The Nationale Hypotheek Garantie is a very Dutch thing – in fact it is the only scheme of its kind in Europe. You could describe it as a sort of insurance for people buying a more modest house. It was developed with the aim of giving home buyers an extra layer of protection in case they were unable to pay their mortgage through no real fault of their own.
So how does the National Mortgage Guarantee work?
From 2022, the maximum price of a home that qualifies for the NHG (National Mortgage Guarantee) scheme is €355,000 -that’s a rise of €30,000 on this year. More than that, the amount can be increased to €376,300 if you include energy saving measures among the improvements you plan to make in your new home – think a new central heating system or double glazing, for example.
Of course, the NHG is not a freebie – you have to pay a one-time premium on the total mortgage amount. But there is some good news here as well. That premium is being cut from 0.7% to 0.6% next year – making it cheaper to take advantage of the scheme. It is also tax deductible.
Even more, your mortgage lender will probably be able to give you a discount on the interest rate you have to pay over your mortgage loan as well, because they are taking fewer risks. This should mean you will cover the cost of the premium you will pay within two or three years.
The guarantee will kick in if you are unable to meet your mortgage payments for several main reasons – if you lose your job, if your relationship ends, if your partner dies or if you are no longer able to work for health reasons.
Be aware though, if you are forced to use the NHG guarantee, it will be noted in the BKR credit registration system, which might make it more difficult for you to take out a new mortgage for the following five years.
You will also have to have a formal valuation of the property that you wish to buy by an approved expert.
Is it worth it? In 2019, some 112,400 households took out a mortgage with an NHG guarantee, and 362 people made a successful claim and so were able to keep their home.
That might not seem many, and if you are the gambling type, you might be quite happy to take the risk. But all mortgage providers offer the NHG guarantee scheme for a good reason – because it offers extra security to both them and the house buyer.
Personally, I would say that given you’ll get a lower mortgage interest rate, and have protection against unforeseen circumstances like losing your job, you would be wise to to take advantage of the option.