Buying a new house in the Netherlands is an exciting step! However, many expats face a common financial puzzle: what if you purchase your new dream home before you have officially sold your current property? This creates a temporary funding gap. Fortunately, the Dutch system offers an excellent solution: the bridge loan (or Overbruggingshypotheek).

This specialized, temporary loan allows you to access the equity (overwaarde) from your current home immediately. Consequently, you can use that capital toward the purchase of your new house, even if the sale hasn’t been finalized. Understanding how this financial tool works is absolutely crucial for smooth house transitions.

What Exactly is a Bridge Loan (Overbruggingshypotheek)?

In simple terms, a bridge loan is a short-term, interest-only loan. Its core purpose is to bridge the financial period between the purchase of your new property and the definitive sale (and receipt of funds) from your old property.

When you sell your existing home, the sale price often exceeds the remaining mortgage debt. This difference is your equity or ‘overwaarde’. If you need this capital for your new purchase, but the closing date for your old home is later than the closing date for your new one, the funds are simply not available yet. This is where the bridge loan steps in.

Key features to remember:

• Temporary: It is not a 30-year mortgage. It is usually short-term, often with a maximum duration of 6 to 24 months.
• Interest-Only (Aflossingsvrij): During the loan period, you only pay monthly interest. You do not make principal repayments.
• Repayment: You repay the entire principal amount in one go when your old home’s sale is completed and the equity is released.

How Does the Bridge Loan Mechanism Work?

The mechanics of a bridge loan are straightforward, yet they involve accepting a period of double mortgage burden.

1. Assessing Equity: Your lender calculates the available equity on your current home. This is the expected sales price minus the outstanding mortgage debt and minus estimated sales costs.
2. Lending the Equity: The bank temporarily lends you this equity amount (or a percentage of it, as discussed below).
3. Funding the New Home: You use the bridge loan, alongside your new main mortgage, to fund the purchase of your new property.
4. Double Costs: For the duration of the bridge period, you pay the mortgage costs on your old home, the mortgage costs on your new home, and the interest on the bridge loan itself.
5. Repayment: Once your old home sells and the funds transfer, the bridge loan is immediately repaid using that equity.

This efficient process ensures you can meet the financial obligations of the new purchase without waiting for the slow wheels of property transfer to turn.

Calculating Your Maximum Bridge Loan Amount

The amount you can borrow through a bridge loan largely depends on whether your current home has already been sold on paper. This is a crucial distinction that impacts the lender’s risk assessment.

Scenario 1: Home is Already Sold (Contract Signed)

If you have a signed sales agreement and the legal cooling-off and voidable conditions (ontbindende voorwaarden) have passed, the bank considers this a low-risk situation.

In this favorable scenario, lenders typically offer you up to 95% or 100% of the expected net overvalue.

Example Calculation:

• Sale Price Old Home: €400,000
• Outstanding Mortgage: €275,000
• Expected Overvalue: €125,000
• Maximum Bridge Loan (100%): €125,000

Scenario 2: Home is Not Yet Sold

If your current home is still on the market, the lender faces higher uncertainty about the final sale price and the timeline. Therefore, they impose a safety margin.

In this case, you estimated market value takes a safety margin of around 10% before calculating the bridge loan (based on a formal valuation report).

Example Calculation (Using a 10% Safety Margin):

• Estimated Market Value: €400,000
• Outstanding Mortgage: €275,000
• Safety Margin (10% of value): €40,000
• Maximum Bridge Loan: €400,000 – €40,000 – €275,000 = €85,000

As you can clearly see, selling your home before finalizing the bridge loan can significantly increase the capital immediately available to you.

Understanding the Conditions and Costs

Before committing to a bridge loan, you must understand the financial commitments and conditions.

The Condition of Double Burden

Since you will temporarily hold three financial obligations—your old mortgage, your new mortgage, and the bridge loan interest—lenders must ensure you can handle this dubbele lasten (double burden).

You must demonstrate sufficient income or substantial savings to cover these combined costs, often for a period of at least one year. Financial stability is absolutely paramount for approval.

Interest and Tax Deductions

The interest rate for a bridge loan is frequently slightly higher than standard mortgage rates because of the inherent, albeit short-term, risk involved. Furthermore, some lenders offer a variable rate, so be aware that your monthly costs could fluctuate if the market rate changes.

Good news for expats: Under the Dutch fiscal ‘verhuisregeling’ (relocation rule), the interest paid on your bridge loan is tax-deductible. This temporary tax arrangement allows you to deduct the interest payments for both your old and new homes, typically for up to three years after the initial purchase or listing date. This can substantially offset the temporary increase in your monthly expenses.

Associated Fees and Obligations

A bridge loan is usually an ancillary product. Therefore, you generally must take out your new main mortgage with the same provider that grants the bridge loan.

You should also budget for various one-time costs:

Cost Type	Estimated Range	Note
Bank Setup Fees (Afsluitkosten)	€200 – €500	Administrative charges by the lender.
Notary Fees (Notariskosten)	€600 – €1,000	For drafting and registering the hypotheek deed.
Appraisal Fees (Taxatiekosten)	€95 – €800	Required to value your current home, especially if it hasn’t sold.

What Happens When the Loan Ends?

The bridge loan is designed for a single purpose: to be repaid the moment your old home’s sale closes. The notarial process ensures that the first priority for the sale proceeds is the repayment of the bridge loan and the outstanding old mortgage.

A note on the Bijleenregeling (Additional Lending Rule): If you still have surplus equity remaining after paying off the bridge loan, it is fiscally advantageous to immediately invest this remaining overvalue into your new property. The Bijleenregeling states that if you don’t reinvest all available equity, you lose the right to tax deductions on the portion of your new mortgage that theoretically could have been covered by that leftover equity.

Alternatives to the Bridge Loan

While a bridge loan is the most common and robust solution, other options exist, particularly if you have strong personal connections:

• Family or Friend Loan: If relatives or close friends can temporarily lend you the required capital, this can be an effective, flexible alternative. You negotiate the terms, interest rate, and repayment schedule privately. However, ensure the interest rate is “at arm’s length” (realistic and commercial) to maintain tax deductibility and avoid issues with the tax authorities. All agreements should be thoroughly documented in a formal loan contract.

In Conclusion: Making Informed Decisions

The bridge loan (Overbruggingshypotheek) is a valuable, albeit complex, tool for expats buying property in the fast-paced Dutch market. It enables flexibility and speed, ensuring you don’t miss out on a new home simply because your old one hasn’t officially transferred yet.

Understanding the conditions—especially the requirement for managing the temporary double burden and the tax implications—is key. Given the intricacy of calculating the maximum loan amount and managing the financial timing, seeking expert advice is highly recommended. Working with a specialized mortgage advisor ensures you select the best provider and structure for your unique situation.