What is a start-up loan?
A starters loan is specially designed to support young homebuyers in buying their first home. Sometimes a regular mortgage loan is just not enough to finance your dream home. The starters loan makes up the difference, putting your first home within reach.
This loan is an initiative of the Stimuleringsfonds Volkshuisvesting Nederlandse Gemeenten (SVn). An important advantage of the starters loan is that you pay no monthly fees for the first three years. You do not have to pay interest or repayments, which gives you more financial leeway to get used to your new situation.
Say you want to buy a €250,000 home, but your mortgage only allows you to finance €230,000. The starter loan can help you supplement that €20,000 so you can still buy the home.
Want to know if the start-up loan is right for you? Read on and find out all the benefits, costs and conditions.
Advantages and disadvantages of the starter loan
The start-up loan has many advantages, but there are also some points of interest. Below is a brief overview. Do you want to know more about this? Then read our extensive article on the advantages and disadvantages of the starters loan.
Benefits of a start-up loan
The Starter Loan offers many benefits, especially if you are struggling to secure financing for your first home. This scheme gives you extra financial room and offers favorable terms. The main benefits are:
- Extra financial room to bridge the gap between your maximum mortgage and the purchase price of a home
- Lower monthly costs in the first three years because you pay no interest and principal
- Greater chance of getting your first home thanks to more financial room
- Flexible terms, such as penalty-free repayment and sometimes extending the interest-free period
- No immediate repayment required, which stabilizes your financial situation
- Tax advantage because interest and principal are often tax deductible
Disadvantages of a start-up loan
Besides advantages, there are also some disadvantages to consider. This will help you make an informed choice. The main disadvantages:
- Higher indebtedness due to an additional loan on top of your mortgage or other loans.
- A reassessment takes place after three years, which may result in monthly charges
- Higher monthly costs in the long run, as interest and repayment start after the interest-free period
- Limited maximum loan amount, usually between €25,000 and €30,000, depending on the municipality
- Additional costs such as advisory and closing costs, and administrative charges for reassessment
- Not all municipalities offer this loan
- Terms vary by municipality, such as purchase price limits and interest-free periods
Wondering if a start-up loan is the best choice for your situation? Schedule a free consultation with our experts. Together, we'll look at your options and make sure you can take the next step with confidence.
Calculate how much you can borrow with a start-up loan
Wondering how much you can borrow with a start-up loan? This loan helps you bridge the financial gap between what you can borrow with a regular mortgage and the purchase price of your dream home. A calculation gives you insight into what is possible.
The amount you can borrow with a start-up loan depends on:
- Your income and the maximum mortgage you can get
- The purchase price of the property you want to buy
- The maximum loan amounts allowed by your municipality
Sample starter loan calculation
Suppose you want to buy a €300,000 home. You can get a maximum mortgage of €275,000 based on your income. You may be able to make up the shortfall of €25,000 with a start-up loan, depending on the rules in your municipality.
Cost and interest of a start-up loan
The Starter Loan itself does not entail any closing costs, but there are some fees you should keep in mind:
- Mortgage counseling fees that may arise when you hire a mortgage broker
- Notary fees because the loan is recorded in a notarized deed
- Any reassessment costs after three years to determine if your monthly expenses start
How do interest rates and fixed rate periods work?
The interest rate on the starter loan is set by SVn and is often lower than the market rate. This makes the loan attractive for starters. In addition, the loan has a fixed-interest period, which ensures predictable expenses once you start repaying.
- You pay no interest and principal for the first three years
- After the first three years, a reassessment determines if your monthly expenses start, depending on your financial situation
Monthly costs after the first three years of the starter loan
If you start repaying after three years, your monthly costs are calculated based on:
- The outstanding loan amount
- The interest rate set at the start of the loan
- The remaining term of the loan, usually up to 30 years
Suppose you took out a €25,000 start-up loan with an interest rate of 2%. For the first three years you pay nothing. After the reassessment, you pay €92 gross per month. Because of tax deductions, your net monthly expenses may be lower.
Terms and conditions of a starter loan
Do you want to take advantage of a start-up loan? Then you must meet the following conditions:
- You are under 35 years of age
- You buy your first home and start using it as your primary residence
- The house price remains within the maximum purchase price allowed by your municipality
- Your income and maximum mortgage are not enough to cover the full house price
- The start-up loan is offered in your municipality and falls within the conditions, such as a maximum start-up loan
The maximum purchase price varies by municipality and is often linked to the average house prices in the region. Always check the specific conditions of your municipality.
