Dutch Tax Blog

Dutch Tax Blog

Maximum mortgage and taxes

Expat tax matters mortgagePosted by Mike de Gruijl Sun, November 20, 2016 15:23:10

More and more expats are seeking for a home which they own themselves. Financing a property with a mortgage can be very different compared to your home country.

A lot of expats know that the rules in The Netherlands give more possibilities to finance a property compared to other countries but Dutch banks are not endless when it comes to the maximum mortgage they are willing to lend you.

European Bank & IMF

Because of the fact the European Bank and IMF still think that our property market is way over-financed the Dutch government decided a few year ago that the maximum mortgage which people could apply for had to be reduced to a maximum of 100% of the market value. The effect is that you only have until December 2016 to apply for a mortgage of 102% of the market value of your new home. Next year the maximum mortgage will be reduced to 101% and in 2018 the maximum will be 100%.

Because of this change in rules not everybody is able to finance a house with a mortgage. Simply because they don't have enough cash or savings to make a deposit on transfer date to cover all the costs involving the purchase of a house and the finance costs.


A big misunderstanding is that borrowing more than the maximum mortgage will resolve in losing your tax deduction on the additional loan you will need to cover the costs for buying a house.

Fortunately this is not the case. As long as you make sure your loan has a repayment schedule it is still possible to borrow money, for example in a personal loan, to cover the costs and which exceeds the maximum mortgage the bank are able to lend you. The Dutch tax authorities don't look at the loan compared to value and stick to different rules when it comes to determine wether or not the interest paid on the mortgage is tax deductible.

Personal loan

However you always must keep in mind that a personal loan will effect your maximum mortgage in a negative way (the maximum possible mortgage based on your income and financial situation will decrease when taking in account your personal loan) and the monthly obligation is usually set at 2% of the credit limit or total of the personal loan.
A possibility could be to apply for a bridging loan at a family member and after transfer date apply for a personal loan at a different creditor. Just as long as you keep in mind that from day one you must have a repayment schedule agreed with your creditor to be able to deduct the interest of the additional loan.

It is always recommended to check your possibilities with an independent financial advisor to see if your dream house is still possible for you to finance with the scenario mentioned above.

Want to learn more about your possibilities? Tax & Service Solutions are here to give you the best advice on all your financial matters. We work together with the best business partners.
Check our website https://www.tssolutions.nl

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