Because mortgages in the Netherlands are expensive, and according to some financial experts even too expensive, there is another option for Dutch people to take out a mortgage. Namely via Germany. You can take out a mortgage for your Dutch home with our German neighbors. Borrowing money also seems to be easier and cheaper in Germany in some cases. This all sounds very attractive, but is it possible for everyone? And what does it take to achieve this?
Compare mortgage rates in Germany
The mortgage rates were last updated / checked on February 20, 2019 .
Mortgage in Germany
Only a small number of German mortgage providers can be found on the Dutch market, despite the fact that there is a lot of market share to be gained for German providers on the Dutch market. This lack of a German mortgage offer is mainly due to the strict regulations set by the Netherlands Authority for the Financial Markets ( AFM ) for the provision of mortgages within the Netherlands.
The AFM is the body that monitors companies active in savings, loans, investments and other financial activities. Particular attention is paid to the behavior of the financial enterprise. One of the most important requirements that the AFM sets for German mortgage lenders is that they open a Dutch branch to bring its mortgage services to the customer. Many German mortgage lenders have therefore not listened to the Dutch market to date. This is relatively small compared to the German market.
Advantages of a German mortgage
- 1% to 2% less interest than in the Netherlands
- Full repayment in twenty years
- Retain tax benefit
- Everything completely transparent
Calculate German mortgage
You can generally calculate the size of a mortgage on the websites of the various banks. You have little or no influence on the maximum amount to be borrowed. What you can borrow mainly depends on the amount of your income, that of your partner, your monthly costs, the value of the house in question and the interest rate at that time. It also makes a difference whether you are building a new house or buying an existing one.
In the Netherlands, banks often use a calculator on their website to calculate the maximum mortgage. This system is also used in Germany. There is one difference, however. If you want to calculate how much money you can borrow at a German bank, it is mandatory to enter your own contribution. This must be at least 15 percent of the total free market value of the home and in certain cases even more. However, in most cases you do not have to enter monthly costs, both variable and fixed.
People who live on and towards the German border often have an extra advantage. This is in contrast to people who live further away in the Netherlands. German banks that are not actually active on the Dutch market sometimes want to make an exception for Dutch people at the border to finance their mortgage.
You see this mainly in Limburg, where more and more homeowners are taking out their mortgage in Germany. This interest is attractive in Germany and, moreover, the paid mortgage interest remains deductible for the Dutch tax authorities. A large and well-known bank in the region of South Limburg, Germany and even Belgium is the Sparkasse in Aachen.
Yet more and more is changing in the field of German mortgage lenders in the Netherlands. There are already several German banks that offer a mortgage for every Dutch person. This usually takes place through a Dutch intermediary or intermediary.
It often happens that Dutch people switch to a German bank. Especially when it comes to refinancing, or 'Umschulden' as the Germans call it, South Limburgers are increasingly opting for the German mortgage lenders. In the Netherlands, when determining the new interest rate, banks often charge a half percent or more extra interest to existing customers than to new customers. In this case, it can pay off to look at a German mortgage lender like Sparkasse. If there is equity or a savings balance, it is no problem for many that the German banks only provide a mortgage up to 50 percent of the free market value.
Differences between German and Dutch mortgages
At the start of the information process, the differences between Dutch and German mortgages quickly become clear. In the Netherlands, for example, you will receive a quote from most mortgage lenders before you have provided all the relevant information. This is not possible on the German market. German providers first ask for all relevant information and documents before you can receive a quote for a mortgage. In addition, German providers demand equity capital from the applicants. A German mortgage may be up to a maximum of 85 percent of the purchase value of the house. In contrast to Germany, people can borrow more money for a house in the Netherlands. In the Netherlands, the maximum funding amount is approximately 111 percent of the value of the house.
In addition, there is a difference in repayment. In the Netherlands we know the interest-only mortgage. This type of mortgage, which is already limited by the government to a maximum of 50 percent of the loan amount, is very popular in the Netherlands. This is because the interest on the entire amount borrowed is deductible for thirty years. German mortgage lenders are not familiar with this type of mortgage. Mortgages from our Eastern neighbors must be fully repaid through an annuity mortgage. However, it is possible to take full advantage of the mortgage interest deduction for the first ten years, in combination with a savings account. The repayment obligation starts after the first ten years. The repayment terms are also different in the Netherlands than in Germany. In the Netherlands it is possible to repay a mortgage within a maximum term of thirty years, with a German mortgage lender this repayment term is a maximum of twenty years.
It may be that you already have a mortgage with a good interest rate and perhaps a longer fixed-rate period, so that refinancing the mortgage is not profitable, but that you still need an extra mortgage for a renovation or other expensive credit, for example. Even then it is possible to take out a mortgage in Germany, as a second mortgage. For this, as with other mortgages, it is best to request multiple quotes to compare the interest rates and costs. Just like in the Netherlands, the German mortgage interest can also make a huge difference.
Why a mortgage in Germany?
A mortgage in Germany is more favorable for the Dutch because of the lower mortgage interest. For people who live around the border of our Eastern neighbors, a mortgage in Germany has become increasingly popular in recent years. There are various intermediaries active on the market, making it possible for more and more Dutch people to take out a German mortgage for their Dutch home. The German mortgage is cheaper and has the same advantages as a 'normal' Dutch mortgage, but the conditions are slightly different. In most cases you are only eligible if you have your own money. In most cases, German banks are not willing to finance one hundred percent of the home value. This financing often does not exceed eighty percent. A German mortgage can therefore be very attractive and can certainly make a difference in the final costs, but can only be taken out if you have sufficient financial resources yourself.