Warning about advertised mortgages

Just a warning about advertised mortgages. I see that there's an ad here for a house in Zutphen. It says that the cost of the hypotheek (=mortgage) starts from €619 per month. This is a very common practice, but it almost impossible to get that price.
Let's take that house as an example. It costs €268.000 k.k. That k.k. is most of the time 10%, so add that to the price of that house. It means you will have to get a mortgage of €294.800.

Now, just calculate the interest you have to pay for the mortgage. If you could find a very cheap one (which doesn't have to be the best option!), the interest is 5%, but that has a certain risk involved. To be more safe, it will be around 5,7%. That means you would have to pay €16.800 each year, or around €1400 each month. That's just the interest, but you would have to pay your loan back, so you would have to add that as well.

When you pay incometaxes here in Holland, you get some of the money you've payd for interest back. If you earn more than €65.000 each year (before taxes), you get 52% of that interest back (but it could be less depending on your personal situation). Even then, it will cost at least €672.

There are even more costs involved. There's also OZB, which is taxes you have to pay to the city. It strongly depends on the city, but still with the same example of Zutphen, it costs around €200 each year. Add another tax (garbagetaxes) of at least €250 each year, you know that you have to pay a lot more. It's something you will have to calculate if you want to know if you can afford a house.

In the worst situation, you could be spending over €1450 just to pay for that house each month, if you're someone who doesn't pay incometaxes in Holland. In that case, I really recommend to rent a house, but be prepared that there's a long waiting list.

Johan 12 Sep 2008, 04:04 - Report