11 January 2022
Mortgage and holiday home
Egle Kemezyte
Growth Marketer

Buying a holiday home in the residence country or abroad is becoming very popular nowadays.

Are you dreaming about a holiday property abroad or in the Netherlands? There are some options available, and you need to meet specific requirements to finance a second home.

Available options:

1. Mortgage equity

Buyers who purchase a second house or vacation property already have built equity on their first home, and you can use equity to buy a holiday home.

2. Apply for a second mortgage

An investment mortgage is another alternative if the current home has no equity. You can consider a buy-to-let mortgage to finance a holiday home. Mortgage lenders often finance 70% loan-to-value (LtV). The rest should come from your savings. Besides, you pay 8 % of the transfer tax in the Netherlands.

Holiday home conditions:
  • You cannot use a second property as your primary residence place.

  • You cannot get a mortgage for a moveable home. A second home must be supported by a foundation and constructed of stone or concrete. You won't be able to secure a mortgage for a moveable second home.

  • Bank can finance a second home only 70% or 80%, and you have to pay the rest from savings.

  • A rental home's market value is usually lower than the average market value.

Things to consider before buying a second property
  • Think about expected rental income.

  • Think about the insurance to protect your holiday home.

  • Think about the maintenance and management of a holiday home.

  • Think about double expenses. When you own two homes - you take to pay double costs, for example, gas, electricity, taxes, and insurance.

Renting your holiday home

It is rational to rent your second home if you plan to use it only a few times a year. There is no tax implication for holiday homes occupied more than 70 % of the time.

Tax benefit

The interest rate you pay for a second home is not tax-deductible. Even though you finance your second mortgage by increasing the mortgage, the tax authorities see property as your asset, which is taxable in box 3. Your first home always falls in box 1, which applies to your income from work and home. But your second home is seen as your assets and therefore falls in box 3.

Do you have plans to buy a holiday home?