The costs of a mortgage

The costs of a mortgage

When you take out a mortgage to finance a home, you will encounter various costs. You pay monthly costs, such as repayment and interest. But you also pay one-time costs when taking out the mortgage, such as brokerage fees for the mortgage advisor and notary fees. Below you can read about the monthly and one-time costs you will encounter, and which costs you can deduct from taxes.

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Monthly costs for your mortgage
One-time costs for your mortgage
Costs of a second mortgage (increasing mortgage)
Costs of a bridge mortgage
Costs of refinancing a mortgage
Deductible costs with a mortgage

Monthly costs for your mortgage

Your monthly mortgage costs consist of:

Repayment and mortgage interest to the mortgage provider
Premiums to insurance companies

1. Repayment and mortgage interest to the mortgage provider

You pay a monthly amount for repayment and mortgage interest to the mortgage provider. The amount depends on various factors:

The mortgage amount: the amount you borrow for the purchase of your home. The higher the mortgage amount, the higher the monthly amount you have to repay.
The mortgage interest: the percentage of interest you pay on your mortgage also significantly affects the monthly costs. The higher the interest, the higher the monthly amount. Read more about mortgage interest.
The term of the mortgage: the period for which you take out the mortgage also affects the monthly amount. Generally: the longer the term of the mortgage, the lower the monthly amount.

Impact of mortgage type on monthly mortgage costs

The type of mortgage also affects your monthly amount. For example, with an annuity mortgage and a linear mortgage, you pay a fixed amount every month, while with an interest-only mortgage, you only pay interest (and insurance premiums). You only repay at the end of the term. Because this carries quite some risks, since 2013, first-time buyers can only take out an annuity or linear mortgage.

Read more about the different types of mortgages.

2. Premiums to insurance companies

In addition to the monthly costs for repayment and mortgage interest, you also pay insurance premiums every month. Many mortgage providers require you to take out a home insurance (building insurance) and term life insurance (ORV). But even if this is not stated in the mortgage conditions, it is wise to take out these insurances anyway.

Building insurance (home insurance)

Building insurance covers damage to the house itself. Think of damage caused by fire, storm, water, or burglary. The costs of building insurance depend on the type of house you have. The premium is somewhere between €10 and €25 per month.

In addition to building insurance, you can also take out home contents insurance. This insurance covers damage to the items in your home. The premium for home contents insurance is usually between €10 and €20 per month.

Term life insurance (ORV)

A term life insurance pays out an amount when an insured person dies during the term of the insurance. With this amount, the mortgage can be (partially) repaid, or the monthly costs can be (partially) covered if a partner passes away. Such insurance covers the financial risk that survivors cannot (no longer) pay the monthly mortgage costs if someone dies.

The premium for a term life insurance depends on various factors, such as age, health, and occupation. The insured amount, term, and scope of coverage also affect the premium. The premium usually ranges between €5 and €45 per month.

Contact a mortgage advisor for advice on the amount and necessity of a term life insurance in your situation.

One-time costs for your mortgage

In addition to monthly mortgage costs, you will also encounter closing costs. These are one-time costs associated with taking out the mortgage. Fortunately, many of these costs are tax-deductible, which you will read more about later. It depends on your situation which one-time costs you will encounter. The costs can also differ per mortgage provider.

Below you can read about the one-time mortgage costs you may encounter:

Notary fees for the mortgage deed
Brokerage fees for the mortgage advisor
Valuation costs
Administration costs
Bank guarantee
Commitment fee
Suretyship fee
Structural inspection

1. Notary fees for the mortgage deed

When you buy a house, you pay notary fees. This amount also includes costs for drafting the mortgage deed. Read our article about the costs of buying a house for an overview of all notary fees. The total notary fees range from approximately €1000 to €3000. Request a quote from the notary in advance, so you know what to expect.

2. Brokerage fees for the mortgage advisor

You also pay brokerage fees to the mortgage advisor. The amount depends on the mortgage advisor and the agreements you make. Some mortgage advisors charge a fixed amount, while others work with an hourly rate. The costs for mortgage advice average €2250 (fixed rate).

The average hourly rate of a mortgage advisor is between €80 and €175. Does your mortgage advisor work with an hourly rate? Always document in writing which services are provided and how many hours are involved. This way, you won't face surprises afterward. If an unreasonable amount is charged, report it to the Financial Markets Authority's complaint center.

