You will see the abbreviation NHG come up from time to time when you are getting your bearings on buying your first home. But what exactly is it and is it wise? In short, NHG stands for National Mortgage Guarantee and serves as a safety net if, due to circumstances, the mortgage can no longer be paid or if a residual debt remains after the sale of the home.
Limit amount NHG
The NHG has a limit amount up to which it can be taken out. The limit amount is redetermined every year, looking at the average house price. In 2022, for example, the NHG limit is set at €355,000. However, there is one exception to this limit, namely if you want to co-finance energy-saving measures. Then the NHG limit is €376,300,-. This is therefore only possible if everything above €355,000 is used for energy-saving measures. If the mortgage or value of the house is higher than this limit, you cannot apply for a mortgage with NHG.
Advantages NHG
So if you buy a home under the limit amount, it is possible to take out a mortgage with NHG. But what are the advantages of this?
First, both you and the mortgage lender run less risk with NHG, because the mortgage is always repaid. If you get tighter financially because of one of the causes NHG covers, they will figure out how to make the mortgage affordable again so you don't have to move out of your home. Should that not be possible and you still have to sell the house with a residual debt, NHG can cancel the residual debt.
Secondly, you get a discount on the mortgage interest if you take out a mortgage with NHG. This discount can amount to about 0.5% per year.
Disadvantages NHG
This sounds very good, of course, but like many wonderful things in life, there are costs involved. The cost for NHG in 2022 is a one-time 0.6% of the total mortgage amount. So if you want to take out a mortgage with NHG, you have to keep in mind that you have to be able to put in some extra money. In addition, you will get a registration with the Bureau Krediet Registratie (BKR) should you need to make use of the NHG waiver. This makes it difficult to get a new mortgage or loan for five years.
So take all these points into consideration when deciding whether or not to take out a mortgage with NHG. Are you opting for the extra security? Is the home value too high anyway and you don't have to make a choice at all? Or is some other reason the deciding factor for you? All good, as long as you know it exists and what it is for.
