Higher mortgage for starters

Starters may still borrow a little more in 2018 to be able to take out a mortgage with a National Mortgage Guarantee (NHG). The government parties VVD, CDA, D66 and ChristenUnie want minister Kajsa Ollongren to make an exception for this group, now that the loan rules will be tightened further next year.

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From January 1, home buyers are only allowed to finance a maximum of 100 percent of the value of their new home with borrowed money. In 2017 this was 101 percent. As a result, additional costs, such as transfer tax and notary fees, must be paid entirely out of pocket from 2018.

The Dutch government want that percentage for people with an NHG mortgage to remain at 101 percent. They fear that the measure will discourage starters from taking out a mortgage with NHG. This type of mortgage, which banks can offer for houses with a value of up to 265,000 euros, has a number of favorable features. The interest is lower than with other mortgages and in the event that the buyers break up later and forced to sell their property that has fallen in value, the residual debt is waived.

Rest for the starter
For that extra security, starters do pay a one-off premium of 1 percent over the home value. The coalition parties want that one percent to continue to be co-financed and possibly remain tax deductible, for example through an additional loan that is repaid from the interest benefit that the NHG provides. “More security for a starting home buyer and the housing market”, says initiator D66 MP Jessica van Eijs. “We all benefit from this.”

The coalition also wants, on the proposal of the VVD, that Ollongren explores whether the NHG premium can be reduced. “That percentage more than doubled during the crisis. Now we are out of the crisis, so I assume it can be lowered now,” according to VVD MP Daniël Koerhuis. The reduction should start in 2019. In order to make it even more attractive for starters to enter the housing market, Koerhuis also wants the cabinet to investigate whether a student loan can weigh less heavily in a mortgage application.

Remaining debt
To prevent people from being left behind with a residual debt after a forced sale, the government has gradually scaled back the maximum loan amounts in recent years. Homeowners must now also pay off their house to be eligible for mortgage interest relief.

The Dutch National Bank has been arguing for years for the maximum loan amount – expressed in the ratio of a mortgage to home value – to be further reduced to below 100 percent. As a result, home buyers would have to invest even more of their own money to be able to buy a house of their own. However, politicians do not want to go that far yet.