Maximum mortgage based on income (Loan to Income - LTI)
The maximum debt service is the maximum part of the income that may be spent on mortgage charges. This is calculated on the basis of the consumer's assessed income and the interest rate. The calculation is based on an annuity repayment schedule, regardless of the form of redemption.
- Consumer assessed income: a mortgage provider will, in principle, calculate the assessed income based on fixed and consistent income. For a two-person household, the calculation is made using the highest assessed income plus 80% of the lower assessed income.
- Interest rate: if there is a fixed-interest period of ten or more years, the calculation is made using the quoted debit interest. In the case of a mortgage loan with a fixed-interest period of less than ten years, the calculation is made using a debit interest rate of 5%. The Dutch Authority for the Financial Markets (AFM) sets this percentage on a quarterly basis.
Debt servicing rates
The government sets the maximum debt servicing rates. The criteria are updated annually on the basis of changing income and expenditure patterns of households. Nibud advises the government on the level of these percentages.
The mortgage provider adds other financial liabilities to the rate of debt service or deducts them from the permitted debt servicing limit.