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Paying a Down Payment for Your Home Purchase? Hypotheek.winkel Shares 4 Golden Tips

A down payment is a gesture of trust from both sides. As a buyer, you don’t lose your money if your dream house turns out to be built on an old landfill. As a seller, you get compensation for your time and effort if the buyers’ eyes were bigger than their wallet and the sale falls through. But how does it work and how much does it cost? Below, we offer four golden tips, absolutely free.

Strict rules only apply to new construction. If you buy a house off-plan, you’re essentially buying a piece of air. That’s why the down payment can’t be too large; it’s legally capped at 5%. For all other sales, there are no laws or fixed percentages, although nowadays, it’s almost standard to pay 10%. Be wary if the seller asks for more, as it’s unnecessary and you don’t even have the keys yet.

Tip 1: Go Through the Notary

Never pay the down payment in cash; that’s a mafia practice that’s been legally banned since 2014. But also don’t transfer it directly to the seller. As a buyer, you can never be 100% sure if someone has debts or other issues. If that trickster takes off to the Balearic Islands, you’ll never see that money again.

Pay the down payment through the notary. They have a separate account for it (a third-party account), which neither you nor the seller can access. The money is parked there until the deed is executed. The amount, the payment time, the account from which the money is transferred, and the account to which it is deposited are all clearly stated in the sales agreement.

If you’re buying from a real estate agent rather than a private individual, they will often suggest depositing it in their third-party account. That’s also safe. A real estate agent is a professional and won’t disappear overnight. Even if they go bankrupt, your down payment is protected because that third-party account isn’t part of their assets.

Tip 2: Prefer a Guarantee Over a Down Payment

Sometimes the notary refers to a guarantee instead of a down payment. The two concepts are similar but not the same. A guarantee is not considered a payment in legal terms. Unlike a down payment, it’s not part of the price. In other words, until the deed is executed, it remains your money. If a dispute arises and turns into a legal matter, you might be better off with a guarantee than a down payment. It only matters if things go wrong, but it doesn’t cost anything to use a different word in the sales agreement.

Tip 3: Don’t Trip Over Your Own Feet!

You’re head over heels for a property, you see twenty other interested couples in line, and you just want to win. This can lead to quickly signing a sales agreement. The down payment is often required within a few days. Be careful with this.

You’re buying a house, not a new pair of shoes. If you don’t have a loan yet and don’t know your exact financial limits, you could stumble badly. If you can’t fulfill your commitment as a buyer, you lose that down payment. Gone. And 10% is not insignificant on a house worth a few hundred thousand euros…

Tip 4: Pay Everything at the End of the Process

A down payment can be a serious headache. You want that house so badly, but suddenly you have to come up with a large sum in just a few days. Sometimes you simply don’t have that money, for instance, if you need to sell your previous house first. From June 2023, there’s a solution: the Guarantee. An insurance company steps in for you, and there’s no financial transaction at all. You pay everything when the deed is executed. Bye-bye, stress. Learn more about how it works here.

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