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When you go to buy your first home, a lot comes your way and quite a bit of information is asked of you.
But what is the most important thing you need to know? And where do you get this information from and who do you need in the process?
We’ve listed a few things for you so you’ll be well prepared!
You need a good mortgage broker
Buying a house, and thus applying for a mortgage, actually all starts with a good and reliable mortgage broker.
A good mortgage broker will take the time to properly list what is possible and give you high-quality financial advice.
They will also think along with you and are always available, so you can quickly switch when necessary. Because it is very important to know whether your dream home is actually feasible and up to what amount you can possibly bid.
After all, it would be very unpleasant if your offer is accepted and then the mortgage turns out not to be completed. There are several options here, including options that can provide more certainty in advance.
Choice of types of mortgages
What mortgages are actually available for first-time buyers and what are the advantages and disadvantages of these forms? There are really only two options here.
Because the linear and annuity mortgages are the only two forms for which you still get mortgage interest deductions even since 2013.
We therefore briefly explain below what the advantages and disadvantages are.
Advantages annuity mortgage
- You pay the same (gross) amount every month, so you know exactly where you stand with your monthly expenses.
- You pay part repayment and part interest. So as a result, you pay off a small part of your home each month and it becomes a little more yours with each payment!
- If you can lock in this mortgage at a low interest rate, you’ll have a nice low monthly payment for years to come.
- Compared to a linear mortgage, you will have lower monthly costs for the first few years.
Disadvantages of annuity mortgage
- Because, especially in the beginning, you only pay off a small portion, it takes a while before you make any real strides in paying off your home.
- Once your fixed-interest period ends, your monthly expenses change.
- Your net monthly expenses increase gradually over the term.
Advantages linear mortgage
- Each month, your monthly amount gets a little lower because your mortgage debt gets a little bit less each month.
- At the end of the term of this mortgage, you pay less interest than with an annuity mortgage.
- You pay part repayment and part interest. So as a result, you pay off a small part of your home each month and it becomes a little more yours with each payment!
Disadvantages of linear mortgage
- Compared to an annuity mortgage, you will have higher monthly payments for the first few years and, of course, you must be able to afford them.
- Once your fixed-interest period expires, your monthly costs may change.
Repayment Free Mortgage
With an Amortization Free Mortgage, you pay only interest and no repayment per month during the term. As a result, your monthly expenses during the term are lower than with an annuity mortgage or linear mortgage.
You repay an interest-only mortgage by making interim repayments at your convenience, but no later than the end of the agreed term. You do this for example with your own money or the sale proceeds of your house.
You can also choose to make additional repayments on your mortgage in the interim. Repaying extra changes your monthly burden. This is because the total amount of your loan becomes lower. This reduces the amount you pay in interest.
Note! With this type of mortgage, therefore, you no longer get mortgage interest deduction since 2013.
Starter Loan
An additional option as a starter is the starter loan! Do you want to buy a house and just can’t borrow enough from the bank?
Then see if you qualify for a Starter Loan. This bridges the gap between your maximum mortgage and the price of the home you have your eye on.
It is an additional loan to your mortgage for your first purchase home.
The Stimuleringsfonds Volkshuisvesting Nederlandse Gemeenten (SVn) is responsible for the Starters Loan. You take out the loan through your municipality provided it participates in it.
So check with your own municipality about the possibilities in this regard.
Additional costs beyond your mortgage
It is also smart to put down on paper all additional costs such as transfer tax, owner’s charge offsets, land registry fees, mortgage broker and notary fees.
These can often be included (in part) in the loan, but sometimes have to be paid out of pocket.
Therefore, it is already good to know that you have to pay the “buyer’s fee” yourself and therefore you have to have this amount in your account.
Buyer’s costs include transfer tax (2% of the purchase price) and notary fees. As the buyer, you can choose the notary, so pay close attention to the price he or she charges.
So there are quite a few costs involved in your mortgage application and buying your first home. Unfortunately, since January 1, 2018, you can no longer co-finance these costs in your mortgage.
You must therefore put in your own money to take out a mortgage. You should think of an amount of about four to six percent of the purchase price. In addition, you can choose to deposit additional equity to lower the mortgage and thus the monthly costs.
By own money we mean the money you have at your disposal to invest in your new home. Also called: the money in your current account, money in your savings account or, for example, the surplus value from the sale of a previous home.
Finally, you can also get your own money through a gift from your parents or from an inheritance, for example. We tell you more about that below.
Buying without your own money and options
Buying without your own money is unfortunately no longer possible since January 1, 2018.
Since then, in fact, only the purchase price and nothing else may be financed with a mortgage.
Don’t have enough money of your own to cover these costs? Then you may want to look to your parents for a (tax-free) donation or other options we discuss below.
Annually, parents donate
Your parents may give you a tax-free gift each year. This is set at the amount of €6,633 per child in 2024.
One-time donation
Your parents are also allowed to give their children a one-time higher tax-free amount. You can use this amount for a house of your own, a study or something else. You or your partner must be between the ages of 18-40. The day of your 40th birthday still counts.
Surplus value of parental home
Do your parents have excess value on their home and still have room to borrow? Then they can take out a mortgage and borrow or gift that amount to you.
Do they already have a mortgage? If so, they can refinance and increase it. If they want to use the excess value to help you, they must first take out a new mortgage. They will pay advisory and notary fees for that.
Joint and several liability
If you do not currently have enough income to buy a house, your parents can also sign for all or part of the mortgage debt.
They then become jointly and severally liable for your debt. Should you no longer be able to pay the monthly mortgage payments? Then the bank will visit your parents to collect the mortgage payments.
Attention! You must be able to prove that your income will be sufficient to pay the mortgage in the future. For example, because you will have paid off a debt in a few years.
Borrowing money privately
Do your parents have money they can spare? Then your parents might consider lending you an amount of money to buy a house. You then agree on a market-based interest rate with each other.
You can deduct mortgage interest in your tax return under certain conditions, and the loan must be repaid (on a straight-line or annuity basis) within 30 years and everything must be repaid.
Note! When you borrow money from your parents, you do so on business terms. This applies to all terms. An example is paying an interest rate that is market-based.
It is important to make good agreements with each other and record them, preferably with a notary. This will prevent misunderstandings or arguments.
Mortgage2Go
Want more certainty about what your maximum mortgage loan will be and want to know before you go house hunting that you qualify for financing?
Then Mortgage2Go offers the solution. With pre-checked financing, you can be sure you can afford your dream home.
Start an application when you qualify for a pre-checked mortgage.
Relevant information:
Checklist: what do you need for a mortgage application?
