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Everything about real estate financing

From investment property to buy-to-let mortgage: how is real estate financed, what is the role of LTV and rental income, and what routes are available outside of the bank?

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Everything about real estate financing
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One overview

What is real estate financing?

Real estate financing is a loan for the purchase, refinancing, or development of real estate that is not your own home: a Investment property, commercial building or a portfolioThe assessment differs fundamentally from a home mortgage: not your salary, but the yield of the object is central.

Does this differ from a regular mortgage?
Yes. With real estate financing, rental income, vacancy risk, and property quality weigh more heavily than your personal income.
real estate financing

LTV, DSCR & yield

Two concepts determine a lot. The loan-to-value (LTV) is the ratio between the financing and the value of the property; for investment property, this is generally lower than for a residential mortgage, meaning you require a larger personal contribution. The debt Service coverage ratio (DSCR) indicates whether the rental income sufficiently covers the interest and principal repayment. [Bram: have indicative LTV bandwidths supplied per provider.]

How much personal input do I need?
This follows from the LTV applied by the lender; for investment properties, a personal contribution is almost always required.
What is DSCR?
The ratio between net rental income and financing costs. The higher, the greater the buffer.

Rented property & buy-to-let mortgage

If you buy to rent out, then a buy-to-let mortgage the usual route. At rented real estate takes into account the existing rental income, as well as lease agreements, the condition of the property, and the type of tenant.

Am I allowed to rent out my home just like that?
Not without permission from your lender; a standard mortgage usually does not allow renting out. A buy-to-let mortgage is required for this.
Which insurance goes with this?
For rented real estate, there is a landlord insurance common; for commercial properties a business premises insurance.

Bypassing the bank

Not every application is suitable for every bank. Via Bank-free financing or financing without a bank private investors and specialized providers come into the picture. They are often faster and more flexible, but generally charge a higher rate. For temporary situations, there exists bridging financing.

When is a bank-free route logical?
In the case of non-standard objects, short turnaround times, transformation, or when the bank cannot act within your timeframe.

Structure & special projects

Real estate is often placed in a real estate company, which has implications for liability and taxation. At new construction, transformation and land financing is financed in construction installments, and permits and planning play a major role.

Financing privately or via a BV?
This affects liability, box classification, and taxation. Have this reviewed by your tax advisor or accountant.

Frequently asked questions about real estate financing

What is a buy-to-let mortgage?
Financing for a home that you rent out instead of living in yourself.
How much can I finance?
This follows from the LTV applied by the lender and from the rental income stream (DSCR).
Can I finance without a bank?
Yes, through specialized providers or private investors — usually faster, but at a higher rate.
Am I allowed to rent out my home with a standard mortgage?
Usually not without permission; that is what a buy-to-let mortgage is intended for.
Which insurance applies to rented property?
Typically landlord insurance; for commercial properties, commercial property insurance.
real estate financing

Compare real estate financing via Finass

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Finass Verzekert puts you in contact with specialized providers.

What our customers say about real estate financing

Customers rate Finass Verzekert on average with a 9.5 and the claims handling with a 9.8.

9.5
Customer review
9.8
Claims handling

“Duidelijke uitleg over LTV and wat dat betekent voor mijn eigen inbreng.”

B
Sanne T.
Investment property

“Prettig dat ook verstrekkers buiten de bank in het overzicht stonden.”

F
Sem H.
Bank-free financing

“De uitleg over de buy-to-let mortgage maakte meteen duidelijk wat wel en niet mag.”

D
Laurens D.
buy-to-let mortgage

“Goed overzicht voor wie een pand aankoopt om te verhuren.”

R
Merel L.
rented real estate

More about real estate

View the other sections within real estate.

real estate financing →

Financing investment properties, commercial properties, or leased real estate.

Investment property →

Buying a property to rent out.

commercial building →

Buying your own business premises instead of renting.

buy-to-let mortgage →

A mortgage for a property you rent out.

rented real estate →

Buying or refinancing a property that is already rented out.

Commercieel Property →

Financing offices, shops, and commercial space.

Bank-free financing →

Financing real estate outside of traditional banks.

portfolio →

Financing or refinancing multiple assets together.

new construction →

Financing a new construction project: from land acquisition to completion.

Associated insurances

Financing and insurance go hand in hand. Finass Verzekert is your independent advisor for the insurance policies associated with them.

landlord insurance →

For homes that you rent out rather than live in yourself.

business premises insurance →

Coverage for your commercial property or investment property.

Opstalverzekering →

The basis: damage to the building itself.

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