Anyone who follows developments on the housing market cannot have failed to notice that mortgage interest rates are still going down. But what can you actually get for your money?
Check out a mortgage interest rate comparison website and the trend is obvious. There is plenty of choice on a 10-year fixed mortgage for rock-bottom rates – and not just from the providers you may never have heard of. A 10-year mortgage of €600,000 will cost you around 1.7% from all the big banks and you can get a deal for under 1.6% if you shop around.
Falling interest rates means the cost of your mortgage will go down, or, perhaps you can borrow more to finance your dream home. And if you already are a home owner, it may be worth looking for a cheaper mortgage and transfer your existing loan to a new provider – if you are at the end of your fixed interest rate period.
The other impact of low interest rates, of course, is their effect on house prices which, despite talk of a slowdown, continue to rise. In fact, they have been going up steadily since 2013 and the end of the economic crisis, by which time prices had tumbled over 15%.
Earlier this year, real estate broker Knight Frank found house prices in Amsterdam have outstripped incomes faster than in any other global city in the last five years. In the five-year period to September 2018 homes in the Dutch capital grew in value by 63.6%, even though incomes rose by just 4.4%.
In fact the gap between the cheapest and most expensive places in the Netherlands to buy a home has never been so wide, according to figures from the registry service Kadaster.
The average price of a home in Blaricum, near Hilversum, was over €900,000 – 6.3 times the average cost of a home in the Groningen town of Delfzijl (€142,000). The most expensive street in the country is the leafy Konijnenlaan in Wassenaar near The Hague, where the average house costs €2.5m. By contrast, the cheapest street is the Tholenstraat in Terneuzen in Zeeland, where a home costs just €90,000.
So will it be Blaricum or Terneuzen? In the Netherlands, how much you can borrow is based upon a complicated set of rules dependent on your income, your debts, how much you can reasonably afford to pay a month towards buying your home and interest rates.
You can get a mortgage of up to 100% of the value of the property you are looking for, but don’t forget, you will need to have about 10% of the value of the property in savings to pay fees if you go for the maximum. You can do a quick check on how much you can borrow on comparison websites such as ikbenfrits.nl. Think roughly three to four times your gross annual salary.
So what will you get for your money? A one bedroom flat on the edge of Amsterdam’s ring road will cost you at least €350,000 – if you can find one for that price. But if you look to the outlying towns of Zandaam, Hoofddorp and Krommenie – which all have great transport connections to the capital – you have much more to chose from.
In Rotterdam, estate agents tip Prinsenland, and Noordereiland, an island in the middle of Maas river, which has a real village-like atmosphere. Kop van Zuid is another place where there is a lot of investment and development going on and you can pick up a two-bedroom flat for under €300,000.
Utrecht too is focusing on expanding its housing supply while The Hague has three major development projects ongoing around the biggest railway stations. If you are able to wait to buy your dream home, it is worth keeping an eye on what project developers are up to and signing up to waiting lists. Many new projects now include a mixture of social and mid-market rental housing with some owner-occupier flats with reasonable prices.
Another way of getting a foot in the door is to make sure you sign up with a knowledgeable estate agent, who will keep you tipped off about what is available in the areas where you are looking.
They will also make sure you don’t bid more than a property is worth, even if you are able to afford a higher mortgage because of the low interest rates!
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