As an expat in the Netherlands, dealing with the intricacies of homeownership can become even more daunting when faced with unexpected health challenges like long-term illness or disability. It’s crucial to have a clear understanding of how to manage your mortgage effectively during such trying times. Doing so is not just about safeguarding your financial security; it’s also about ensuring your peace of mind. Our aim is to provide you with the essential knowledge and strategies to help you keep your financial commitments stable, even amidst health-related uncertainties.
The Scenario: When Illness Strikes
Imagine this: You’ve successfully navigated the Dutch housing market, obtained a mortgage, and are comfortably settling into your new home. But then, unexpectedly, you find yourself unable to work due to a long-term illness or disability. What happens next, especially concerning your mortgage?
The Reality of Reduced Income
A decrease in your ability to work often leads to a reduced income. In the Netherlands, your employer typically covers your salary for the first two years of illness. After that, you may be eligible for a disability benefit (WIA), which is usually a percentage of your previous earnings. This reduced income can significantly impact your ability to meet monthly mortgage payments.
Example Case: An Expat Experience
Consider the situation of Alex, an expat who typically manages a monthly mortgage payment of €900. Unfortunately, Alex faces a long-term illness, leading to a decrease in income from €2,200 to €1,540 per month. This unforeseen circumstance shifts Alex’s once-stable financial landscape into a more challenging scenario, where meeting monthly expenses becomes a struggle, turning a previously comfortable surplus into a deficit.
Proactive Measures to Safeguard Your Home
Borrow Wisely: Consider borrowing less than the maximum allowed to keep monthly payments manageable.
Emergency Savings: Build a savings buffer to cover expenses during periods you can’t work.
Dual-Income Consideration: If you have a partner, their increased earnings could temporarily cover the shortfall.
Woonlastenverzekering (Housing Cost Insurance): This insurance can supplement your disability benefits to cover mortgage payments. Understand the terms, duration, coverage, and tax implications before opting for one.
What Brickle Mortgage Recommends
Stay Informed about Government Benefits: In the Netherlands, lower incomes might qualify for additional government support like healthcare or childcare allowances.
Budget Adjustment: Align your spending with your new income level. Using financial management tools can help you track and adjust your expenses.
Communicate with Your Lender: If you foresee difficulties in paying your mortgage, contact your lender immediately. Early intervention can lead to more manageable solutions.
In Conclusion: Be Prepared and Stay Informed
The prospect of long-term illness while holding a mortgage can be daunting, especially for expats unfamiliar with the Dutch system. However, with careful planning, understanding your insurance options, and maintaining open communication with your lender, you can navigate through these challenging times more effectively.
Brickle Mortgage is committed to supporting you through every aspect of your homeownership journey in the Netherlands, including preparing for unexpected life events. We include scenarios in our mortgage advice that outline the financial impact of such events, and our team can also guide you on insurance options for additional protection.