This is probably the most asked question we could possibly think of, and a very valid question too. In most cases the answer is yes, however, there are some things you should be thinking about. So, what is the best way to tackle this question? It would be to start by asking more questions. As we are told, humans are storytelling beings, therefore, each answer to the main question will differ. So let’s begin!
Important aspects
1. What are your plans?
Start by thinking about your future. Buying a house and taking out a mortgage is a commitment, therefore we always say take your time. On the other hand, have you been living here for a while and know that this is it, but you have that voice in the back of your head that maybe you want to go back to your home country, or move somewhere else (although unlikely, we think 😉)? Well, we know that these are all worries that you might come across, and we are happy to tell you that there are solutions for your home if you wish to move back abroad. What we say, as a rule of thumb, is if you live in a home for over three years, you have already set yourself up in a good position.
2. Is the house for you, or is it an investment?
An important factor to know. Why? The housing market for residential property is different compared to buy-to-let mortgages, mostly because of the possible impact of government regulations. Lenders have to abide by these regulations which further impacts their options when providing you with a residential mortgage, or a buy-to-let mortgage.
Long story short, we do believe this is a great time to buy for a residential property (please see more below). On the other hand, we are more reluctant when it comes to buying a property for investment purposes.
What we see in the market
Upsides to buying
Interest rates have risen over the past year, and a consequence of that is that the market has cooled down, a lot. Since there is still uncertainty about the housing market, there is good ‘momentum’ to get a good deal. This momentum will likely carry on until the market gets used to the fact that interest rates of this level are likely here to stay, and then demand for property will rise again.
Downsides to buying
As you probably know, interest rates have a positive correlation with monthly repayments. Therefore, higher interest rates, higher repayments. Another point to keep in mind, with a higher interest rate, banks will allow you to borrow less money (continue reading to know more!).
Our crystal ball
Here is some insider knowledge when it comes to mortgage calculation. As you know, your maximum borrowing capacity is based on your total gross annual income. But, what you might not know, is that the government has a substantial influence in determining your borrowing capacity. Long story short, every year the government decides how much of your income as a percentage can be spent on your mortgage. And taking inflation into account, we wouldn’t be surprised if that percentage drops when other expenses will increase. What does this mean for you, in the coming years there is a possibility that there is a reduction in your borrowing capacity.
Supply and demand. It is well known that there is a housing shortage in the Netherlands, with the larger cities being impacted the most. This is also one of the driving forces of rising house prices. The king announced that there will be 900,000 new homes being built between his announcement date (‘Prinsjesdag’ 2022), and 2030. This is a great initiative to combat the lack of supply plaquing the Netherlands, hopefully providing a more level playing field for first time home buyers. However, what we see in the market is that it will be a great challenge (and we think it will be unlikely) to achieve this goal.
Inflation. You’ve probably noticed the increase in costs when it comes to your grocery bills, gas & electricity, hopefully your payslip, and most considerably, your rent. This last one is especially interesting. Rent is adjusted yearly depending on inflation. If you own your property, this will not be the case. With a mortgage you can fix your interest for an extended period, giving you more certainty.
Intrigued?
Are you still doubting whether to jump into buying your home? Or did we incite more questions? Then Call us! We love to talk, and we are ready and willing to spar with any ideas you may have.
Do you have any questions?
