The Complications of Downsizing in the Netherlands

| Your Financials

Is a senior permitted to downsize? 

You might wonder what kind of a question that is, however the answer to it is more complicated than you might think. We advise on financial solutions and also do what it takes to realize that advice. Part of that realization is mediation of mortgages. 


After a decades-long relationship Fred, as we will call him here, has passed the age of 80, has been a widower for years, and wants to live in a smaller house. His beautiful single-family home is too big for him alone and he would like to live in a more bustling area. There is no more mortgage debt. Near the shopping street in the center is a modern and comfortable apartment complex that is at the top of his wish list. After a long wait, an apartment finally becomes available where everything is right. The price is well below the value of his current home which will be sold. 

No choice 

When we mediate mortgages, we have a choice of 62 (yes you read that right) mortgage lenders in the Netherlands. In practice, a few of them always fall off because of specific target group policy, but there are dozens of them. There are none (!) left if you are looking for a mortgage with which you only bridge the sale of your own home in order to be able to purchase the new home (a bridging mortgage) and therefore do not need a mortgage on your new home. After all, you have money left over from the sale. There are solutions, but these are unnecessarily complicated. 

Outrageous, we think 

Mortgage lenders have conditions when accepting clients and transactions. These vary from the type of client to the real estate to be financed and there are therefore also restrictions for certain products. Dozens of providers apply the requirement that to be able to use the bridge loan product, financing must also be requested for the new home. This makes the future of risk-averse (because the entire mortgage has disappeared) elderly suddenly much less flexible, while it should be without debt. Moreover, this can impact the flow of families into their potential new homes. This stalling is caused by all major Dutch mortgage lenders, who have been discussing “putting the customer first” since 2008. 

What would inspire them? 

Since the commission ban, the mortgage lenders have to live off of the interest margin alone. So short contracts, such as bridging, only yield something for a short time, and it is just not much if you have the expectation that you will pay off within 3-6 months. We understand that too. Conversely, the amount of work required to assess a bridge financing is a lot smaller than another mortgage application. In our opinion, it is not right that this group of applicants for limited and temporary financial solutions with a very low credit risk are disrespectfully dismissed. In these cases, ask for a reasonable (such as, for instance, 0.25%) fee, and assist the property flow for families. There are dozens of these families who would be eager to move into the house that Fred would leave behind when he moves!