NHG
NHG explained
What is the National Mortgage Guarantee and when are you eligible for it?
4 min read
The National Mortgage Guarantee (NHG) is a safety net for people who can no longer afford their mortgage due to unforeseen circumstances. The guarantee is designed to prevent homeowners from being left with a residual debt if they are forced to sell their property.
How does the NHG guarantee work?
If you can no longer pay your mortgage due to a so-called life event, such as unemployment, disability, death of a partner, relationship breakdown or retirement, you can make a claim on the guarantee from the Stichting Waarborgfonds Eigen Woningen (WEW). If the conditions are met, WEW repays the residual debt to the lender. In some cases a portion of that debt may be recovered from you, but the guarantee prevents a full residual debt from weighing on you for years.
Conditions for NHG
NHG is not automatically available for every mortgage. The property value must be below the NHG threshold. A threshold applies for standard properties and a higher threshold for properties where energy-saving measures are co-financed. Additional conditions apply to the use of the property: NHG is intended for your own home, not for rental. The mortgage may also not exceed the purchase price or property value.
Cost of NHG
NHG is not free. At the time of taking out the mortgage, you pay a one-time guarantee fee, a percentage of the mortgage amount. This amount is typically added to the mortgage or paid from personal funds. In return, most lenders offer a lower interest rate for mortgages with NHG. Depending on the mortgage amount and interest rate, the guarantee fee typically pays for itself over time.
Benefits of NHG in brief
The main benefit of NHG is the safety net in the event of financial setbacks. In addition, NHG yields a lower mortgage interest rate with most lenders. For first-time buyers, NHG is therefore attractive: monthly payments are lower and there is a safety net if life changes unexpectedly.
When is NHG not possible?
If the purchase price or property value exceeds the NHG threshold, NHG is not available. The same applies when purchasing a property for rental or if the mortgage is intended for purposes other than buying, renovating or improving the energy efficiency of your own home. An advisor will assess whether NHG is applicable in your situation.
Disclaimer
This is general information, not personal mortgage advice. The NHG threshold and guarantee fee are set annually and may change. Consult a Wft-certified advisor for information relevant to your situation.