Sleep peacefully in 10 years - Think hard about your mortgage now
What you need to know about your mortgage
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When buying a new home, the focus is often on speed. Bidding without or with a very short reservation of financing is the rule rather than the exception these days. But this haste is often at the expense of carefully arranging the mortgage, whereas according to your mortgage advisor, that is exactly where the focus should be. After all, do you know what would change in your mortgage if your family grew larger or if your salary grew slower than expected? This is exactly what a good independent mortgage advisor zooms in on.
Avoid surprises: start financial advice on time
Don't wait to schedule a counseling session until you have found a home. Instead, have this conversation before you actively start looking for a home. You may fall in love with a home tomorrow and then you want to be able to move quickly, and in many situations you can do that even if you've already done the preliminary work.
Advice that suits you
Ideally, you should start thinking about financing a home at least a month before you enter the housing market. A good financial advice program looks beyond what you can borrow now. Together with your mortgage advisor, you look at your future and discuss topics such as:
What will my mortgage look like when I retire?
Are the charges then still affordable?
What happens in the event of disability?
What has your employer regulated? And if you are a business owner, how are you protected? Is additional insurance desired, as these can often take a big part
Cohabitation contract: what should it contain?
Also, think, if either of you bring in a lot of your own money, how do you document that.
What if one of us dies?
How do we arrange it so that the surviving partner is able to continue living in the house? Should there be death insurance?
Entrepreneurial plans in the future?
Should this already be taken into account when choosing the bank?
Salary growth and family expansion:
How do future changes in income or family situation affect affordability?
What if the relationship ends?
Can each take his or her mortgage portion, or will the bank not cooperate?
Are you expecting surplus value soon from, say, a home abroad (think expats)?
Can you then repay penalty-free, and does that fit within the terms of your mortgage?
Do you have remodeling or preservation plans?
Do you need to save extra for that or reserve room in your mortgage?
These questions directly affect the amount and form of your mortgage. So it's not just about the lowest interest rate, but more importantly the terms that suit your personal situation and future plans.
How quickly can financing be arranged?
Over the last two or three years we often get asked if we can get the financing done within the 3-day reflection period, it is often possible. But for that it is essential that the documents are already collected and that there is good contact between broker, buyer and mortgage advisor.
But we always advise clients to prepare well and do thorough preliminary research.
What really determines housing affordability?
You want to look not only at the pictures of a property but also at the condition of a house.
An A energy label can allow you to borrow €10,000 or €20,000 more. While for a house with a long leasehold charge of €1,000 per year, you can borrow up to €20,000 less. So it's not just the purchase price that counts.
These other factors have much more impact on your monthly expenses.
Home sustainability
Service charges (at apartments)
Association health
Ownership vs. leasehold
The financial advisor not only helps you determine the right amount of the mortgage, but also weighs these kinds of important details. That way, you don't go out with only the maximum amount you can borrow, but you and your buying agent also look at the condition of the home.
Realtor and mortgage broker: the perfect team for your dream home
The Amsterdam housing market demands both speed and certainty. Without good financial advice, a bidding process can be delayed, or-even more annoying-it turns out afterwards that your dream home is not within your reach after all. This is why a real estate agent often asks prospective buyers if they have already spoken with an independent mortgage advisor. This allows you to move quickly when bidding and gives you a head start in the crowded Amsterdam market.
A good mortgage broker looks beyond just the maximum loan amount. Consider the influence of changing interest rates, own land versus leasehold, and the energy label on what you can ultimately borrow. This will give you a realistic picture of your responsible monthly burden, now and in the future-whether you have a desire to have children, are approaching retirement, or have other plans.
Together with your mortgage advisor, you determine your responsible monthly burden and thus your price range. Then, together with your Amsterdam buying agent, you can search for a home that really suits you. Stay in touch with your advisor during the bidding process, because the unique characteristics of each home affect your financing options.
In short: Let yourself be guided by a purchase broker and an independent mortgage advisor who really ask questions. Together they will ensure that you enter the Amsterdam housing market with confidence and realism. In this way you ensure that the mortgage remains affordable now and later - even if life goes differently than planned.
Because let's face it: when you buy a home, you'd rather think about the future than what could go wrong. Still, it's good to go through those scenarios, too. That way you can build your new home with confidence - and still be able to sleep peacefully ten years from now.
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About this blogger
Since 1999, Martin van de Biezen has been a partner of the Kredieter, a financially independent consultancy that is a leader in the Amsterdam mortgage market. With his years of experience, Martin knows how to expertly guide buyers in their financial choices. His commitment and passion for the profession make him a familiar face inside and outside the organization.
Do you have questions for Martin? If so, please contact The Creditor.