Maximum Mortgage for Expats: 5 more things to keep in mind

In this article, we are discussing 5 more things to keep in mind to secure the maximum mortgage for your financial situation.

As a continuation of our first maximum mortgage article, we're going to look at 5 more things to keep in mind when preparing yourself financially for a mortgage.

Remember: Banks want to keep their risk low, so applicants who have lower risk are more attractive, though some banks are willing to take on higher risks clients under certain circumstances. There are a few things that might make a difference in your loan-to-income / borrowing capacity.

Monthly expenses

Your mortgage advisor and eventual mortgage lender will want to know exactly how much money you have to put aside for your general monthly expenses like insurance, car payments, etc. Considering your monthly income and these expenses, your mortgage advisor can help you see exactly how much you can budget. Take the time to think about which of these monthly expenses are mandatory (like insurances) and which could be dropped (like app subscriptions).

Student debt in The Netherlands

If you studied in The Netherlands and started repaying your student loans before and up to 2015, your monthly repayment was assumed to 0.75% of the debt. With a few changes to the student loan repayment in 2015, the monthly repayment is now assumed to be about 0.45% of the cost of the loan. 

This means that on a student debt of €30,000, your monthly repayment is estimated at €187,50. That number, whatever it is, will be subtracted from your monthly disposable income. If you’ve paid down a good chunk or have some money saved, it might be worthwhile to pay it off and free up that monthly disposable income!

Consumer debt

In The Netherlands, consumer debt is registered in the Dutch Credit Registration Office (BKR). Mortgage lenders will request access to your BKR registration. Your information will provide them with information on the level of risk of non-payment. Your BKR registration shows outstanding debts like monthly credit card payments, private lease contracts (like a car), buying in monthly installments (like using Klarna or buying a phone on contract). If a mortgage lender sees that, on top of your necessary monthly expenses, you have consumer debts to repay, you will be at higher risk of non-payment of your mortgage. 

Factor in leasehold

When you’re looking for a new home, especially in the Amsterdam region, it’s important to double check if the property is lease- or freehold. Most properties in Amsterdam are leasehold, this means that you required to pay a yearly amount to the municipality to use the land your property is on (yes, that includes apartments!). This, too, can impact your loan-to-income capacity. 

Fixed-rate interest period

Take into consideration the fixed-rate interest period. With the current increase of mortgage interest rates, when you choose a fixed-rate period of 10 or more years, the current interest rate will be taken into the total calculation. At 10+ years fixed, the interest rate that you lock in now is guaranteed for the length of the fixed rate. 

The more information you have, the better understanding you’ll have of your own financial situation and what you can expect from a mortgage. 

Ready to get started with your mortgage application process? Contact Arjen today for a free consultation!