Another Step Closer to Owning a House

Today we got the word from the house valuation—a crucial step in getting the mortgage approved. The maximum mortgage you can get in the Netherlands is not just determined by your own finances but also by the value of the house you’re intending to buy. If you bid over the market value of a house, you have to pay for that difference out of pocket. Alternatively, if you’ve underbid and the valuation shows the house was worth more, you can still only get a mortgage up to the actual bid. Apparently, the regulations are both to protect buyers, sellers, and the market in general as well as to combat money laundering through real estate.

So, today, we got the house valuation report which confirmed that our bid matched the value of the house; i.e. we should be able to get a mortgage that covers the buy. Another hurdle passed! The only thing left is to get the actual financing, and the rest is paperwork!

Mortgage Broker

Yesterday, we passed another milestone in the process of buying a house: we formally hired a mortgage broker to deal with the process from hereon out. We had signed the bill of sale last Friday, and earlier that week we had an engineer inspection done on the house, just to be sure. So, with all that done, it was time to formally hire our mortgage advisor and get into the final stages of buying this house.

The engineering inspection, fortunately, showed that the house was in pretty good state. Of course it had some wear and tear, as all older houses will, but overall it was in good stead. Basically, there were only three real points of concerned: firstly, the fuse box was one of those older ’50s models that has the individual fuses; secondly, a board on one of the windows in the back (the side that gets most of the weather) was rotten; and, lastly, there was some damage on the chimney stack that needed repairing before it could cause damage. All in all, pretty decent. There were some other minor things, such as some mortar that needed replacing, and some potential asbestos in the tiling inderneath the hallway floor, but that’s nothing too surprising or worrying.

Signing the bill of sale was nerve-wracking but banal at the same time. It was a nervous moment, because at that time you’re really solidly committing to seeing the process through. Technically, under Dutch law, we still have until the end of tomorrow to make use of a buyer’s remorse clause – an opportunity to cancel everything without any consequences. However, of course we want this house, and everything looks fine, so why would be? As nervous as the moment of signing was, it was also incredibly bureaucratic: we both had to initial every single page of the contract and sign at the end, doing everything in duplicate.

Both of those things allowed us to take the next step, and yesterday we spoke with our mortgage broker to start the financial part of the process. We really like the one we have – of all the people we called and mailed to ask about this, he was the only one that invited us over to the office, and spent as much time as we needed to explain everything in an orientation meeting (i.e. before we even committed to anything or paid him!). His indication is that, as long as the valuation of the house comes out to what they put it on the market for, everything looks good. It may be a little expensive, but what’s great about this office is that they will now take care of everything. Any mail, question, or thing that happens from hereon out, we forward to them to deal with.

Given how procedural, administrative, and legalized the process of buying a house is, I’m very happy we went with a mortgage broker. It feels like every little bit takes quite specialized knowledge so as not to be tripped up by anything problematic. It’s such a relief to know that now it’s pretty much out of our hands. We’ll sign some documents that are all prepared by other people, and at the end we’ll have a house.

There’s one last hurdle to overcome, though. As I mentioned, the mortgage broker is now sending somebody over to value the house. Our maximum mortgage is determined by that valuation – if it ends up as less than the asking price of the house, everything falls flat. Fortunately, we have a provision in the bill of sale that means if we cannot get a mortgage for the price, everything is off without consequences. So, sometime next week, by virtue of that valuation, we’ll essentially hear whether we’re getting the house or not. Fingers crossed!

The Process Of Buying A House Continues

We’ve now received the bill of sale (the koopovereenkomst in Dutch), that further solidifies the process. Before this process, I was vaguely aware of how buying a house worked but going through it now really drives home how ritualistic it all is. We first made the offer, which had to be accepted. Afterwards, we are communicated a formal message that an agreement has been reached. Next, the bill of sale is forwarded, which forms the basis of talks with a mortgage broker. The following steps are to acquire a mortgage, set up a meeting with a notary, and finally a final tour of the house with the broker before signing with the notary.

