Buy a holiday home with a personal loan
The housing shortage in the Netherlands is becoming an increasingly serious problem. The demand for (owner-occupied) homes is much greater than the supply. At the same time, the construction of new homes is being delayed by the nitrogen crisis and PFAS. Moreover, many new-build homes still turn out to be far too expensive for a large group of home buyers, according to the NVM .
The VVD and D66 therefore want to legalize the - until now - illegal occupation of holiday homes. We think this is a good idea, because in this way tens of thousands of extra, already existing, homes can become available for permanent residence in the short term.
In this article we explain the benefits and challenges of legalization and why borrowing money for a holiday home is often a better option than a mortgage loan.
Advantages of legalization living in a holiday home
At the moment, some 55,000 people already live in a holiday home. All illegal. These are often starters who, after a long search, have not been able to find an affordable home for sale. But also the elderly and people who, for example, after divorce, could not find another form of livable / affordable shelter. Legalization of living in a holiday home would mean that these people get clarity and peace and that they do not have to stay elsewhere for two months a year. Legalization also means that residents of a recreation park are given the same rights to social services. Such as care in the municipality where the house is located.
Permanent residence of a holiday home is also a great option for people who do not need a large home or who would like to live 'outside'.
And of course your own holiday home is a perfect investment. To enjoy yourself or to (partly) rent out.
Legalization also has tax advantages: anyone who already owns a holiday home will benefit financially from the legal permit of permanent residence. At the moment, holiday homes still fall under box 3 (second home) and are therefore taxed extra. With legalization, the regulations would be aligned with those of 'normal' homes and owners would be entitled to interest deduction. With your own holiday home, the interest on both a mortgage and a personal loan is deductible.
Clear rules around permanent residence recreation houses
Clear rules will, however, be required for legalization. According to current legislation, each municipality decides for itself which holiday homes are or are not eligible for permanent residence. With legalization, there must be one clear directive with rights and obligations for both municipalities and residents.
Also, not every holiday home is suitable, safe or comfortable enough for permanent residence. For example, a chalet with central heating, fire extinguisher and running water is a different story than a log cabin without fixed facilities. This difference in quality does require clear regulations.
Borrow money for a holiday home
People who want to buy a holiday home - for holidays, rental or permanent living - usually have 3 options to pay for such a house:
- From equity
- Taking out a mortgage
- Borrow money, such as a Personal Loan
Paying for a home from equity is of course the best option, but not everyone has the money ready for it. A mortgage or consumer credit are then the obvious choice.
Mortgage loan or borrow money?
The biggest advantage of a mortgage is of course the current extremely low interest rate. But with a mortgage loan you do enter into a financial obligation of 20-25 years.
Usually a mortgage of 100% is not possible, at most 60% - 90% of the appraisal value. Moreover, there are all kinds of costs associated with taking out a mortgage: notary, appraisal and other costs for the buyer. In addition, many mortgage lenders often apply risk-limiting acceptance criteria and interest surcharges, because with mortgages the value of the real estate is taken into account in the acceptance and interest.
Those who prefer to borrow money via a personal loan or a combination credit now also pay a historically low and fixed interest rate: from 3.9%. The term is a lot shorter than with a mortgage (usually 10 years) and you will receive the total amount in your account in one go. The house will therefore be yours directly, without collateral to a mortgage lender.
Personal loans are provided on the basis of income and expenses of the consumer. There is therefore no connection with the financing object (the holiday home), as with a mortgage.
Another big advantage is the option to be able to make extra repayments in between without penalty, as much and as often as you want. With a mortgage, this is only a maximum of 10% - 20% on an annual basis.
Through additional repayments you shorten the term of the loan and / or the monthly repayment amount decreases. Whether it concerns a holiday home for permanent residence, holidays or rental: the faster you pay off, the more you can enjoy your holiday home.