Maximise your home’s value: A guide for expats retiring in the Netherlands
Expats who have chosen the Netherlands as their permanent home or retirement destination often have substantial capital invested in their property. With Dutch house prices soaring beyond pre-financial crisis levels, your home may now be worth considerably more than your initial purchase or mortgage.
Accessing the added value of your home
Traditionally, the only way to access home equity in the Netherlands was by selling the property. However, Dutch banks now offer solutions that allow homeowners to unlock this capital without having to sell. Here’s how you can make the most of your home’s added value in retirement.
New mortgage options for retirees
One way to boost retirement income is by taking out a specialised mortgage that allows you to remain in your home while receiving funds to supplement your income. These options, known in Dutch as “excess value,” “cash-in,” or “eat-up” mortgages, work by providing a loan based on your home’s added value.
How to use your home’s equity
With funds from an “eat-up” mortgage, you can do more than simply enjoy leisure activities. Consider these practical uses for the additional cash:
- Support your family: Help your children buy a home, pay off student loans, or start their own business.
- Home improvements: Make renovations that allow you to live independently for longer, such as accessibility upgrades.
- Supplement retirement income: Increase your cash flow if your retirement income falls short.
Understanding state pension limitations
It’s worth noting that retirees who haven’t lived in the Netherlands for at least 50 years may not qualify for a full state pension (AOW), currently around €1,400 monthly for a couple. Expats accrue 2% of the AOW per year of Dutch residency, so if you’ve been here for 30 years, you’ll receive 60% of the full amount.
Important considerations for an “eat-up” mortgage
If you want to leverage your home’s value without selling, there are several factors to consider:
Property condition and value
Your home should be well-maintained and have considerable equity. Decide whether you prefer a lump sum or monthly payments.
Mortgage obligations
If you still have an original mortgage, you’ll need to continue payments. The “eat-up” mortgage debt is added to the initial loan and is only repaid when you or your partner passes away or sells the home. You’ll pay interest solely on the new loan.
Potential downsides of releasing equity
While accessing your home’s equity can improve your retirement, it’s essential to consider potential downsides:
- Reduced inheritance: Using home equity may mean less for your heirs.
- Less capital for downsizing: If you decide to move, you may have already used part of your home’s value, limiting funds for a new property.
Final thoughts on unlocking your home’s value
For expats envisioning a retirement filled with travel, family support, or home improvements, releasing equity from your property could be a valuable option. To make the best decision for your future, consult with a financial advisor.