It’s a highly risk-avoidant procedure, where every step has multiple escape hatches to stop the process in case any little thing is wrong. However, every step we complete of this arcane incantation brings us closer to finalizing the ritual of consecrating the grounds. The next step will be the most precarious: securing the mortgage. From our talk with the mortgage broker, it shouldn’t be an issue at all. Still, though, there’s a bit of doubt for me; what if – just what if? – some time thing that I wasn’t aware of becomes a bigger problem? I’m sture it’ll all be okay, but it’ll be nicer once we have the key in our hands, you know?

Nevertheless, we’ve started packing. Almost exactly a year after we packed to move to this apartment, we’re now packing up to move to our very own house. We’d never actually even fully settled into this apartment. We’d never gotten around to painting it yet and because of the COVID-19 restrictions, we hadn’t been able to buy a new couch yet, to name but two examples. Last year, we were in quite the rush to pack, as we were moving while I was still working, giving us very little time to pack together. This year, however, I have far more free time, as we should be moving right in the middle of my summer holiday. so, we’ve also decided to take things much easier and pack little by little.

It’ll be a tough move, and money will be extremely tight for a month or so, but it’s an exciting journey so far.

So I Guess We Might Be Buying A House?

Life can throw you for some unexpected loops. Originally, this blog was started to track my law degree progress. After I’d started and gotten some grades, Tracy and I had a big talk about potentially not staying in the Netherlands, and it seemed fairly certain we were seriously exploring emigration. So, the law degree got put far back on the backburner (a degree in Dutch law makes no sense outside of the Netherlands). Then, as we were exploring options to travel to Canada, discovering that the threshhold would be quite high, COVID-19 hit, pretty much eradicating any possibility to move at that time. Fast forward a year as we move to a new apartment, settle in more, I change positions at work, and we improve our financial situation, and suddenly life looks vastly different.

We’d been exploring our options to buy a house for a few months now, trying to understand what was possible. Based on my income, we could get quite a reasonable mortgage for the type of house that we’d enjoy. However, I also have a substantial student debt, which greatly limits the height of the mortgage you can get (essentially, double your original student debt gets deducted from what you might afford based on your salary). As I posted before, despite having a rent that’s higher than whatever we’d pay for the highest mortgage based on my income, we wouldn’t be able to get that. One mortgage lender quite nicely said that we’d “be able to buy a nice garage” from what they’d be able to offer us. We were downtrodden but nevertheless Tracy put her dealfinder skills to work to find us new options (seriously, she’s really good at finding high-quality yet cheap things).

What came next was a cavalcade of terrible housing. We viewed a house that was incredibly cheap, had a large garden, was located in the middle of the city, and was really spacious. Oh yes, and also the garden was on loan from the municipality, most of the house was rotting, and three rooms had to be torn down with an estimated cost of 100.000 Euro for the rebuild. There was an affordable house in a tiny village (it had about three streets to its name), that was half an hour away by a bus that came once an hour. There were tiny houses, bizarrely designed houses, run-down houses, and so on. We’d gotten to a place where we’d given up hope.

Earlier in the week, we’d viewed a house that Tracy really liked but I wasn’t too excited about (once again, small village with only a bus connection, which would limit Tracy’s mobility). Our next viewing was a house I thought would be pretty decent (it was fifteen minutes away from work on a train line), but Tracy didn’t really like the look of. However, we’d agreed to look at anything and everything that was remotely decent – the worst that could happen was that we’d waste some time while we more clearly realize what we can and cannot accept. So, we go to this small town, and we are blown away by the neighbourhood. We’ve joked that it looks like Hobbiton. There’s medieval buildings here and there, and town centre has open and wide streets. There’s stretches of greenery where you can hear the chirping of birds (I hadn’t realized I’ve not heard any for over a year) and many people walk their dogs. The neighbourhood of the house is well-kept, quiet, and decent. We instantly realize that this is the type of town that is our perfect compromise: rural enough for Tracy to love and close enough to work for my convenience. We know that this town is worth our attention.

