Everything you need to know about buy-to-let mortgages for expats

Buy-to-let mortgages are a viable option for many homeowners.

Among other trends in the Dutch mortgage industry, buy-to-let mortgages have become more and more popular among expat buyers. Some homeowners do this when they need to go abroad for work for an extended period or want to move out of the big city. Others are looking to move in with partners.  There’s a lot to take into consideration with buy-to-let mortgages, here are 8 things to keep in mind!

1.     Get permission from your bank

Banks are required to know what’s in their portfolio, so it’s imperative that you not only inform but also get permission from your bank to let out a property that has a mortgage on it. This is important because if a mortgage deed says a property is owner-occupied, it must indeed be occupied by the owner.

2.     Own contribution required

If you are buying a property on a buy-to-let mortgage, be aware that you can never borrow 100% of the property value. For buy-to-let you can only borrow 70%- 90% of the property in rental condition, meaning that you will be required to contribute from savings or other equity.

3.     Higher interest rates

Buy-to-let mortgages often have interest rates of 1 to 1.5% higher than an owner-occupied mortgage. With buy-to-let mortgages, you’re looking at about 2.5 to 3.0% interest for a ten-year fixed rate.

4.     Registration and nationality requirements

In order to be eligible for a buy-to-let mortgage, you must be registered and work in The Netherlands. European Nationality or residency conditions may apply.

5.     Minimum income required

The minimum income needed for a buy-to-let mortgage is €45,000.

6.     No owner residency allowed

If you own an investment property on a buy-to-let mortgage, you are not allowed to live in the property as a resident. This means that you cannot have a buy-to-let mortgage on a home that you live in and are renting out a room/floor of. Should you want to move into the property, you will need to refinance your mortgage to an owner-occupied, residential mortgage.

7.     Long-term rentals only

Financial providers will only accept mortgage applications for long-term rentals. This means no Airbnb or short-term rentals (ex. summer only). Take this seriously! Ignoring the conditions could lead to large fines or even being forced to sell the property!

8.     Purchase protection rules vary per city

Every city has their own rules regarding whether you can buy a property to let. In Amsterdam, for example, properties with a property valuation under €512,000 cannot be bought to let. Your mortgage adviser can help you find the right information for the area you want to buy-to-let in.

Want to more about buying to let in Amsterdam and beyond? Contact Arjen today.