples have more possibilities in terms of their maximum mortgage. Currently, double-income couples cannot simply add both salaries to calculate the maximum amount that they can borrow.

This is not allowed because if one of these salaries disappears, payments for the mortgage will become a problem. Therefore, only 60 percent of the lower of the two salaries is currently used when calculating the maximum mortgage.

On January 1, 2018, this will be increased to 70 percent. This increase means that, on average, a couple can get an additional 10.000 - 20.000 euros for their mortgage.

Do you need more information about your own particular situation? Contact Henk van Seijen, a partner at Finsens, providing specialist services to expats in the areas of tax, mortgages, pensions and investment advice.