National Mortgage Guarantee (NHG)
The National Mortgage Guarantee (Nationale Hypotheek Garantie (NHG) serves as a safety net if you are unable to pay your mortgage costs due to circumstances. The Homeowner’s Guarantee Fund (Waarborgfonds Eigen Woningen (WEW) guarantees, on behalf of the Dutch Government, via NHG, the repayment of your mortgage.
In order to qualify for a mortgage under NHG, conditions and standards are drawn up annually which you have to comply with as a borrower. Therefore, it becomes less risky for a lender to provide a mortgage. This translates into a lower interest rate if you take out a mortgage with NHG.
Who qualifies for NHG?
To make use of the NHG, specific requirements apply. The purchase price, for example, may not exceed € 290,000.
Furthermore, there are specific income requirements. For example, a self-employed person must have earned an income for at least 12 months from his or her business, and someone with a fixed-contract must be able to present a letter of intent. Standards also apply to the house. For example, the value of the house must be determined by a validated appraisal report.
If payment problems occur during the mortgage term due to occupational disability, unemployment, your partner’s death, or divorce, and there is no other option than to sell the house with negative home equity? The residual debt can then be waived.
What are the advantages?
- A high discount on your mortgage interest rate as the lender runs a lower risk.
- Are you in default due to occupational disability, unemployment, death of your partner, or divorce? Then there are possibilities to temporarily resolve the situation, such as an interest-free period or partial debt collection. The mortgage payments can also be temporarily decreased. This is referred to as the mortgage payment facility.
- A possible residual debt, which remains in the event of a forced sale, can be waived under strict conditions.
What are the disadvantages?
- One-time costs (NHG security provision) amounting to 0.9% of the total loan.
- Only available for a maximum purchase price of € 290,000.
Take note: When transferring a substantial amount in savings, it can possibly be less attractive to take out a mortgage with NHG. The more savings you transfer, the more your interest advantage decreases. We have listed the advantages and disadvantages for you.