Moving House and your Mortgage: What Do You Need to Know?

When you move, you often buy a larger or more expensive home. If you need to borrow more than your current mortgage balance, you will take out an additional loan for the extra amount. Please note: If you want to keep your current favorable interest rate (this is called "porting"), you usually have to take out the additional loan with your current lender.

What are the rules?

• Mortgage types since 2013: To qualify for mortgage interest tax deduction, you must choose either an annuity or a linear mortgage for the new portion of your loan.

• Grandfathered rights: Did you have a mortgage before 2013 (e.g., an interest-only mortgage)? In many cases, you can port this mortgage type to your next home, provided it fits within current regulations and limits.

In many cases, you are allowed to port your current interest rate contract for an amount up to the balance of your old loan.

Key considerations

• Risk surcharge: Your interest rate may change slightly. If you borrow a higher percentage of the market value for your new home than you did for your previous one, the lender may apply a "risk surcharge."

• The 10-year stress test: Is your remaining fixed-interest period less than 10 years? Lenders are then legally required to calculate your maximum loan based on a "stress test rate" of 5%. This might result in a lower maximum loan than expected. A possible solution for this is interest rate averaging.

Do you want to buy a new home while your current one is still on the market? This is possible, but there are additional requirements:

• Bridging loan: You can temporarily "advance" the expected equity from your current home using a bridging mortgage (Dutch: overbruggingskrediet).
• Double monthly costs: You must demonstrate to the bank that you have sufficient financial means to cover the costs of two mortgages temporarily.
• Deadlines: If you have already sold your home, be aware that the "porting scheme" is usually valid for a limited time (typically 3 to 6 months). The new mortgage must be finalized at the notary within this window.

Tip: If you aren't porting the mortgage yourself, check if you can use the transfer clause (Dutch: de doorgeefregeling). This allows you to transfer your favorable interest terms to the buyer of your house, making your property much more attractive.

If you sell your home at a profit, you will encounter the reinvestment rule (Dutch: de bijleenregeling). This means you are expected to invest the equity into your new home. If you choose not to, you will lose the right to tax deduction on the portion of the new mortgage equal to that equity.

• Equity not yet available? If the transfer of your old house hasn't happened yet, you can cover the gap with a bridging loan or your own savings.
• Residual debt? Is your home "underwater" (the debt is higher than the sale price)? You will need to cover the residual debt with your own savings or, if possible, finance it as part of your new mortgage.