As we come to the house, it’s actually better than the photos had led us to believe. The rooms are decently sized, the kitchen is larger than it looks, and the back garden is much larger than it looks. The shed has plugs, so we can turn it into a workshop, and the back alley is large enough for Tracy’s scootmobiel to go through. It’s really close to town center, close to a supermarket, and pretty close to the train station. It seems great! The previous owner was an old lady that passed away, and apparently the house is the inheritance for a set of nieces and nephews who just want it sold so they can divide the money. The big downsides, really, are that the previous owner was a heavy (and I mean heavy) smoker, so all the walls are yellow and the stench of nicotine assaults you as you enter. Given the rotted houses we’d seen, the prospect of just doing some deep cleaning doesn’t scare us in the slightest. She also kept some cats, who’d terribly scratched up some of the wallpaper upstairs. Taking down wallpaper and repainting? Big whoop, we would do that anywhere we move in anyway.

Sure, there’s some things that need improving. For instance, the bathroom downstairs doesn’t have a sink. For some reason, that’s quite common in Dutch house of a certain period – don’t ask why. In fact, in this one, it isn’t just that they never built a sink in the downstairs bathroom – they actually had it removed! God knows why. The kitchen is pretty decent, but could use some improving; restructuring some cabinets, improving the use of vertical space, that type of thing. Also, the bathroom was poorly constructured: the cover they added to the ceiling wasn’t made of water-tight material, so there’s some warping there that needs to be fixed. The biggest downside there, though, is that there’s no toilet upstairs (relatively common in houses in this price range in the Netherlands). However, these are all things we can deal with. Seven years down the line, when my student debt is gone, we either sell the place, or get a second mortgage to do some major upgrades.

So, based on what we’d seen, we figured to put in a bid. This is the best house we’d seen in the price range, and the town itself was love at first sight. It fit all our criteria that we’d been building for the last months. Suddenly, everything goes at warp speed. Thursday evening we viewed the house, and later that evening we mention we’re interested in bidding. Friday morning the realtor calls us to explore options; a few hours later we’re talking with our mortgage broker, after which we call in a formal bid to the realtor; a few hours after that, we get a call that our bid is accepted, and we’ve reached a deal in principle. I can tell you it was a tense, emotional day. We were both equally excited and freaked out: we’re actually getting the house! Oh god, did we just buy a house? Wow, we’ll be saving so much money! Wait, are we sure we can afford this? This is the best house we’d seen so far! What’s the catch here? When do we discover what the major problem is?

Any day now, we can expect the bill of sale, which is the starting point of us talking to our mortgage advisor. Now, there’s still plenty that can go wrong at this point. The height of the mortgage is determined by the valuation of the house. If the bank values the house at a lower price than we bid, then we don’t have the money to cover the difference. If the bank, for some bizarre reason, doesn’t want to give us the full mortgage (unlikely, since the mortgage broker worked through everything in our first talk), then we can’t afford it. And who knows what else can go wrong.

However, if nothing goes wrong, then we may have just bought our first house. Our house. A house in a quiet town that’s conventiently close to work. A house with a garden that we can grow crops in. A house that we can build furniture in. A house that we can make really cool. Every day the idea is becoming a little less scary and a lot more awesome.

Housing Challenges

Tracy and I have been looking into buying a house, and boy is it a tricky proposition. On the one hand, it shouldn’t be that hard of a deal: I have a permanent contract, a good salary, and a solid record of paying rent for over a decade. However, there’s also a huge snag: I also have a massive student debt. When I started studying, the rules were that student debt would not be factored into considerations regarding buying a house. These days, however, those rules have changed, and they’re crippling us.

