Bridging mortgage Netherlands

Bridging mortgage Netherlands

What is a bridging mortgage?

At the time when you buy a new home and don’t sell your existing home(s) until a later date, a bridging mortgage allows you to receive the surplus value as a down payment. This way you can start remodeling your new home earlier or simply take out your new mortgage lower. It is always a temporary mortgage with a term of up to two years with most lenders.

With some banks, it is possible to take a bridging mortgage for two different properties. This occurs if, for example, you own a house with two different cadastral numbers or have two homes for sale because you are moving in together. For example, if you are going to buy a new home with friends or parents.

The bridging mortgage is taken out at the same time as the new mortgage for your new home. It is exceptional to take out a bridging mortgage with another lender than the lender of your new home.


Take out a separate bridging mortgage?

Suppose you do not want to take out a new mortgage, but only a bridging mortgage. Even then, there are options for taking out only a bridging mortgage.


How does a bridging mortgage work?

You take out the mortgage like a normal mortgage, except that it is usually registered on the old collateral (your current owner-occupied home). You do need to have sight of a buyer for your home, or be able to provide an appraisal report showing the free market value. You can then take up to 90% of this value with most lenders as a bridging mortgage. There are also lenders who will provide you with a bridging mortgage based on 100% of the excess value. Even without selling your current home.

Can I also take out a bridging mortgage for a new-build home?
You can also use a bridging mortgage for your new-build home. The interest rate you pay will then be the same as the bridging mortgage for an existing owner-occupied home.
Does it make sense to compare bridging mortgage interest rates?
We recommend that you better compare the terms of your new mortgage and the fixed interest rate of your new mortgage.

Ultimately, the interest rate component of your bridging mortgage is temporary in nature. So the payoff is mainly in properly researching the permanent new mortgage.

Is the interest from a bridging mortgage deductible?
If you use the money from the bridging mortgage to buy or remodel your new owner-occupied home, then the interest is deductible. The cost of taking out the bridge mortgage is also tax deductible from your income tax.


Interest compensation bridging mortgage

The mortgage interest rate you pay for the bridge mortgage is variable and is usually slightly higher than the regular variable interest rate. The reason you can’t take out a fixed rate mortgage is because the length of the bridging mortgage is difficult to predict. At the time when you have not yet found a buyer for your home, it is very difficult to estimate when this mortgage will be paid off. To avoid penalty interest and to be practical, for this reason the bridging mortgage can only be taken out with a variable mortgage rate.


Client experiences

Experience and solution for Ingrid
Frank De Waard has once again proven to be a man of details. He has helped us in perfect ways to take our mortgage to the next destination and offer the bridging solution tailored to our needs. We recommend Cournot Advisors in general and Frank De Waard in particular to everyone. We cannot fail to mention the pleasant informal mutual communication with Kelsey Visser-Hulshof. Thick praise and thanks again for the perfect guidance.” | Review on Advieskeuze


Costs of taking out a bridging mortgage

In addition to the advisory fees you may have to pay to your mortgage advisor, some banks also charge fees directly.

You can read an overview of the costs per lender in this list.


Consent of first lender

If you decide to take out a bridging mortgage, it should usually be taken out on your first home. If the lender of this mortgage is different from the bank for your new mortgage, you will need permission.

It is better to request this permission at an early stage. In practice, this takes several business days to assess. Moreover, we find that this permission does not surface until late in the process. Then it is often the notary who draws your attention to it.


Ex-partner consent bridging mortgage

If you are in the middle of a divorce and the current home still belongs to you and your ex-partner together then they must give permission for a bridging mortgage to be established. Some banks will not grant you a bridge loan while your ex-partner still owns the home. Even if the divorce covenant shows that the house is going to be sold.

Customization and prior consultation is therefore wise if you and your ex-partner still own a home and wish to take out a bridging loan.

Bridging mortgage with NHG

A bridging mortgage cannot be taken out in combination with NHG. However, the new mortgage for your new home can fall under NHG conditions.


