December 13th, 2018 | reading time: 3 minutes
Arjan Klein Kromhof
K-RMT Certified broker and appraiser in Real Estate
Sunbelt Realty Bonaire
The time has finally come, the National Mortgage Guarantee (in Dutch; ‘Nationale Hypotheek Garantie’, and after this NMG) is introduced on Bonaire, and that is welcome news! This NMG makes it possible for young families and first-time buyers to buy a home without the need of an unconscionable large amount of savings. A big change for our island, and finally a possibility for a lot of people to buy a home on Bonaire.
At present local bank will only finance up to 70/80% of the value of a home, the so called ‘Loan to Value’. The remainder has to be paid by buyer, and on top of that the buyers costs of approximately 7% plus the mortgage closing fee for the bank. A lot of people don’t have this kind of money to spend, and have to save up for a long time.
Saving money on island can be a harsh thing. The rental market is under pressure, a high demand makes that rental prices are high, therefore less money to save per month. On top of that, the current mortgages have a limit on age. The duration of a mortgage is limited to the age of 65. So if savings takes a long time, age is making it eventually even harder to conclude a mortgage.
To break through the above situation and stimulate the real estate market and economy at the same time, the NMG is now introduced on Bonaire by the Dutch government. This NMG creates a situation in which the loan to value can go up to 100%. This means that a buyer only has to cover the buyers costs and closing fee for the bank. Also, the duration of the mortgage is set to a thirty year total, and is ignoring the age factor.
To qualify for a NMG type of mortgage, there are some rules and stipulations to follow. For example, the buyer needs to be permanently employed, and the mortgage can only be for the use of purchasing or building a home. Also, the property needs to be insured with an insurance that covers hurricane damage, and the maximum purchase sum can be USD 225,000.-.
A NMG type of mortgage comes with its costs. Yearly a premium of 1%, calculated over the mortgage amount, is due. This is the same premium as used in the Netherlands. For the year of 2019 this premium is expected to drop to 0.9%.
Have you lived abroad in the past, or in the Netherlands? Not a problem, one can still apply for a NMG. If you have lived in the Netherlands in the past, please be aware that the BKR (Stichting Bureau Krediet Registratie) will be checked for present records.
Unfortunately not all banks can participate. To qualify as a bank, it needs to be under full supervision of the Dutch Banking Association, and this results in only 1 bank being qualified at this point. This bank is the Maduro & Curiels bank (MCB). Of course we hope that in the future more banks can qualify.
Don’t wait too long to apply for a NMG. In the first trial period of 5 years, only 70 NMG’s per year will be issued. Curious about what homes will be suited for a NMG type of mortgage? Contact us and we will gladly help you select your NMG piece of paradise.
Call our office on +5997176560 or send an e-mail to firstname.lastname@example.org