4 ms·

I'm happy for you to have embarked on the journey of owning your home, but 0% downpayments and what sounds like an increasingly heating up market (people overbi

I'm happy for you to have embarked on the journey of owning your home, but 0% downpayments and what sounds like an increasingly heating up market (people overbidding the asking price) should be a sign to be careful. Make sure to keep the 15-20% cash that is usual for downpayments in a liquid form in case there is a downturn. The people worst hit by real estate crises are those who take advantage of these "easy" ownership offers and then neglect to keep a cash buffer in case their mortgage goes into negative equity.

eecc 8y ago
It’s typical for the Dutch market to overbid (as well as ridiculously.) it is the land of the Tulip Craze after all ;)
vonmoltke 8y ago
Negative equity is only relevant when one needs to sell the property.
- refurb 8y ago
  Like when the economy crashes and you lose your job. It’s amazing to me that only 11 years ago the world say one of the worst housing crashes in a century, yet people think “it’s different this time” and keep pouring money into an already overheated asset. It’s going to be interesting!
  - jypepin 8y ago
    I agree with you but it depends on the market I guess. Europe doesn't have a housing/mortgage that is as volatile and "extreme capitalist" as the US. Much more regulations around banking here.
    - refurb 8y ago
      Maybe you mean not any more? If I remember correctly, Ireland housing got absolutely hammered in a way that was at least as bad as the worst areas of the US (Miami, Las Vegas) back in 2008.
- short_sells_poo 8y ago
  That's untrue and bad advice. The reality is that it depends (from country and bank), but often banks will have a margin call clause in the contract. In my experience they almost always have such a clause to cover their own ass. They'll not use it for relatively self contained cases, but when the shit hits the fan and there's a 2008 style downturn, they will, because they want to protect their balance sheets. This clause will then hit you at the worst possible time, when the economic situation is just bad everywhere and you'll be expected to prop up your mortgage, only you can't if you have no cash and nobody will lend you because you are in negative equity.
  - jypepin 8y ago
    not in europe afaik
    - tathougies 8y ago
      If banks in your country do not have the ability to make margin calls while simultaneously making 0% down loans, you should probably think twice about putting your money there, because the moment they go belly up, your savings will be gone. Or, if your gov't guarantees savings, then expect massive inflation.
- refurb 8y ago
  Or if you need/want to refinance.
gpvos 8y ago
0% downpayment has been normal in the Netherlands for decades.
mcv 8y ago
Downturns in the Amsterdam housing market are incredibly rare. My wife and I bought my first (her second) house in 2008, and a month after we bought it, the news said that for the first time in ages, housing prices in Amsterdam were dropping. Despite that, we never had any trouble. Even during the crisis, house prices didn't drop much, they just spent more time on the market. We had been careful enough to make sure that in a pinch, my wife would have been able to pay the mortgage on her own (my income would have been too small for that), but even if we would have had to sell our house, I doubt we'd have lost a crippling amount on it (and the house we'd have bought instead would probably have been cheaper too). After the crisis, things quickly recovered and we sold out house with €100k profit in 2017. (Of course our new house was more expensive too.) The main risk he have, is that part of our mortgage is not automatically getting paid off. So even after our mortgage runs out, we'll still have some debt left unless we pay extra. These mortgages are now illegal: all mortgages need to paid off in a predictable manner, to ensure houses don't go too far under water even when the market goes down. We have always overbid (but never too much) for the houses we bought, and when we sold, buyers also always overbid. It's how the market works here, I guess.

eecc 8y ago

It’s typical for the Dutch market to overbid (as well as ridiculously.) it is the land of the Tulip Craze after all ;)

vonmoltke 8y ago

Negative equity is only relevant when one needs to sell the property.

refurb 8y ago
Like when the economy crashes and you lose your job. It’s amazing to me that only 11 years ago the world say one of the worst housing crashes in a century, yet people think “it’s different this time” and keep pouring money into an already overheated asset. It’s going to be interesting!
- jypepin 8y ago
  I agree with you but it depends on the market I guess. Europe doesn't have a housing/mortgage that is as volatile and "extreme capitalist" as the US. Much more regulations around banking here.
  - refurb 8y ago
    Maybe you mean not any more? If I remember correctly, Ireland housing got absolutely hammered in a way that was at least as bad as the worst areas of the US (Miami, Las Vegas) back in 2008.
short_sells_poo 8y ago
That's untrue and bad advice. The reality is that it depends (from country and bank), but often banks will have a margin call clause in the contract. In my experience they almost always have such a clause to cover their own ass. They'll not use it for relatively self contained cases, but when the shit hits the fan and there's a 2008 style downturn, they will, because they want to protect their balance sheets. This clause will then hit you at the worst possible time, when the economic situation is just bad everywhere and you'll be expected to prop up your mortgage, only you can't if you have no cash and nobody will lend you because you are in negative equity.
- jypepin 8y ago
  not in europe afaik
  - tathougies 8y ago
    If banks in your country do not have the ability to make margin calls while simultaneously making 0% down loans, you should probably think twice about putting your money there, because the moment they go belly up, your savings will be gone. Or, if your gov't guarantees savings, then expect massive inflation.
refurb 8y ago
Or if you need/want to refinance.

gpvos 8y ago

0% downpayment has been normal in the Netherlands for decades.

mcv 8y ago

Downturns in the Amsterdam housing market are incredibly rare. My wife and I bought my first (her second) house in 2008, and a month after we bought it, the news said that for the first time in ages, housing prices in Amsterdam were dropping. Despite that, we never had any trouble. Even during the crisis, house prices didn't drop much, they just spent more time on the market. We had been careful enough to make sure that in a pinch, my wife would have been able to pay the mortgage on her own (my income would have been too small for that), but even if we would have had to sell our house, I doubt we'd have lost a crippling amount on it (and the house we'd have bought instead would probably have been cheaper too). After the crisis, things quickly recovered and we sold out house with €100k profit in 2017. (Of course our new house was more expensive too.) The main risk he have, is that part of our mortgage is not automatically getting paid off. So even after our mortgage runs out, we'll still have some debt left unless we pay extra. These mortgages are now illegal: all mortgages need to paid off in a predictable manner, to ensure houses don't go too far under water even when the market goes down. We have always overbid (but never too much) for the houses we bought, and when we sold, buyers also always overbid. It's how the market works here, I guess.