National Mortgage Guarantee (Nhg) for Home Improvement

Home improvement

If you have plans to improve your home, you must meet certain requirements to qualify for National Mortgage Guarantee. The Waarborgfonds Eigen Woningen, responsible for the implementation of the NHG, understands quality improvement: 'The taking of provisions in connection with the restoration of overdue maintenance, improvement and / or expansion of the home, whereby the facilities, so to speak, become part of the home. 

Examples are :

• a new kitchen or bathroom
• construction of a dormer or construction
• insulation materials
• (parts of a) heating installation
• (3-) double glass
• sun blinds and shutters on the outside of the house
• construction of a child-friendly garden
• purchase of a piece of land, garage or parking space near the house

You can opt for an additional loan or a new loan, with which you also pay off the existing mortgage. You must take out the additional loan with your current mortgage provider. When you opt for a new loan (with which you pay off the existing one), the remaining debt of the existing mortgage may not exceed the private sales value before the improvement.

NHG conditions

• In 2018 you pay a one-off and tax deductible (bail) commission of 1% for NHG.
• With a new loan you pay commission on the total mortgage sum. A new mortgage may not exceed € 265,000 (with energy-saving provisions € 280,900).
• With an additional loan you only pay commission on the additional part, provided that there is already a mortgage guarantee. If this is not the case, you pay the commission on the remaining debt of the existing mortgage and the additional loan. The remaining debt of the old mortgage and the costs for the home improvement may not exceed € 247,450.
• The renovation or improvement of quality must always be apparent from an appraisal report, in which the market value of the dwelling is included before and after refurbishment. In addition, the required costs must be recorded in the valuation report, in an architectural report or in an own specification. The own specification consists of an enumeration of the work plus an overview of the estimated costs.

The advantage is that this arrangement is not related to the value of the home. Nor does a maximum apply to the free market value of the home. However, the free-market value of the home may not be lower than the remaining debt of the current mortgage.

The Waarborgfonds does not set any conditions for the minimum size of the home improvement. This means that by carrying out a small home improvement to a more expensive home you can also get a mortgage guarantee for the entire mortgage. The replacement of a door handle is in principle sufficient for this.

The other standards such as the financing burden percentage (which determines what part of your income can be spent on mortgage payments) and test income (the income with which banks calculate your maximum mortgage) do not differ from those of the mortgage guarantee when you buy a house.

Remit the residual debt

From 1 January 2014, homeowners can co-finance their residual debt in a new mortgage with NHG when selling their home (subject to conditions). The Cabinet wants to give the housing market such a boost. Previously, homeowners with a residual debt could not take out a new mortgage under the favorable NHG conditions.

The new regulation only applies to residual debts that arose on the sale of a house that was financed with NHG. The costs of the new home and the residual debt must also remain below the NHG limit. If the residual debt exceeds € 245,000, mortgage lenders may co-finance it outside the NHG.