Starter loan: the loan for starters on the housing market

As a starter, it is difficult enough these days to find a house that suits your budget. Houses are generally becoming more and more expensive and few starter homes are being built. That is why there is now a starter loan to help starters on the housing market. A starter loan is actually only discussed if you already have a house in mind and it turns out that the housing costs are too high for your income. The Dutch Municipalities Housing Incentive Fund Foundation (SVN) therefore also gives starters the opportunity to help.

For whom is a starter loan possible?

A starter loan is really intended to help a starter, because a starter is often seen as someone who is at the beginning of their career and has therefore had little chance to save. In addition, the salary is often not high, but this is likely to be better in the future. Buying a house without equity and a low income is very difficult. The starter loan is therefore also suitable for people who are planning to buy their first home. Please note that this starter loan applies to every municipality. Please first check with your municipality whether you qualify for this.

How does a starter loan work?

The idea behind the starter loan is that it is the difference between the total purchase price of your home and the maximum amount that you can borrow from the bank based on your income in accordance with the rules of the National Mortgage Guarantee. The amount of a starter loan does depend on your income, equity and the conditions of the municipality. Each municipality has its own conditions. The starter loan has a maximum term of 30 years and the interest is fixed for a period of 15 years. You pay no interest and no repayments for this loan for the first three years. After the three years, you must pay interest and repayments, if your income has increased sufficiently. If your income has not increased, you can request a reassessment from the SVN and it will then be determined which monthly costs match your income.

How does the application proceed?

If you want to qualify for the starter loan, it is first important to check with your municipality whether they provide this subsidy. The subsidy does not apply to every municipality. If the subsidy is available from your municipality, you can send the SVN application form for a starter loan. Please note that you must enclose an Income Tax Return and Assessment. If you do not have this, you must request an Income Tax Declaration from the Tax Authorities and send it along. If your application is approved, you will receive a letter from the municipality stating the amount, term and interest rate of the starter loan, and the conditions of the loan. You must use all of this when taking out the mortgage with the bank for the rest of the amount you need to pay for the house. Ultimately, you must send a copy of the mortgage quote to the SVN, after which you will receive another quote for the starter loan and if you agree and meet the conditions, you will receive the starter loan. The documents are sent to your notary and both the starter loan and the mortgage must be taken out at the same time.

What costs are associated with this?

There are costs associated with taking out this starter loan. However, you can deduct these costs from your income tax. The SVN charges 1.5% for taking out this loan.