How a bank guarantee works when buying a home in the Netherlands

If you buy a home in the Netherlands, you need to pay a 10% deposit (waarborgsom) when you sign the purchase agreement. If you do not have this money in savings, you can ask our mortagage advisor to arrange a bank guarantee.

This article is written by Luc, our mortgage advisor at OHAO and it gives you insight into what a bank guarantee is, why you might need one, how it works, what it costs, and what you can expect when buying a home in the Netherlands.

What is a bank guarantee?

A bank guarantee means the bank promises to pay the seller the 10% deposit if you, as the buyer, cannot meet your obligations.

Instead of sending your own money to the notary, the bank guarantees the payment for you.

For example

• You buy a house for €350,000.

• Deposit required: 10% = €35,000.

If you do not want to or cannot transfer €35,000 yourself from yoru savings, you can get a bank guarantee.

Why do homebuyers need a bank guarantee?

After you sign the purchase agreement:

• You get a 3-day cooling-off period during which you can cancel for any reason.

• After those 3 days, the seller wants certainty that you will continue with the purchase.

For this reason, to provide more certainty during the waiting period until your mortgage is approved, you must provide a 10% deposit—either by paying it yourself or by using a bank guarantee.

The deposit protects the seller in case:

• You cannot secure a mortgage.

• You cancelled the purchase without valid resolutive conditions.

• You fail to meet your obligations.

A bank guarantee is just another way to cover the deposit if you do not want to pay it yourself.

How does a bank guarantee work?

• You apply for the guarantee through your mortgage advisor.

• The bank checks your financial situation (related to mortgage eligibility).

• After approval, the bank sends a guarantee letter directly to the notary.

• The notary treats this as if you paid the deposit yourself.

• The guarantee stays valid until you complete the purchase.

If the purchase goes ahead smoothly:

• The guarantee ends automatically at the notary when you close on the home.

If the sale falls through:

• The seller may claim the 10% deposit.

• The bank pays the seller, and you repay the bank. The bank's interest rate is typically 1% of the deposit amount.

For example

• House price: €350,000

• Deposit required: €35,000

• Fee for a bank guarantee (1%): €350

Some lenders charge more or less, and some offer discounted rates through mortgage brokers.

Important to know:

• The fee cannot be included in your mortgage.

• You must pay it yourself.

When do you get the deposit back?

If you pay the deposit yourself:

• The notary will return it to you at the final transfer date, or

• You can choose to use it toward the urchase price.

If you use a bank guarantee:

• No money needs to be returned because you did not pay anything up front.

What if the purchase falls through?

If the sale is cancelled with valid resolutive conditions (for example, you cannot secure financing before the agreed deadline):

• You owe nothing

• The guarantee is cancelled.

If the sale is cancelled without valid conditions:

• The seller may claim the 10% deposit.

• The bank pays the seller.

• You must repay the bank the full amount, possibly as a loan with interest.

When is a bank guarantee mandatory?

You need a bank guarantee when:

• The purchase agreement requires a 10% deposit, and

• You do not have enough savings to transfer this deposit to the notary.

If you have enough savings, you can transfer the deposit yourself. This is usually the cheapest option.

A bank guarantee is a practical solution for homebuyers who want flexibility or who do not have the full 10% deposit available. It provides the seller with security while allowing you to move forward without using a large part of your savings.

At OHAO, our mortgage advisors arrange the entire bank guarantee process for you as part of our service, so everything is handled smoothly and on time.