What does NHG mean?
With National Mortgage Guarantee (NHG), you give your lender the certainty that your mortgage debt will be repaid when you are no longer able to do so. For example, when you get divorced, become incapacitated for work, your partner dies or in case of unemployment.
What are the advantages of NHG?
Both you and the lender run less risk with NHG: the mortgage is always repaid. Does your financial situation deteriorate due to one of the causes covered by NHG? Then we will look at how the mortgage can be made affordable for you again, so that you can continue to live in your home. Do you have to sell and is the proceeds less than the mortgage? Then NHG can write off the residual debt. In addition, you get a discount on the mortgage interest rate if you take out a mortgage with NHG. The advantage of an interest rate with NHG can be as much as 0.5% per year. When taking out an NHG-backed mortgage, you can deduct the NHG fee from your taxable income.
What are the disadvantages of NHG?
NHG is not free: the costs for the guarantee are a one-off 0.6% of the total mortgage amount in 2023. That is a maximum of € 2,130. For those who co-finance energy-saving investments, NHG costs a maximum of € 2,257.80. If you want to buy a house with NHG, you will have to put in more money. In 2022, you may borrow up to 100% of the value of the house. If you make use of the NHG waiver, you will be registered with the Credit Registration Bureau (BKR). This makes it difficult for five years to get a new mortgage or loan.
What are the conditions of NHG?
NHG strives for house preservation. If this is really not possible, NHG will take over the residual debt under certain conditions. In exchange for this security, you pay less mortgage interest, but you do have to pay one-off costs.
You can get NHG if you take out a loan to buy a house, but also, for example, if you already own a house and want to renovate it (quality improvement).
You can apply for the guarantee through a lender or intermediary. They will assess whether you meet all the conditions of the Home Ownership Guarantee Fund Foundation (the foundation behind NHG). It is also possible to transfer your existing mortgage to a mortgage with NHG.
The main conditions in 2023 are:
- The maximum mortgage for purchase is € 405,000 (100% of the market value).
- The maximum mortgage for refinancing is € 405,000, including additional costs.
- If there are energy saving measures, the maximum mortgage is € 429,300. The extra 6% must be spent entirely on energy saving measures.
- The maximum purchase price/market value for existing and new homes is €405,000.
- If the purchase price is higher than € 405,000, but the amount in the appraisal report is € 405,000 or lower, NHG is possible. In that case, however, a greater contribution of own money is required.
- The market value free of rent and use of an existing home must be evidenced by an appraisal report issued by a certified validation institute.
- For new builds, a guarantee certificate must have been issued by an institution to which Stichting Garantie Woning has granted its quality mark.
Extra costs you should take into account:
- Penalty interest, which you pay if you pay off your current mortgage prematurely
- Costs for quality improvement and/or energy saving measures
- Notary fees
- Valuation costs
- Mortgage advice costs
- Costs NHG
Are the costs of NHG tax deductible?
When you take out a mortgage, you pay a one-off fee to NHG. This is to make use of the safety net that NHG offers. In 2023, this commission will be 0.6% of the total mortgage amount.
These costs are tax deductible. Because of the tax refund and the interest rebate, you will earn back these costs quickly.
Do I need a life insurance?
As of 1 January 2018, the requirement to cover the part of the mortgage that exceeds 80% of the market value of the home with life insurance lapsed (for new mortgages). From 1 January 2020, life insurance is no longer compulsory for old NHG mortgages either. Your mortgage consultant may advise you to ensure an amount anyway: this reduces the financial pressure on surviving relatives. A number of lenders do require life insurance for mortgages with NHG.
Moving with an NHG mortgage
The maximum purchase price for a mortgage with NHG is € 405,000 as of 1 January 2023.
Suppose you bought a house ten years ago for € 330,000. At the time, that was possible with NHG. You sell this house after 1 January 2023 for the same price, and buy a new house, again for € 330,000. It is possible that the bank has noted in the mortgage conditions that you can take the agreed interest rate with you to a mortgage for the next house, if the fixed-interest period has not yet expired. Because the new house remains under the amount of € 405,000, you can take the NHG interest with you.
Can I convert my existing mortgage to NHG?
You can convert your mortgage to a mortgage with NHG, so you have a safe, sound and advantageous mortgage at a lower mortgage interest rate. There are conditions attached to refinancing:
- The mortgage amount is up to € 405,000, including additional costs.
- With energy-saving measures, the maximum mortgage amount is € 429,300, including additional costs.
- The mortgage amount is redemption-free for up to 50 percent of the original market value. The old mortgage must have been taken out before 1 January 2013.
- You must use part of the mortgage for quality improvement of the house and/or purchase of energy-saving measures. The lender will ask for a cost specification and will sometimes set a minimum requirement for the amount you are going to invest in these measures.
- Or your situation must improve, e.g. through better loan conditions and a lower interest rate.
Stay tuned for the new rules and regulations for 2024. We will keep you informed!