More and more people are consciously choosing to buy a new-build home. No hidden defects, no need for renovations, and everything tailored to your own preferences. Yet, not everyone is aware of what is involved, both in terms of costs and the mortgage process. Buying a new-build home works differently in several ways compared to purchasing an existing property. In this blog, we break it down clearly.
New-build homes offer several concrete advantages over existing properties:
• No hidden defects. You are buying something brand new, with a construction warranty provided by the contractor.
• Energy-efficient. New-build homes meet the latest insulation and sustainability standards, which translates directly into lower monthly costs.
• Personal choices. From the layout to the kitchen: many project developers offer room for personal preferences.
• No transfer tax. With new-builds, you buy "free on board" (v.o.n.), which means you do not pay the 2% transfer tax. The VAT is already included in the purchase price.
The benefit of no transfer tax applies to every buyer of a new-build home, not just first-time buyers. For existing properties, buyers under 35 do not pay transfer tax on homes up to €555,000, but above that amount, or for older buyers, that 2% adds up quickly. New-builds do not make that distinction.
"Free on board" sounds advantageous, and it is, but it doesn't mean you won't have additional costs. The costs for a new-build home are simply different in nature than those for existing properties. Count on the following items:
In most new-build projects, you can customize the home to your own taste. An extra power outlet here, a different kitchen there. In practice, this so-called "additional work" often adds up to 5% to 15% of the construction contract price. It’s tempting, but be careful: you need to fit this amount properly into your total financing plan. Always discuss this with your mortgage advisor beforehand, as you can often finance additional work, provided you stay within your maximum mortgage limit.
Construction interest is the interest you pay to the contractor on construction costs incurred before you sign the mortgage deed. It is a fee for the contractor advancing these costs.
Once construction has started, your mortgage is paid out in phases via a construction deposit (bouwdepot). You pay mortgage interest on the portion that has already been withdrawn. You receive a deposit credit on the amount still remaining in the account. Most lenders offer a one-to-one offset. With some lenders, the interest credit is slightly lower than the interest you pay.
Because you buy a new-build home "free on board," the notary fees for the deed of transfer are already included in the purchase price. However, you do pay for the preparation of the mortgage deed yourself, typically between €500 and €1,200, depending on the notary.
For new construction, you will also need a mortgage advisor and, depending on the lender, an appraiser. Be sure to include these costs in your total budget.
Rule of thumb: budget between 4,000 and 5,500 in additional costs for new construction. Depending on your situation, these may or may not be eligible for financing.
The mortgage process for new construction differs in several ways from purchasing an existing home. It is good to be aware of this before you sign.
With existing homes, you typically go to the notary after two to three months. With new construction, this can take up to one or even two years after signing the purchase and construction agreement. This requires an interest rate reservation in your mortgage offer or agreements regarding interest rate extensions.
Your mortgage is not paid out in one lump sum, but in phases via a construction deposit. The contractor submits an invoice for each construction phase, after which you authorize the payment. It is important to monitor this process closely: late payments can delay construction, while early payments result in unnecessary interest loss.
Because new construction often involves a longer period between signing the purchase agreement and the actual closing at the notary, it is important that your mortgage offer remains valid for long enough.
A standard offer has a limited validity period, but for new construction, it is wise to choose a lender that can extend the interest rate from your offer. This prevents you from having to request a new offer if the completion date is delayed, which could result in different interest rate terms.
Do you want to know how much you can borrow for a new-build home, taking into account additional work, construction interest, and any temporary double housing costs? Our advisors are happy to help you think it through. Via our mortgage calculation page you can contact us directly and present your situation.
New-build starter homes are popular, partly because the government is actively pursuing policies to stimulate affordable home ownership. However, registering for a project does not automatically mean you will be drawn or selected. And once you have been allocated a home, things move quickly. The purchase and construction agreement often needs to be signed within a few weeks.
Therefore, ensure that your mortgage has been broadly calculated before you register. This will prevent any surprises when it comes time to sign.
Buying a new-build home is a big step. Clear advice on the costs, the mortgage, and the associated matters makes all the difference. Our advisors know the market and are happy to think along with you, from your initial orientation to the final handover.
Get in touch with one of our branches or leave your details via our online form, and we will contact you. We are active in Breda, Dordrecht, and Den Bosch, among other locations, but there may be another branch closer to you.
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