FAQ about a Dutch mortgages
When you’re decide to buy a house in the Netherlands, the first thing you should do is check if you’re eligible for a mortgage. Applying for a Dutch mortgage can be a difficult process, since the rules are complicated.
How does a Dutch mortgage work and what are the special requirements for expats?
What about tax breaks when buying a home?
When buying a home in the Netherlands, your mortgage interest may be tax-deductible. If so, you can deduct the interest you pay on your mortgage from your taxable income on your tax return. Some of the costs and fees you incur in buying a home are also tax-deductible.
What is the mortgage interest deduction?
Under certain conditions, you can deduct the mortgage interest you pay from your taxable income in Box 1. This reduces your net mortgage costs through a tax refund.
What costs can be deducted?
- One-time mortgage-related costs, such as valuation fees, notary fees for the mortgage deed, mortgage advice, and NHG premium.
- Mortgage or loan interest (for your primary residence).
What is the Dutch National Mortgage Guarantee?
The NHG (Nationale Hypotheek Garantie) helps ensure your mortgage is affordable and responsible. It’s a unique scheme in Europe, providing a financial safety net if you face unforeseen challenges, like job loss or divorce.
Why choose NHG?
- Affordable and responsible borrowing: NHG ensures your mortgage matches your income based on NIBUD guidelines.
- It guarantees your mortgage to the lender, reducing risks for both parties.
- Safety net:Offers support if you can’t pay your mortgage due to specific circumstances (e.g., job loss, relationship breakdown, disability, or the death of a partner).
What are the benefits of NHG?
- Lower financial risk: NHG helps cover a shortfall if you face financial difficulties.
- Lower interest rate: Lenders often offer discounts for NHG-backed mortgages.
What are the conditions for mortgage interest deduction?
- The mortgage is for your main residence (not for a second or holiday home).
- The loan must be annuity- or linear-based and repaid within 30 years.
- Surplus value from selling a home must be used for the new home within 3 years (additional loan scheme).
- The imputed rental value ("eigenwoningforfait") is included in your taxable income.
How do I receive the tax refund?
- After filing your tax return, you receive the full refund as a lump sum.
- Alternatively, opt for a monthly provisional tax assessment.
Where do I find mortgage information for my tax return?
Each year, you receive an Annual Mortgage Statement from the lender. You can use this statement to complete your income tax return. This document includes: the total mortgage interest paid and the outstanding mortgage balance.
What is the 30% ruling?
The 30% ruling allows eligible expats in the Netherlands to receive up to 30% of their gross salary tax-free. This benefit compensates for extra costs related to working and living abroad, known as extraterritorial expenses.
How does the 30% ruling impact my mortgage?
The 30% ruling boosts your net income by making 30% of your gross salary tax-free. Lenders consider this tax benefit when calculating your maximum mortgage amount for the remaining eligibility period.
After the ruling expires, your mortgage payments will be based on your gross salary.
What are the benefits of the 30% ruling?
- Lower income tax: You keep more of your salary compared to those without the ruling.
- Expense compensation: Employers can cover costs like relocation, work permit applications, and visits to the Netherlands tax-free.
- Employer benefits: Employers save on contributions, making it cost-effective for them as well.
How long does the 30% ruling apply?
The ruling is valid for up to five years, provided you meet the eligibility criteria.
Need advice on your mortgage and the 30% ruling?
Contact your mortgage advisor for tailored guidance.
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