Without going too much into detail, what we did was figure out how high a mortgage we could cover if we payed the same amount we currently do into rent into a mortage instead. As it turns out, that was a decent chunk of money that could get us into quite an acceptable home. In fact, we’d found some homes that we’d like to explore (and one that we absolutely fell in love with) and for those, we’d even be paying less in mortgage than we would do in rent. On top of that, buying a first house comes with all sorts of advantages, such as municipal subsidies to make it more sustainable, and tax breaks based on your mortage interest rates, to name two. So, we figured, all of this is great – we can totally afford buying a house.

The banks, however, have a different idea. Despite us already paying the effective mortage (in fact, our net rent is higher than the gross mortgage!), the banks, in short, argue that we can’t carry that payment. The problem is, as I mentioned, my massive student debt. Banks are required to factor that into the mortgage, and to deduct a percentage of the student debt from the maximum mortgage. So, despite us demonstrably carrying this financial load, as well as the fact that we’d in fact be living cheaper with the mortgage than without, according to the rules, this is irrelevant. We’ve spoken to a mortgage advisor, and he as well basically said it’s a case of it making no sense but they have to follow those rules.

Now, to me, this already seems somewhat off. It gets even more absurd, however. You see, if I had decided to buy a house right after I graduated, this wouldn’t have been a problem. In the Netherlands, you only start paying off your student debt a year after graduation. Since I wouldn’t have been paying off my student debt that first year, they wouldn’t have to factor it. So, despite the situation being functionally and practically the same, it wouldn’t have mattered. However, who on earth would buy a house right after graduation? At that point, no company here will have given you a permanent contract (the standard usually is two fixed-term contracts before issuing a permanent contract for first jobs).

Moreover, the rules were changed during my time as a student, and again after my graduation. So, again, had I bought a house earlier, I wouldn’t have had any of these issues. However, at that time, I was still being bounced between fixed-term contracts and payroll constructions. I didn’t actually get a permanent contract until 2018, despite working in the same program since 2012. Still, the fun doesn’t end there!

The Netherlands actually had a pretty lenient student debt program at my time, still. Not as lenient as the generation before me, but better than what came after. The interest rate on my student debt is incredibly low (and I think at the moment it’s actually 0%). On top of that, after fifteen years of paying as much as I can each month, the entire debt is forgiven. I have six years and eight months left on that, with a debt that’s so high that I almost couldn’t pay it off. I mean, sure, if Tracy and I moved into a shoebox, ate rice and beans daily, I got a second job, and so on, I could chip away at it and have it paid off it, say, a little over six years. See what I’m getting at? At this point, the system is encouraging me, rather, to save up my money so I could buy a house when my student debt is done. Surely, that’s completely wrong? Surely, the system should be set up to encourage me to buy a house? That would mean that a highly-educated citizen settles down in the country that paid for his education, and contributes more to the economy by owning a house. Let alone that owning a house will benefit the economy by the time I retire, because my costs will be far lower, leaving me more financially stable and less dependent on government money.

What is most likely for us right now is to see if we can wrangle a semi-decent place to live with what mortgage we could get. However, the large problem we have is that most places in the Netherlands are multi-story, which is difficult for Tracy. With the mortgage we can get, it’ll also be a small house, with most of the ones we’ve seen in our range having tight, narrow stairwells. So, again, we’re almost encouraged to not buy through this emergent property of the system.

I’d be lying if I said it hadn’t gotten us down. Particularly given the amazing house that we’d found for the full mortgage that we can’t get. It was all ground floor. Close to my work yet in a smaller town to suit Tracy’s needs. It had a large garden, allowing us to save on money by growing crops. It pretty much suited us exactly. But unless the owners decide to sell the house for about 75% of its current asking price, or some mysterious distant relative leaves us enough to pay off a huge student debt, the boat’s sailed on that one.

So, for now, we’re scouring housing sites for that diamond in the rough. That tiny little house that’s just at the right distance away from work to be affordable. That little place that has enough promise to have us survive there for at least 7 years, at which point we can sell it for a good house. Or, perhaps that one mystery house, that magic little spot that’s good enough to be this cheap, yet offers enough to make us want to live there.

Either way, tear down capitalism and stomp on its ashes.