Holiday Home and a Mortgage

The most important points at a glance

How do you find a reliable advisor for expert mortgage advice? We've put together five tips to help you get guaranteed quality mortgage advice.

1. Mortgage for a holiday home

A mortgage for a holiday home, also known as a recreational property, is only available from a limited number of providers. Providers that do offer a loan for a holiday home often don't finance the full purchase price. There may also be additional conditions that apply. A recreational property is generally not used as a primary residence and is therefore less standard. It's important to keep in mind that you will likely need to contribute your own funds. The conditions set by banks also vary, so it pays to make a good comparison. Want to know what's possible? With the mortgage for a recreational property, you can calculate what you can borrow for your holiday home in no time. You can then decide which provider to use for a first or second mortgage on your holiday home, depending on whether you already have a mortgage.

2. Conditions for financing a holiday home

There are several conditions for taking out a mortgage on a holiday home. These conditions vary by provider. They include requirements that apply to the holiday home itself:

• With most mortgage providers, the home must not be movable.
• The home often needs to be built from brick or concrete.
• Sometimes the condition applies that the recreational property cannot be used for permanent residence, and in some cases renting it out is not permitted.
• There is generally a maximum mortgage term of 25 years.
• The second home must sit on freehold land or be subject to erfpacht (ground lease).
• The holiday home must have sanitary facilities and be connected to standard utilities such as electricity and water.

3. Contributing your own funds for the recreational property

Typically, financing for a holiday home covers a maximum of 70% to 80% of the property's value. The exact conditions again differ between mortgage providers. Contributing your own funds is therefore often necessary to finance a holiday home. If you already have a mortgage on your main residence, it's also possible to use the equity in that mortgage to finance your holiday home, through what's called an opeethypotheek (equity release mortgage).

4. Tax rules for a second home

It's important to be aware of the tax rules that apply. Taking out a mortgage on a holiday home comes with different tax rules. For example, you cannot deduct the interest on a holiday home mortgage from your income through mortgage interest deduction. The Dutch Tax Authority considers a second home to be wealth, which means it falls under Box 3. The associated debt also falls in Box 3, so the mortgage amount is deductible from your wealth, but the interest is not. Maintenance costs for the second home are also not tax-deductible.

5. Mortgage interest deduction for a second home

You can of course choose from different mortgage types for a recreational or holiday home, such as a mortgage with annuity repayment or one with linear repayment. These are the mortgage types that are usually available for financing a holiday home. You also have a choice between different interest types. If you want extra certainty, for example, it's a good idea to choose a fixed interest rate. The rate then stays the same for the chosen fixed-rate period. With a variable rate, you benefit from a particularly low rate at the start, but there's no guarantee it will stay low in the future. That makes it a less certain option than a fixed rate.

6. New or existing holiday home

It's possible to take out a mortgage on both an existing recreational property and a newly built holiday home. In practice, this means there are all kinds of options available to make your dream home a reality, for example on a holiday park in the woods or near the beach. Thinking about buying a second home abroad? There are also multiple financing options for that, such as an international mortgage. These may come with different conditions. If you're looking for the ideal financing for your holiday or recreational property, it's wise to speak with an independent advisor to go through your options together.