Who provides the starter loan?
The starters loan is provided by the Stimuleringsfonds Volkshuisvesting Nederlandse Gemeenten (SVn). They also determine the conditions for reassessment after three years and the term of the loan.
If you live in a municipality where the maximum purchase price is €325,000, you can buy a home that falls below this limit. In addition, you must be younger than 35 and live in the property yourself. Always check if your municipality has additional rules, so you can get a good overview of whether you qualify.
Which municipalities offer the starter loan?
Not all municipalities in the Netherlands offer the starters loan. It is therefore important to check whether your municipality participates in this scheme. You can check this in three ways:
- Refer to the SVn municipality checker on the Housing Incentive Fund website
- Contact the Housing or Public Housing counter in your municipality
- Seek advice from a mortgage broker experienced in start-up loans
What does a municipality determine?
The starters loan is funded by municipalities and the Stimuleringsfonds Volkshuisvesting Nederlandse Gemeenten (SVn). Each municipality determines for itself:
- The maximum loan amounts for the starter loan
- Whether additional conditions apply, such as an income limit
- In which neighborhoods or areas the loan is available
How do you apply for a start-up loan?
Applying for a starter loan is easy if you follow the right steps and prepare all the necessary documents. The process goes through your municipality and SVn. Follow these steps:
- Check whether your municipality offers the loan. Use the SVn municipality checker or contact your municipality.
- Get a mortgage quote from your mortgage broker or bank. The starter loan is an additional loan on top of your regular mortgage.
- Submit your application to the municipality. Complete the application form and submit the necessary documents, such as your income information, purchase contract and mortgage offer.
- Wait for approval from your municipality. Once your application is approved, the municipality will forward it to SVn.
- Have the loan recorded at the notary. After approval by SVn, the loan will not be disbursed until it is notarized.
After three years, a reassessment takes place. SVn will then assess your financial situation. If your income has increased, you can start paying interest and redemption. If your income remains the same, the conditions may be extended.
Frequently asked questions about the start-up loan
Still have questions about the start-up loan? Don't worry, you're not the only one! We've listed the most common questions to help you along. Whether you want to know how a starters loan works, whether you qualify for it, or what the benefits are. You can read it all below!
Is a start-up loan beneficial?
Yes, a starter loan is often beneficial, especially if you are short in your mortgage financing. You pay no interest or principal for the first three years, giving you financial room to put your new home in order. Plus, the interest is usually tax deductible, further lowering your monthly expenses.
Can everyone get a start-up loan?
No, not everyone can get a starter loan. You must meet specific conditions, such as:
- You are under 35 years of age
- You buy a home that you use as your primary residence
- Your income and mortgage are insufficient to fully finance the home
In addition, your municipality must offer a starter loan. Check this via the SVn-municipality checker. The starters loan exists specifically for starters who have difficulty buying their first home without this scheme.
How long does the process take to apply for a starter loan?
The process to apply for a starter loan takes an average of four to six weeks. This includes:
- Approval by your municipality
- Assessment and final approval by SVn
Make sure you provide all necessary documents, such as your income information and mortgage offer, on time to avoid delays. Keep in mind that you will need to apply for a retest after three years.
How much do you get with a start-up loan?
The amount of the starters loan varies by municipality, but is often between €20,000 and €30,000. The exact amount depends on the shortfall between your maximum mortgage and the purchase price of the home. An example:
- Property price: €250,000
- Maximum mortgage: €225,000
- Starter loan: €25,000
Check the maximum loan amounts used by your municipality.
Is the interest on a start-up loan tax deductible?
Yes, the interest on a starter loan is tax deductible if you use the loan for your own home. This tax benefit can lower your monthly expenses, especially if you start paying interest and principal after the first three years. Consult a tax advisor for your specific situation.
Can I combine a start-up loan with an NHG?
Yes, you can combine a start-up loan with a National Mortgage Guarantee (NHG). This is often beneficial because it provides additional security and can lead to a lower mortgage interest rate. Just be aware that the total financing must remain under the maximum NHG limit.
What is the maximum term of a start-up loan?
The maximum term of a starter loan is 30 years. This means that, as with a regular mortgage, you must repay the loan within this period. After three years, a reassessment takes place to determine whether you start repaying
When are you a starter in the housing market?
You are a starter in the housing market when you buy a home for the first time and start using it as your primary residence. This usually applies to young buyers who have not yet owned another home for sale. In addition, you must be under the age of 35 for a starter loan.
