Buying a house in the Netherlands: Is it just a dream or an achievable goal?

De Boer Financial Consultants are specialised in expat mortgages. José de Boer is the owner and director and has many years of experience dealing with a wide variety of expat-related legal and financial matters.

Are you an expat in the Netherlands or Dutch citizen living abroad? Buying and financing your home in the Netherlands can be a challenging operation. 

Residence status

Around 20 years ago, banks hardly catered to international clients wishing to buy a home in the Netherlands. If you were not Dutch, the banks would worry about the duration of your residence permit and insist on an indefinite residence status before granting you a mortgage.

In the years that followed, however, banks became aware that these international clients paid their mortgages on time and the percentage of foreclosures would be even lower than those of the native buyers. And even the non-resident Dutch treated their house back home with care and honoured their financial obligations with a minimum of mortgage defaults.

So the banks started to become more open to this large group of prospective clients and even developed special guidelines on being able to service their international clientele. Some banks were more adept than others, but so far so good.

The Mortgage Credit Directive

So just when we started to think that banks (or at least some banks) were treating everybody equally, the European Union came in with new regulations.

In Brussels, it was decided that everybody with an income in a currency other than the Euro, should be protected against currency fluctuations and the risk this brings about when you buy a house in the Eurozone.

The rules that were set out by the EU meant that a big part of the currency risk should be covered by the banks. Optional meaning that the banks should offer a mortgage in a foreign currency if the exchange rate difference exceeds 20 percent during the period of the mortgage contract. This is one of the stipulations in the so-called Mortgage Credit Directive.

But, of course, banks had and still have no intention whatsoever to offer these foreign currency loans. First of all, their systems are simply not up to it and secondly, they would now have to deal with currency risks themselves. A totally unacceptable situation for the banks and their answer was simple.

Approximately one year ago, one bank after the other closed their mortgage desk for anyone with a non-Euro income. And which group was the most affected by this new measurement: the expat community, of course. Many internationals earn their income in a foreign currency. So we were back to square one.

German bank to the rescue

Luckily, a German bank just across the border had their own interpretation of this Mortgage Credit Directive and was able to service many clients with non-Euro (non-EU) income.

To this date, they finance clients with Euro income and if it is a foreign currency outside the EU, they are also able to provide mortgages.

So now we could service most clients, except Sterling income, Swedish or Danish Kronen because these countries are part of the EU so the German bank is following the European Mortgage Credit Directive regulations.

The solution

Towards the end of 2016, ABN AMRO sought external advice on how to deal with the Mortgage Credit Directive and found a solution on how to service their non-Euro income clients. What a huge relief for the expat community and their financial advisors.

ABN AMRO now only takes 90 percent of the income into consideration when someone’s maximum mortgage amount is assessed. This way the client has some protection against currency fluctuations and less vulnerable to a lower salary when the exchange rate changes.

All’s well that ends well? Well, sort of…

The housing market

So now buying a house is possible again, right? Of course, you may have noticed that house prices are shooting up.

Why? Well, simply because the demand is greater than the supply. Yes, you can probably get a mortgage, even if your income is not in Euro, even if your residence status is not indefinite, in many cases even if you have a temporary contract of employment.

But those of you who have checked out the Funda housing website will find that most houses or apartments that you like are already sold or under offer. There are simply not enough houses to accommodate everybody and every budget.

This is partly caused by the fact that the Netherlands has limited space to build, but also because during the financial crisis there was no money to build and people were scared to invest their money in new developments.

If you are interested in buying a house or apartment and you wish to improve your chances, it could be worth doing your 'financial homework' up front to be able to move quickly when the right house for the right price comes along, so you know exactly what your financial capabilities or inabilities are.

If you are facing limited mortgage options, don’t hesitate to contact De Boer Financial Advisors. They are able to find solutions for many internationals with non-euro incomes.