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Saving for your first home

Gabriella Modderman



minutes reading time

Saving for your first home

How nice that you are planning to buy a house, congratulations! You may have already done some research, so then you know that buying a house costs money. A lot of money. And the fact that the housing market has become hugely overheated in recent years doesn't work in the starter's favor either. That's why it's important to save money, so you can take a nice pot to the bank. In this article, we'll take you through the costs surrounding buying your first home so that you're well prepared.

These costs you'll encounter when buying your first home

Let's start with the obvious: you need your own money to cover some of the costs. The rules for first-time buyers have become stricter in recent years, and in doing so, for example, you can no longer include buyer's fees in the mortgage amount. So you need to bring your own money and to gather that together, saving is very important.

The cost of buyer and home purchase are often obvious concepts when buying a starter home. But what really are the standard costs? What should you consider financially when buying your first home of your own?

Mortgage amount

As soon as you start looking around for a home of your own, it is wise to inquire about how much you can borrow. Your maximum mortgage depends on, among other things:

Most points you can figure out prior to your search, but home value is specific to each real estate property. And a very important point. Namely, you may borrow up to 100% of the home value. For home preservation, you may borrow extra, up to 106% of the market value. So, this is only the cost of the house itself. However, it is possible that you still have to pay an additional amount if the purchase price exceeds the house value. 

If a house is for sale for €395,000 and you make an offer of €410,000, make sure that this offer falls within the market value. Because if the appraised market value comes out at €400,000, you as the buyer must still finance €10,000 in another way. This also applies if your maximum mortgage loan amount is not sufficient for the type of house you want to buy.

Cost of buyer

In addition to a mortgage amount, you must take into account buyer's costs (k.k.). These are one-time costs consisting of many different costs that apply to your home purchase depending on your personal situation. We briefly explain the one-time costs. 

Brokerage fees

If you are a starter in the housing market and you keep missing out, it is wise to hire a real estate agent to keep an eye on the housing supply for you. This will increase your chances of a successful purchase. The broker's fees are about 1-1.5% of the purchase price, but many brokers charge a fixed fee of an average of €3000.

Notary fees (deductible)

Champagne, that's where it ends at the notary. But before that happens, the purchase must be officially confirmed by a notary. This is done through a deed of delivery and a mortgage deed. In the case of new construction, only a mortgage deed. Keep in mind about €600 per deed.

Appraisal costs (deductible)

Most mortgage lenders require an appraisal report from an independent party to prove that the house value is sufficient as collateral for the mortgage. For an on-site appraisal, you should take into account an average of €600. Make sure you engage a licensed appraiser, otherwise the mortgage lender will not accept the report. You can tell this by a registration in the Dutch Register of Real Estate Valuers (NRVT).

Mortgage advisory fees (deductible)

A mortgage broker can assist you in determining the most appropriate mortgage. He or she provides advice for your options and helps complete the mortgage application. You can also choose to take out a mortgage without advice. In this case, the costs are lower. On average, these costs come to €1500. 

Application for National Mortgage Guarantee (deductible).

The National Mortgage Guarantee gives buyers with a home up to €405,000 an interest rate advantage and, as an added benefit, a free mediator in case of financial problems. If you meet the NHG conditions, then it is wise to opt for this. You pay a one-time application fee of 0.6% of the mortgage amount. But you will earn that back within 3 years because of the interest advantage. 

Transfer tax

If you buy an existing home and you are older than 34 years, you also pay 2% transfer tax. If you buy a house together with your partner, who is still under this age limit, then you only have to pay 2% on half of the purchase price. 

Bank guarantee 

If you buy a home, the notary will ask for about 10% of the purchase price as a down payment. But you can also arrange this with a bank guarantee. This will cost you 0.1% of the purchase price as compensation for the administrative work. 

Building inspection

Finally, we mention the structural inspection. Although not mandatory, such an inspection gives you a good idea of what you are actually buying and in case of defects it can also give you room to negotiate in the purchase price. 

Savings are needed

It makes a difference whether your dream home is an existing or newly built home, because for existing construction the total buyer's fees are on average 5% of the purchase price, while for a newly built home they are about 3%. If you convert this to a €400,000 home, you will quickly have to put in €20,000 of your own money for an existing home and €12,000 for a new build.

As you can see, there are a lot of costs involved in buying your first home. Don't worry, you can get some of it back on your tax return. Nevertheless, it is important that you set aside enough money in advance to be able to pay these costs and also have some money left over to furnish your dream home after you get the keys. 

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