Want to buy a second house in the Netherlands as an investment or as a rental property? As an expat, navigating the process of purchasing a second house can seem like a daunting task. However, with the right guidance and a trusted mortgage advisor like Brickle Mortgages, your dream of a second home can become a reality. In this comprehensive guide, we’ll walk you through the key steps and considerations for buying a second home in the Netherlands.

Buying a second home for investment purposes

Purchasing a second home presents an intriguing opportunity for various reasons. Many individuals acquire a second property as a strategic investment. It serves as a means to deploy their savings for potential financial growth. 

Moreover, second homes are frequently acquired with the intention of renting them out. This approach accelerates the return on your investment. For instance, you might invest in a city apartment and lease it to expats, students, or even your own children. There’s a specialized mortgage product designed for this purpose, commonly known as a rental mortgage or real estate mortgage.

Please note: due to the current interest rates and the increased transfer tax, rental mortgage returns are under tremendous pressure. Please consult our mortgage advisors to assess whether investing in property is the right choice for your financial situation. 

Financing your second house

The first step in acquiring a second home is understanding your financing options. Here’s how it works:

Savings

Some expats choose to use their savings to purchase a second home outright. This offers the advantages of debt-free ownership and reduced interest expenses. However, it’s important to carefully weigh the substantial financial commitment it entails and consider your long-term financial goals and risk tolerance. Consulting with a mortgage advisor can help you make an informed decision that aligns with your financial objectives.

Second mortgage

If your savings fall short, a second mortgage can be an option. This is similar to your primary mortgage but secured against your new property. It offers flexibility, competitive interest rates, and the potential for property investment. However, it’s vital to consult with a mortgage advisor to ensure that a second mortgage is the best option for you.

Mortgages for second homes can differ from those for primary residences:

• Interest rates on second home mortgages might be slightly higher;
• Lenders typically require a larger down payment for second homes, often around 20-30% of the property’s value;
• The loan-to-value ration determines how much you can borrow compared to the property’s value, this tends to be lower for second homes;
• The maximum mortgage term for a second home is 25 years, this is shorter than for a home you use as your primary residence.

Equity release

You may also explore equity release on your primary residence to fund the purchase of a second home. The surplus value of your primary residence can serve as a partial of complete source of financing for your second property. When the value of your primary home exceeds the remaining mortgage balance, it’s referred to as excess value or “overwaarde” in Dutch. However, it’s important to note that you cannot directly access and spend this excess value. To make this surplus value accessible for your second home, you need to find a way to mobilize it. One common approach is to increase the mortgage on your primary home by the amount of the excess value. Subsequently, you can allocate this ‘additional’ capital toward your second home.

Nevertheless, it’s essential to recognize that any increase in your mortgage is subject to approval by your mortgage provider. They assess your financial capacity to manage the additional monthly expenses, ensuring that such a change aligns with your financial situation

Buying a second home in the Netherlands is an exciting venture for expats. It offers not only a home away from home but also the potential for financial gains through rental income and property appreciation. With thorough planning, expert guidance, and a trusted mortgage partner like Brickle Mortgages, your dream of owning a second home in the Netherlands can become a delightful reality.