What is a start-up loan?
A starters loan gives you that extra financial push to buy your first home. It is an additional loan that helps bridge the gap between the maximum amount you can borrow with your mortgage and the purchase price of the house. So you can still get your dream house.
This loan is offered by the Stimuleringsfonds Volkshuisvesting Nederlandse Gemeenten (SVn) and is available in certain municipalities. The conditions vary by municipality and depend on the house price and your financial situation.
Wondering exactly how a start-up loan works and what the conditions are? Read our extensive article on what exactly a starters loan is and find out if this scheme is for you!
The benefits of a start-up loan
Want to buy your first home, but does financing seem like a stumbling block? A starters loan offers the solution to still get your dream home within reach. Below you will discover the main advantages:
- Extra financial room to buy a home
- Lower monthly costs in the first three years
- Greater chance of getting your first home
- Flexible terms, such as penalty-free repayment
- No immediate repayment required in the first few years
- Often tax deductible
1. Extra financial room to buy your first home
A starters loan helps you close the gap between your maximum mortgage and the purchase price of a home. This means that you can buy the house that is just outside your budget. Say you have your eye on a house worth €250,000, but your mortgage is maximum €230,000. Then with a €20,000 starters loan you can still buy the house.
2. Lower monthly costs in the first three years.
As a starter, you often have many expenses in the first few years, such as furnishing your home. With a starter loan, you pay no interest and repayments for the first three years, keeping your monthly expenses lower. This gives you three years to improve your financial situation.
During this period you can build up savings, for example by setting aside a fixed amount each month. You can also pay off existing debts, such as a student debt, thus increasing your financial room. In addition, this time offers the opportunity to invest in making your home more sustainable. This will lower your future energy costs and structurally reduce your net monthly expenses.
3. Greater chance of getting your first home
The extra financial room can make all the difference in a competitive housing market. Starter loans allow you to offer just a little more, significantly increasing your chances of getting that first home. This is especially helpful for first-time buyers who often have to compete with move-up buyers.
4. Flexible terms that help startups
With a starter loan, you benefit from terms tailored to starters. You can repay penalty-free whenever you want and sometimes even extend the interest-free period.
Extending this period depends on your financial situation and the policies of the municipality where you took out the loan. For example, an extension may be approved if you have had unexpected setbacks, such as loss of income or high medical expenses. This flexibility allows you to better get your financial situation in order without having additional monthly expenses right away.
5. No immediate repayment required in the first few years
Because you pay no principal or interest for the first three years, you have time to stabilize your financial situation. This gives you room to build up a financial cushion, for example, or to more easily bear other expenses, such as furnishing your home.
Because your monthly payments are lower during this period, you can better accommodate unexpected expenses and avoid immediate financial hardship. This flexibility makes the Starter Loan an ideal solution for those who are just taking their first steps in the housing market and want to build a stable foundation.
6. Tax advantage for startups
The interest and repayment of a start-up loan are tax deductible in many cases. This means you can get some of these costs back through your tax return when you start repaying. This lowers your net monthly costs and makes the loan more attractive for first-time buyers.
With these benefits, buying a first home becomes feasible and less stressful. A starter loan is a smart move for young homebuyers looking to get started in the housing market.
The disadvantages of a start-up loan
Although a start-up loan offers many advantages, there are also disadvantages to consider. Below we list the main disadvantages:
- Higher debt burden due to additional loan
- Mandatory reassessment after three years
- Interest and repayment start after the interest-free period
- Limited maximum loan amount
- Higher long-term monthly costs
- Additional costs associated with closing and administration
- Starter loan not available everywhere
- Conditions vary by municipality
1. Higher debt burden due to additional loan
A start-up loan is an additional loan on top of your regular mortgage. This means that your total debt load increases. This can affect your financial space and your ability to borrow additional money in the future, such as for a remodel or other major expenses.
2. Mandatory reassessment after three years
After the interest-free period of three years, you must apply for a reassessment. During this retest your financial situation will be checked to see if you have improved and are able to make interest and principal payments. If your income has increased, these payments start immediately, which can mean a substantial increase in monthly expenses.
3. Interest and repayment start after the interest-free period
Although you pay no interest and principal for the first three years, these costs do begin after the interest-free period. This can cause a significant increase in your monthly expenses, especially if your financial situation has not improved significantly.
