Mortgage changes in 2020
Every year something changes in the rules surrounding mortgages, and in 2020 there will be a number of changes that will mainly benefit buyers. Unfortunately, there is bad news for homeowners with an income in the highest tax bracket.
The mortgage interest relief scheme is being retrenched
For years, the percentage against which you can deduct the mortgage interest you have paid has been falling for the highest tax bracket. Years ago, the benefit was equal to the levy in the highest tax bracket (52 percent). During 2019, you could deduct the mortgage interest you had paid against 49 percent. As of 2020 this will fall to 46 percent, increasing net mortgage costs for homeowners with an income in the highest tax bracket. In following years, the maximum deduction will further decrease. In 2021, the maximum percentage will drop to 43 percent. It will continue to fall until 37.05 percent is reached in 2023. In 2020 the percentage has dropped to 0.6 percent.
The notional rental value has fallen, but the levy has risen
The notional rental value, called the eigenwoningforfait in Dutch, is a tax calculated on the WOZ value of your house. The tax authorities see your house as a source of income, which is a somewhat surprising stance. This tax addition has decreased this year. In 2019, the addition was 0.65 percent (for a house with a WOZ value between 75,000 and 1,060,000 euros). In 2020 this has decreased to 0.6 percent. However, you can assume a higher WOZ value in 2020, so there is a good chance that you will still have to spend more on the notional rental value.
NHG mortgage accessible to more buyers
Buying a house with a safety net has become more accessible to a larger group of potential buyers. With an NHG mortgage, you pay what is called a bail commission. There are additional costs if you wish to benefit from an NHG mortgage. Last year (2019), the costs represented 0.9 percent of the mortgage amount. In 2020, this has fallen to 0.7 percent. You can currently get NHG for a house with a maximum purchase price of 290,000 euros. In 2020, the maximum will rise to 310,000 euros. These changes will make an NHG mortgage an option for more home buyers.
Double income couples can borrow more in 2020
From 2020, the lower income of double income couples will account for more. Currently, the lowest income accounts for 70 percent. From next year it will account for 80 percent. This will enable you to take out a much higher mortgage compared to the 2019 maximum.