Borrowing money, costs money

Borrowing standards are being tightened. What does that mean to you?

Loan standards further tightened

December 3, 2020

Borrowing money must be responsible. You should not get into financial trouble because your monthly costs are too high due to the loan. That is why lenders use loan names to determine your maximum loan amount. Those standards are now being tightened up. What is changing and does that mean for you?

If you borrow money, you enter into payment obligations for a longer period of time. That is a financial risk, because you cannot spend that monthly amount on anything else. Lenders are therefore only allowed to give you a loan if you have enough left over for living and fixed costs after paying interest and repayment. If you borrow too much, there is over-lending. Over-lending is prohibited in the Netherlands. The Netherlands Authority for the Financial Markets (AFM) ensures that lenders offer protection against over-lending.

Borrowing based on borrowing standards

Lenders may themselves fulfill the legal obligation to prevent over-lending. To determine the maximum amount you can borrow, most use a fixed method with which they determine your income and expenses. These are the so-called loan standards. only works with lenders who use the borrowing standards of the Association of Financing Companies in the Netherlands (VFN) and the Dutch Banking Association (NVB).

New method

Because the AFM discovered some shortcomings in the market, the VFN and the NVB are now tightening up these borrowing standards. The new method provides an even more precise overview of income and expenses, further reducing the risk of over-lending. For example, the actual costs of childcare and the car are also included. A distinction is also made between tenants and home owners. The adjustments were made with the help of Nibud and in consultation with the AFM.

Rules apply from January 1, 2021

The new method will be incorporated into the codes of conduct of VFN and NVB, which will come into effect on 1 April 2021. The affiliated lenders apply these codes of conduct. To reduce the risk of excessive lending earlier, they will use a transitional measure from 1 January 2021 to 1 April 2021. A surcharge will then be added to the outcome of the current method, so that the forthcoming new loan standards are nevertheless approached.

How much can you borrow?

What does the tightening mean for you now? That depends on your financial and personal situation. There is a chance that you can borrow less than before, but you don't have to. Let us find out for which loan amount you are eligible. We consider responsible lending of paramount importance and always check whether you can bear the monthly costs of your loan. Do you want advice and a calculation? Please contact us or request a quote .

Written by:
  • René Koopman
  • Director
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