Special starter loan: here's what you need to know
The starter loan is a special loan for people who buy a home in the Netherlands for the first time. It is an additional loan to the regular mortgage and is offered by municipalities in cooperation with the Stimuleringsfonds Volkshuisvesting Dutch Municipalities (SvN). The starter loan bridges the difference between the price of the home and the maximum mortgage you can get.
How does the starter loan work?
The Starter Loan closes the gap between the purchase price, the construction price or the market value of the home (using the lower of these values) and the loan amount you can get from the bank. This loan is divided into two components:
1. The first part is the starter loan itself, which you repay annually.
2. The second part is the combination loan, which increases in the initial phase.
During the first three years of these loans, there are no monthly payment obligations, and no interest is charged. During this period, the repayment of the starter loan is financed by the combination loan, so that the combination loan increases in these years. After this initial period of three years, you will start paying both interest and repayment. When you start paying interest and/or repayment in full, you repay both the Starter Loan and the Combination Loan.
What can I pay out of the starter loan?
The Starter Loan is extra financing that comes on top of your mortgage. This loan is intended to close the gap between the purchase price or the construction price of the home (or the market value, if lower) and the maximum amount that you can borrow from the bank. This might make that one house within your reach after all. However, it is necessary to always have some of your own money on hand. After all, there are certain costs that you have to bear yourself, known as the “buyer costs”.
The maximum amount of the starter loan is 20% of the purchase price or the construction price (including any additional costs for improvement or additional work) or of the market value determined in the valuation report. We hereby use the lower of these two amounts. If your bid is higher than the appraised value of the home, the excess cannot be financed with the starter loan. You must therefore pay this extra amount with your own money.
The starter loan has a number of advantages, such as:
• You do not pay interest and repayment on the starter loan in the first three years
• You can borrow a higher amount than with a regular mortgage
• You can buy a more expensive home than you would otherwise be able to buy
• You can benefit from the mortgage interest deduction on the starter loan
The starter loan also has a number of conditions, such as:
• Not all municipalities in the Netherlands offer the Starter Loan. It is important to check with the relevant municipality whether the scheme is available and what the specific conditions are.
• The home you buy must have a certain appraisal value or a purchase price (the higher of the two). The amount of this also varies by municipality. Be well informed about this.
• You must take out a mortgage with a National Mortgage Guarantee (NHG)
• You must meet the income and wealth requirements of the municipality where you buy the home
• You must apply for the starter loan from the Stichting Stimuleringsfonds Volkshuisvesting Dutch Municipalities (SvN)
Do you want to know more about the starter loan? And whether this is possible in your municipality? Our advisors will inform you about your options and all aspects of the starter loan.
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