Mortgage advice for internationals
NHG limit increases to EUR 325.000 in 2021
NHG is increasing a cost limit from EUR 310.000 to EUR 325.000 as of January 2021. What does it mean? The housing market becomes more accessible to buyers with low or middle incomes. The National Mortgage Guarantee is a government insurance scheme that protects borrowers from residential debt if the borrower cannot afford monthly payments. If you plan to buy a property for new or existing property up to EUR 325.000, you will be charged the NHG fee to back up your mortgage.
What is NHG?
NHG or Nationale Hypotheek Garantie or National Mortgage Guarantee is a unique Dutch system which aims to protect you and your mortgage lender.
The Dutch Government backs the scheme and intends to help homebuyers get a mortgage more quickly. This was introduced in 1993 to reduce the risk of taking out a mortgage and to make homes more affordable.
With NHG, the risk is partly covered, enabling lenders to offer a lower interest rate. When you buy a house in the Netherlands, you can choose the safety net provided by NHG. The NHG safety net covers your mortgage if you can’t afford your monthly payments.
When you participate in the NHG scheme, you can make sure that your income will match your mortgage. A drawback is that this only applies to mortgages under a certain threshold, which many properties in larger cities exceed. The other option is a conventional mortgage guaranteed by a banking institution.
To get a mortgage with NHG coverage, you must meet quite some requirements, but the most crucial element is the cost limit of the property:
- The cost limit is no more than € 310,000 or 100% of the value of the property. The rule applies for both: existing and newly built properties.
What’s good to know: If you’re planning to invest in energy-saving or energy efficiency measures, you can get an extra € 18,600 in 2020 with a maximum of 6% of the value of the property.
Why do I need coverage of NHG?
Imagine a scenario where you lose your job, or your partner passes away. Your entire life will be upside down, and everything will change. It can take months to rebalance your finances. If you are not able to make your monthly payments, but you have the NHG protected mortgage, you can ask for help. Your mortgage lender and NHG will assess your situation and come up with a financial solution. In this case, you will be able to keep your property and avoid losses when selling your property.
NHG protects you if you
- lose your job
- get a divorce
- are not able to work due to disability
- (or your partner) passes away
How much does NHG cost in the Netherlands?
There’s a one-time fee of 0.7% of your mortgage amount. Let say you are planning to borrow € 175,000, so your NHG (the Dutch National Mortgage Guarantee) fee will be € 1,225.
If you have financial difficulties, we recommend you to
- contact your mortgage advisor to assess your financial situation
- set up a budgeting plan and try to keep up with your bills and
- ask NHG for help.