Do you also dream away at the idea of your own holiday home?Somewhere nice in the sun, where the waves gently lapping or perhaps in a green forest with only the sounds of nature around you. It seems like a dream, but a dream that it could be within reach. By making smart use of the surplus value on your current home?

Why your excess value could be the key

In a market where house prices are rising, the surplus value of your home often grows too. Surplus value occurs when the value of your home exceeds the remaining debt on your mortgage. And guess what? You can use that excess value to finance a holiday home!

How can you buy a holiday home with the excess value?

Suppose your home in the Netherlands has become worth more since you bought it. By taking out a second mortgage or increasing your current mortgage, you can liquidate some of that excess value. You can then use this amount as financing for your new home.

But how do you go about this? You first talk to your mortgage advisor or bank. Research carefully what the financial implications are. After all, there are conditions attached to borrowing against the excess value of your house, and it is wise to know in advance where you stand.

Taking advantage of your surplus value

Equity investment:
When you use the excess value of your home, the equity you invest in the holiday home is higher. This can benefit mortgage terms.

Possible source of income:
Do you rent out the holiday home when you are not using it yourself? If so, this can generate additional income.

Enjoying two homes:
A place under the sun, a house in the snow or still a holiday home in the Netherlands. By using your surplus value, you can enjoy a holiday home and your own home in the Netherlands.

Beware of the Pitfalls

More debt:
Taking the excess value also means increasing your debt. This can affect your financial situation and options in the future. When you increase your mortgage, you enter into long-term obligations with a bank. Amounts you have to pay monthly. In addition, increasing your mortgage may also bring a restriction at the time when you want to move out of your first home.

Tax implications:
Holiday homes and the taxman are good friends. This means that certain tax rules apply that can work to your disadvantage. Be well informed about the tax implications of buying a holiday home on your situation.

Market risks:
Real estate markets can fluctuate, even abroad. So know what you are investing in and what risks are involved. Especially if you are assuming a return when buying the holiday home. Returns can fluctuate and, unfortunately, the past is no guarantee for the future.

Estimate value of your current home:
See what the current house value is. You could look at the current WOZ value of your property. Searching Funda for comparable properties can also give an indication.

Seek advice:
Talk to a financial adviser to explore all options. Make sure you have a complete overview of your financial picture. Your assets, debts and a clear overview of your income.

Determine Financial Space:
Determine how much of the excess value you need to buy the holiday home. Also, get figured out how much money you could borrow with. This amount often depends entirely on your income. Possible returns are not taken into account by banks in this calculation.

Looking for your holiday home:
Now you know what your budget is, time to start the search for your second home. In your search, set clear goals and requirements. Do you want to rent out the property? What is the maximum budget you want to spend? Do you want a holiday home in the Netherlands or abroad?

Especially if you choose to rent out the holiday home, it is important to research the location well.

Financing a holiday home with excess value, think about the future

Remember that buying a holiday home is not just about finances. It is a long-term decision that is also about your lifestyle and future plans. Do you see yourself staying abroad for long periods of time? Do you want to get actively involved in renting out a holiday home? Do you enjoy going on holiday to the same place from time to time? Do you have enough financial room for unexpected expenses and maintenance?

Especially when you buy a holiday home with an eye on returns, it is important to take a good look at your financial situation. Can you bear the costs of the holiday home even if there is no rental income? Think carefully about this so that sooner or later you don’t run into financial problems.

Be well informed

Buying a holiday home with the surplus value of your first home can be a wonderful step towards realising your dream. However, it is important to always be well informed about the financial aspects and what this decision means for your personal life.

A visit to Second Home Expo can be a good first step in this regard. In addition to a wide range of holiday homes, there are always financial experts present who are happy to look and think along with you about what is the best option for you.

With the right planning and preparation, the surplus value of your home can take you not only to a new holiday home, but also to a new phase in your life that feels like a permanent holiday! Are you ready to take the hurdle and invest in your own place under the sun?

Adventure awaits… What are you waiting for?

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Note: The above advice is generalist and may vary from individual to individual, always check with a financial adviser before making any financial decisions.