Applying for a mortgage: this is what you need

Do you have your eye on a house? A mortgage loan can make the purchase possible. Whether and how much you can borrow depends primarily on your income and the property’s market value.

Sufficient income

Your income determines the maximum amount you can borrow. The lender wants to be sure that you have enough income to pay the monthly mortgage costs. Your income must also considered to be stable, as you’ll need to pay the mortgage for a long time. A permanent contract with an employer is seen as stable, as is income from a successful business. And with a temporary employment contract, there are also plenty of options. Jobs with strong demand in the labor market are also considered.

If you have a variable income, such as working on a commission basis or receiving substantial yearly bonuses, you can often also consider these components.

The property: collateral for the mortgage

For a home mortgage, the house serves as collateral for the loan. This gives the lender security. If you’re unable to pay the mortgage, the lender can eventually sell the property to recover the loan amount. Therefore, the lender wants detailed information about the property’s condition and value. You also need to clarify how you intend to use the property. For example, not all lenders finance properties for running a bed & breakfast.

An independent appraiser evaluates the property’s value and prepares a detailed appraisal report.

Factors in the appraisal report

The appraiser considers the following aspects when determining the value of the property:

• Type of property: The kind of home affects its value. For instance, an apartment is generally easier to sell than a houseboat, which impacts its market value. The building materials also play a role.
• Structural condition: Is the property well-maintained, or is there deferred maintenance?
• Volume and surface area: The size and volume of the property are important factors.
• Energy performance: The energy efficiency of the property provides insight into expected energy consumption. More energy-efficient homes typically have a higher value. If the property is not energy-efficient, you may be able to borrow extra for energy-saving measures.
• Zoning plans: Local and regional government’s plans to widen a road near the house can influence the property’s value.

Property value in the appraisal report

Together, these factors determine the property’s market value. As the buyer, you commission the appraisal and cover the costs. The good news is that appraisal costs are tax-deductible.

Documents for your mortgage application

To get approval for your mortgage application, you must submit documents so the lender can verify your income, debts, and the property. If the requested mortgage fits within the lender’s acceptance criteria and you can borrow enough, the lender will issue a binding offer.

Would you like to know which documents to gather to prepare for your mortgage application? Fill out our contact form and schedule an appointment with a Viisi advisor. After an initial consultation, our advisors can tell you precisely what documents are required and how much you can borrow. This consultation is free of charge and ensures you’re fully prepared to apply for your mortgage.