4. Limited maximum loan amount.
The maximum amount you can borrow with a start-up loan is limited. This amount varies by municipality, but is often between €25,000 and €30,000. If you have a larger financing gap, the starter loan may not offer a sufficient solution.
5. Higher long-term monthly costs
Although the start-up loan gives you financial breathing room in the beginning, the monthly costs can increase significantly in the long run. After the interest-free period, you pay interest and principal on top of your regular mortgage. Suppose your starter loan is €30,000 and your interest rate is 2%, then after three years you will pay about €50 extra per month in interest, in addition to repayment. This can be financially tough if you are not prepared.
To cope with this increase, you can start saving some extra during the interest-free period or limit your expenses. In this way, you can better prepare for the higher monthly costs and avoid financial stress.
6. Additional costs associated with closing and administration
Taking out a start-up loan often involves additional costs, such as advisory and closing costs. In addition, there are administrative burdens, such as applying for a reassessment, which can cost time and money.
7. Starter loan is not available everywhere
Not all municipalities offer a starter loan. The Stimuleringsfonds Volkshuisvesting Nederlandse Gemeenten (SVn) decides together with the municipalities where the scheme applies. This may mean that you cannot make use of the loan in your municipality.
8. Conditions vary by municipality
The conditions for a start-up loan are not the same everywhere. In each municipality, there may be differences in the specific conditions, such as the maximum loan amount, the purchase price limit or the interest-free period. This makes it difficult to get a clear picture of what is possible for you.
With these disadvantages, it is important to think carefully about whether a start-up loan is the right choice for your situation. Be sure to get informed before making a decision.
Frequently asked questions about the start-up loan
A start-up loan can help you buy your first home, but it also raises many questions. Below, we answer the most frequently asked questions so you know exactly what to expect.
When do you qualify for a start-up loan?
You are eligible for a starter loan if you buy your first home and meet the requirements of your municipality. Usually, this applies:
- You are between the ages of 18 and 35.
- The home becomes your primary residence.
- The purchase price of the home is within the maximum purchase price of the scheme.
The exact conditions vary by municipality. Some municipalities have additional requirements, such as a limit on the amount of equity you may have. Contact your municipality to check if you meet the specific conditions.
How much of your own money are you allowed to have with a start-up loan?
There is no set limit on how much of your own money you can have with a start-up loan. The loan is intended to make up a shortfall when you cannot finance the full amount with a regular mortgage. If you have enough equity to make up this shortfall yourself, you may not qualify.
For example: suppose you want to buy a €250,000 home and your maximum mortgage is €230,000. If you have less than €20,000 equity, a start-up loan can help bridge the gap.
How much is a start-up loan?
The amount of a start-up loan varies by municipality and is determined by specific conditions. Usually the amount is between €25,000 and €30,000. In some regions, such as Amsterdam, the starters loan can go up to €50,000, depending on house prices and the regulation in your municipality.
A start-up loan makes it easier to close the gap between your maximum mortgage and the purchase price of the home. Want to know exactly how much you can borrow? You can easily calculate your starters loan by mapping out your financial situation and the municipal conditions. This will give you a clear picture of what is possible and how you can finance your first home.
How do you repay start-up loans?
Repayment of a start-up loan usually starts after three years, when the interest-free period ends. The reassessment examines whether you have enough income to pay interest and repayment. If your income has not increased, you may be able to apply for an extension of the interest-free period.
After three years, for example, you will pay €50 in interest per month on a €30,000 loan with a 2% interest rate, in addition to a fixed amount of repayment. This can add up to €200 in extra monthly charges. It is important to be prepared for this.
Combining a start-up loan with the National Mortgage Guarantee (NHG) can provide additional security. This is especially useful for first-time buyers who want to limit their financial risks. Want to know if this scheme suits you? Then find out from your municipality whether it offers a starters' loan and how to apply for or take out one.
Can you repay your starter loan earlier?
Yes, you can repay a starter loan early without penalty. This offers flexibility, especially if your financial situation improves or if you receive an unexpected amount of money. By repaying early, you reduce your total debt and any monthly payments in the future.
Does starter loan affect mortgage?
Yes, a starter loan can affect your maximum mortgage. Because it is an additional loan, it increases your total debt load. This can limit your options for a new loan in the future, such as if you want to remodel or buy another home. It is important to factor this into your financial planning.
