Mortgage loan calculation (2024)

Are you wondering what home you can buy? What part of your budget goes toward the purchase of your home? What part will go toward additional costs (such as registration fees)? This article will tell you.

Disclaimer: This article is based on a March 2024 calculation. The amounts below have been adjusted to make the calculation simple.

Step 1: What is your total net income?

Calculating your mortgage loan starts with calculating your total net income. This includes:

Your net income per month
Your additional net benefits
- Meal vouchers
- Eco vouchers
- Bonus
- …
Your partner’s net income per month
His/her additional net benefits

Fictitious example:

Partner’s income: 2,400 euros + 100 euros bonus = 2,500 euros

Income from you: 2,350 + 150 euros meal vouchers = 2,500 euros

Then the total income is: 5,000 euros.

Step 2: Do you have current credit?

Indicate whether you have current credit and the amount of that credit. In this case, we assume you don’t have it, because in a lot of cases then you won’t get a mortgage loan.

Do you have current credit? If so, contact your bank or credit broker.

Example:

Neither has current credit.

Step 3: How much do you want to pay off per month?

Most banks allow you to a maximum of 40% of your total net income per month to pay off your mortgage. This is a fairly high proportion of your income.

Suppose your partner or you fall ill for a long time or are laid off from work due to impotence (for example, due to a new Corona outbreak). Then half of your income simply falls away.

Therefore, it is ideal to 33% (or less) of your net income as repayment for your house or apartment.

Example:

33% of 5,000 euros is: 1,650 euros.

Ideally, you will repay 1,650 euros monthly.

Step 4: How much can I borrow?

Simulate how much you can borrow with the monthly repayment you just calculated.

Tip: In March 2024, one takes into account an interest rate of 3.5%.

Determine your term

Choose the total term of your mortgage loan. For young individuals, 25 years is recommended, while for older people it often slides more toward 20 years. The longer you borrow, the more you can borrow. But the longer you borrow, the more it will also cost you.

Use a simulation tool like the one on savingsguide.com and do the following:

Choose formula: fixed interest rate.
Select annual interest rate: 3.5%.
Choose term: 25 years.
Set the amount around 300,000 euros.
On the right, see how much your monthly repayment is according to the simulation. Adjust the amount in the tool and recalculate it so you get as close as possible to (but below) your monthly repayment amount.

Then use the same method, but calculate this for a 20-year term.

Then decide what amount is sufficient to borrow a home with.

Example:

In the simulation, your monthly repayment is now at 1,493 euros, while 1,650 euros also feels comfortable for you. Increase the amount on the left column until you get as close as possible to 1,650 euros.

Then you end up with this:

For a term of 25 years, you can borrow an amount of 330,000 euros at 3.5% interest. In this case, you will repay 1,642.35 euros monthly.

Do the same for a 20-year term.

For a term of 20 years, you can borrow an amount of 285,000 euros at 3.5% interest. In this case, you will repay 1,644.85 euros monthly.

In this case, choose between these two amounts: what will you get by with? Does it feel doable?

Step 5: How much savings do you have?

See how much savings you have. Can you possibly borrow or get an amount from your parents or family? This obviously increases your budget.

Or just how much do you want to use as a buffer for contingencies and expenses? Or for furniture and the move itself? This you keep off your budget.

Calculate your investment budget this way.

Example:

The total savings of you and your partner is 100,000 euros.

Your parents put away an amount of 30,000 euros for you and give it to you so that you can buy your first home.

But you definitely want to leave 20,000 euros as a buffer that covers unforeseen expenses.

And ideally also 10,000 euros for furniture you will buy after purchase.

Then you calculate: 100,000 + 30,000 – 20,000 – 10,000 = 100,000 euros

In this case, your investment budget is: 100,000 euros.

Step 6: What is your total budget?

Do the sum. Add your loan amount to your investment budget.

Normally you then have 2 situations:

Situation 1: Loan amount for a 25-year term + investment budget.
Situation 2: Loan amount for a 20-year term + investment budget.

Example:

Situation 1: 330,000 + 100,000 = 430,000 euros.

With a 25-year mortgage loan at 3.5% interest, you have a total budget of 430,000 euros.

Situation 2: 285,000 + 100,000 = 385,000 euros.

With a 20-year mortgage loan at 3.5% interest, you have a total budget of 385,000 euros.

Step 7: How much should the property cost?

The final step of calculating your mortgage loan is one in which you face reality. Buying a home costs money. In this step, you calculate this extra cost.

In our article All costs when buying a house or apartment you will find an overview of all costs. Below is the simplified calculation (with estimated costs for March 2024):

Registration fee: 3% for a first home (in which someone has lived for at least 2 years) or 12% for a new home.
VAT: 21% for a new home.
Purchase deed: about 4,800 euros.
Credit deed: about 6,500 euros.
File costs: about 350 euros.
Estimation cost (not always): about 250 euros.

Estimation costs are not always applicable, but include them in a simulation for safety.

Example:

Situation 1: 430,000 euros.

Additional cost: 4,800 + 6,500 + 350 + 250 = 11,900 euros.

Acquisition cost: 405,000 euros

Registration fees (3%): 12,150 euros

With a 25-year mortgage loan at 3.5% interest, you need a total of 429,050 euros (= 11,900 + 405,000 + 12,150).

With which you can buy a property with purchase price 405,000 euros.

Situation 2: 385,000 euros.

Additional cost: 4,800 + 6,500 + 350 + 250 = 11,900 euros.

Acquisition cost: 360,000 euros

Registration fees (3%): 10,800 euros