If you are going to buy a vacation home, one of the first things you think about is: how am I going to pay for it? We list the different options for you!

Mortgage for your vacation home

Few banks fully finance the purchase of a second home. It is often 60 to 80 percent of the value of the house. In addition, you pay a higher interest rate on financing a second home. You also have to consider strict conditions, such as a ban on permanent occupancy or on renting out the house. And if renovations are still needed, remember that you will have to pay for them yourself since the bank will not finance the full home value.

Purchasing a vacation home from the surplus value of your current home

If you already have a home with a substantial surplus value, you can use it to purchase a vacation home. You then use the excess value to take out a mortgage for the second home. In theory, it is allowed to take out the second mortgage with a different mortgage provider than your current one, although in practice it turns out to be virtually impossible. So the second mortgage actually always goes through the same lender. Keep in mind that you cannot deduct the interest on the second mortgage for tax purposes if you finance your second home with the surplus value.

Partially repayable mortgage

The interest on the mortgage for a second home is not tax deductible. In some cases, however, you may take out a partially repayment-free mortgage for a second home. Usually this is 60 to 65 percent of the mortgage. In this way, the monthly costs remain somewhat contained.

Financing a vacation home abroad

Dutch banks are not eager to finance the purchase of a second home abroad, or they only want to finance a limited percentage of the value of the home. If you want to buy a second home abroad, it is better to check the financing options in the country itself first. Because each country has its own rules, conditions and mortgage rates. Inform yourself well in advance so that during your house hunt you will not encounter any surprises.

Home financing with equity

Since banks do not finance the total value of a second home, you will have to rely partly on your own funds. If you pay for your second home entirely with your own funds, you don’t have to take out a mortgage and thus pay no interest. Make sure you always set aside a nest egg to cover possible financial setbacks. So it’s better not to put all your money into your second home.

Financing with a personal loan

Another way to finance a second home is with a personal loan. However, you will pay a higher interest rate than with a mortgage.

Financing a second home from a business

If you own your own company, you can finance your second home from your private limited company. Then you borrow money from your company as a private person, or you can take out a mortgage for the second home through your company. If you are considering this, seek the advice of a financial expert first. After all, buying a second home from a limited company has advantages but there are also disadvantages. Better be well prepared!