3. Valuation costs

To determine the value of your new home, a valuation report is required. This lets the mortgage provider know the value and determines your maximum mortgage loan. Nowadays, you can borrow up to 100% of the property value. It used to be more.

The costs for a valuation report in the Netherlands can vary depending on the type of property and the scope of the report. Costs usually range between €600 and €900. If you want to include a renovation or extension in the report, the costs are higher.

4. Administration costs

You also pay administration costs to the mortgage provider when taking out a mortgage. These are costs for assessing and processing the loan application, drafting the necessary documents, and the administrative costs of the mortgage provider.

You pay again for administration costs when you make a (major) change to your mortgage, such as changing the repayment method or the term. Expect a few hundred euros.

5. Bank guarantee

When you buy a new home, you sign a purchase agreement. The purchase price is usually not paid immediately. This happens when signing the notarial deed at the notary. To give the selling party (more) assurance that you will meet your financial obligations, a bank guarantee is often requested after signing the purchase contract.

A bank guarantee is a guarantee statement from the bank. The bank guarantees the amount of the deposit. If you as a buyer do not fulfill your obligations, the bank will ensure that the amount is paid. You then have a debt to the bank.

The seller is thus assured that the deposit amount will be paid. In addition to a bank guarantee, you as a buyer can also provide security to the seller by depositing a down payment. The down payment must be paid within a week after the contingencies expire. You transfer the amount to the notary.

The down payment is 10% of the selling price. For many people, this is too much money, so they ask the bank for a bank guarantee. The bank usually charges 1% of the bank guarantee amount as costs.

6. Commitment fee

There are situations where you as a buyer need to ask for an extension for the passing of the mortgage deed. For example, if you need more time to arrange the necessary finances for the mortgage or if you need more time to conduct additional research on the property. The mortgage provider may then charge an additional fee. This is called the commitment fee.

The amount of the fee varies per mortgage provider and can range from tens to hundreds of euros per day. Always check the conditions in advance and the costs associated with delaying the passing of the mortgage deed.

7. Suretyship fee

If you take out a mortgage with National Mortgage Guarantee (NHG), you pay a suretyship fee. In 2024, you pay a one-time amount of 0.6% of the total mortgage sum as a suretyship fee. If you take out a mortgage for €350,000, you pay an amount of €2100. You recoup this amount within a few years because you pay less mortgage interest with NHG.

8. Costs for a structural inspection

In some cases, a mortgage provider may impose requirements regarding the structural condition of the property before granting the mortgage. The bank may request a structural report during the mortgage application. This mainly happens if there are concerns about the structural state of the property.

The costs of a structural inspection can vary depending on the property, the size, the location, and the complexity of the inspection. For a standard inspection, you can expect an amount between €250 and €450.

Even if the mortgage provider doesn't require it, it is wise to consider a structural inspection. Especially when buying older homes. You gain insight into the condition of the property and identify any defects. This helps you make an informed decision and avoid unpleasant surprises later. Moreover, it can give you negotiation options for necessary repairs or a lower purchase price.

Buying real estate agent and/or mortgage advisor needed?

Through Mijn Verkoopmakelaar, you can quickly and easily find the best buying real estate agents near you. Sign up for free and receive proposals from buying real estate agents in your mailbox. If you wish, you can also immediately schedule a free appointment with a mortgage advisor. In 30 minutes, you can ask all your questions about taking out a mortgage and the rates at different banks.

Find a purchasing agent

Costs of a second mortgage (increasing your mortgage)

If you want to take out a second mortgage, for example to finance a renovation, you will encounter different costs. First of all, your monthly costs increase due to the second mortgage. Additionally, you pay brokerage fees again to a mortgage advisor if you use their expertise. Often a new valuation report is also required. You also bear the costs for this.

Whether you incur notary fees depends on your situation. Have you already repaid a lot on your mortgage? Or is your mortgage registered for a higher amount? Then you might be able to 'increase it privately'. That means you don't have to go to the notary again to take out the second mortgage. You don't have to pay notary fees then.

Note: it's not always possible to take out a second mortgage. Make an appointment with a mortgage advisor to be informed and advised.

Including notary fees in the second mortgage

If increasing privately is not possible, you pay notary fees again for the new mortgage deed. It is possible to finance these notary fees with the second mortgage, provided you have financial room for this, of course. The costs for taking out a second mortgage are deductible from income tax.