Advantages of a bridging mortgage?

The advantages of taking out a bridging mortgage can be read below :

You can already dispose of the surplus value of your current home to, for example, renovate it while it has not yet been settled by a buyer;
The mortgage interest of a bridging mortgage is deductible;
You can stack the bridging mortgage on top of the new mortgage, increasing the maximum mortgage allowance. This is, of course, a temporary situation.

Disadvantages of a bridging mortgage?

You usually pay a higher mortgage rate than the standard variable mortgage rate;
You can take out the bridging mortgage only with the lender of your new mortgage;
You face double charges, actually triple charges, because you have both the mortgage of your current home, the mortgage charges of your new home and the charges of the bridging mortgage (you can usually co-finance these charges in your bridging mortgage);
There are additional notary fees associated with registering the mortgage deed and you will have costs for a valuation report and advisory fees from your mortgage broker or bank;Also, the actual purchase price of your home may turn out to be lower than budgeted and then you will face a shortfall.

Situations for bridging mortgages

Simply put, there are two possible situations for applying for a bridging mortgage.


Current home sold

In this situation, your current home for sale has been sold, only the transfer is at a later time than the time of delivery of your new home. In this situation, the bank or lender is willing to grant you a bridging mortgage relatively easily. Sometimes the resolutive conditions must have expired before the final agreement. You must then prove this with a statement from the real estate agent or a reference to the purchase agreement with the agreements on this subject. Each lender has its own policy on this.


Current house not yet sold

If your current house has not yet been sold, you can obtain a bridging mortgage up to 100% of the appraised value. Most banks have built in a buffer in case the selling price is disappointing. The granting in this situation is often a lot stricter. For example, you usually also have to demonstrate that you can pay the double charges on both mortgages for an extended period of time. Usually about 12 months, unless you have sufficient borrowing capacity to co-finance these charges. They also weigh the location of your home.

Most bank underwriters have lists of places and neighborhoods that show the marketability and expected turnover rate. For example, a home within the Amsterdam ring road will sell faster than a home in Zeeland Flanders for illustration purposes.

Some lenders also allow it if you provide a Calcasa valuation report. Only then most banks apply the following rules:

The Calcasa value is a maximum of € 750,000;
There is no leasehold or building rights;
The reliability of the report is 5 or higher;
The house is exclusively for own occupation.

Overview of maximum lending per lender

Less than 90% of the value

If the house has not been sold irrevocably, a bank can also decide to calculate with a lower safety margin than 10%. This occurs, for example, in certain neighborhoods or regions. Lenders do not disclose this information exactly. It is not clear in advance which areas or zip codes are involved.


Three mortgages at once

At the time you take out a bridge mortgage, you have three mortgages in your name. Wow! That sounds like a millstone around your neck. The fact is, at that point you have the mortgage on your old home, the mortgage on your new home and the temporary bridge mortgage.

Of course, with proper direction, this situation is not problematic. The order is especially important. And at the time you take out a bridging mortgage you usually also have the security of selling your first home. So as soon as you sit down with the notary to receive the purchase price, you also immediately pay off the mortgage of your first home plus the bridging mortgage.


Valuation of the bridging mortgage

Most lenders require you to provide a NWWWI validated appraisal report. The alternative these days is a Calcasa desktop valuation. And a very small group of lenders can convince you of the value of your collateral with a WOZ value or a sales order with expected proceeds from your sales agent.


Alternatives to a bridge mortgage

As you can read, there are a few uncertainties associated with taking out a bridge mortgage. In some situations, it is unclear whether the bridging mortgage can be repaid in full.

An alternative solution is to take out an additional loan portion in addition to the mortgage for your new home. You can then decide to take out this interest rate variable, allowing you to repay penalty-free. If the sale proceeds of your first home are disappointing, you do not have the obligation to repay this extra loan part in its entirety. This is a great comfort.

To qualify for this solution, however, you must have sufficient income. It is tested as if you were taking out a permanent mortgage.


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