Increasing a mortgage with NHG

Do you have a mortgage with NHG and want to increase your mortgage? Make sure your mortgage stays below the NHG limit. In 2024, that's €435,000. If you exceed this, your right to NHG lapses.

Costs of a bridge mortgage

A bridge mortgage is a temporary loan taken out to bridge the financial gap between the purchase of a new home and the sale of the current one. It enables you as a homeowner to finance the purchase of a new home (including any equity) before the sale proceeds of your current home are available.

When taking out a bridge mortgage, you may incur the following costs:

Mortgage interest: you pay mortgage interest on the amount during the term of the bridge mortgage. This mortgage interest is usually slightly higher than the interest for a regular mortgage.
Administration costs: like with a regular mortgage, the bank may charge administration fees when closing a bridge mortgage. Expect between a hundred to a few hundred euros.
Valuation costs: to determine the value of your current home, a valuation may be needed. These costs are usually charged by the mortgage provider and typically amount to between €600 and €900. Read more about the valuation costs.
Notary fees: for drafting and passing the mortgage deed, notary fees may be charged. Read more about the notary fees.
Brokerage fees for mortgage advisor: if you used a mortgage advisor, you pay advisory costs. Read more about these brokerage fees.
Possible penalty for early repayment: if you repay the bridge mortgage early, the lender may charge a penalty. This is to compensate for the financial loss the mortgage provider incurs by missing out on interest income.

You pay interest, not repayment

With a bridge loan, you usually don't repay during the loan term. Instead, you only pay interest on the borrowed amount. The purpose of a bridge mortgage is to temporarily provide financial space between the purchase of a new home and the sale of the current one. Once the sale proceeds of the current home are available, the bridge mortgage is repaid.

So, unlike a regular mortgage, where you pay both interest and repayment monthly, with a bridge mortgage, you only pay interest during the loan term. The repayment of the loan takes place when the sale proceeds of the current home are received.

The financial risks of a bridge mortgage

A bridge mortgage allows you to use the expected equity for the purchase of your new home. Or to pay a double mortgage. But be aware of double monthly costs during the term of the bridge mortgage. You have to pay for your current mortgage, your new mortgage, and your bridge loan.

Additionally, you risk selling your current home for less. You would then be left with a residual debt. You must pay that amount back to the bank with your own money.

Are you considering taking out a bridge mortgage? Consult a mortgage advisor and get advice.

Costs of refinancing a mortgage

When you refinance your mortgage, you may incur several costs. First, you pay brokerage fees again to your mortgage advisor and administration costs with your new mortgage provider.

Additionally, you pay notary fees again because the notary must deregister your old mortgage and register your new mortgage. The notary fees for refinancing your mortgage typically range from €700 to €1000. The actual costs vary per real estate agent.

A new valuation report is also needed to determine the current value of your home. Your old valuation report is insufficient as the value may have increased or decreased in the meantime.

Penalty interest for refinancing a mortgage

You may also incur a penalty interest. You have to pay an amount to the mortgage provider if you refinance your mortgage before your fixed-rate period ends. The reason is that the mortgage provider loses interest income because you break the mortgage contract early. The penalty interest compensates for these missed amounts.

The amount of the penalty interest depends on various factors, such as the remaining term of your mortgage, the penalty interest clause in your mortgage contract, and the current interest rates on the market. The penalty interest may never be higher than the financial loss incurred by the mortgage provider. You can ask the bank for a calculation of the penalty interest.

Are you nearing the end of the fixed-rate period? Usually, you receive a new offer from your mortgage provider a few months before your fixed-rate period ends. Is the interest lower at other banks? This may be a reason to refinance your mortgage. Usually, you don't have to pay penalty interest then.

Seek advice from a mortgage advisor if you are considering refinancing your mortgage. They help you map out all costs and see if the costs of refinancing outweigh the investment.

Suretyship fee when refinancing a mortgage

Did you not qualify for NHG when you bought your home, but now you meet the conditions? Then it may be possible to refinance your mortgage to one with NHG. For example, if you want to make improvements to your home with a renovation, or if you are getting divorced.

If you decide to refinance the mortgage, you will encounter the suretyship fee. In 2024, you pay an amount of 0.6% of the mortgage amount. The advantage is that you pay less mortgage interest with NHG, allowing you to recoup the amount usually within a few years.

Deductible costs with a mortgage

The following mortgage costs can be deducted from income tax. You can deduct the following amounts once from the declaration over the year in which you incurred the costs.