Can I finance a garden home with a mortgage?
Usually yes, but not as a separate mortgage on the garden home itself. The usual route is to increase the mortgage on your own house, with its surplus value as collateral. Bear in mind that the interest is often not tax-deductible, because for tax purposes the garden home is not your own home.
Usually yes, but rarely in the way people imagine. You will hardly find a separate mortgage on the garden home (mantelzorgwoning) itself anywhere: for a lender, a movable building on someone else's plot is not collateral. The usual route is to increase the mortgage on your own house, with the surplus value (overwaarde, the market value minus the outstanding mortgage) of that house as collateral.
Bear in mind that in most cases the interest is not tax-deductible. That surprises people, and it makes enough of a difference to look into it beforehand rather than when you file your tax return.
Five routes
| Route | Who borrows | What to look out for |
|---|---|---|
| Increasing your own mortgage | The owner of the plot | Surplus value, income test, interest usually not deductible |
| From the resident's savings or surplus value | The person who will live there | Arrange a right of superficies, otherwise it is a gift |
| Municipal loan | The owner of the plot | Only in participating municipalities, with their own conditions |
| Loan within the family | Parent to child, or the other way round | In writing, at a commercial interest rate, carried out every year |
| Renting instead of buying | Nobody | Monthly cost, no purchase and no question of residual value |
Why the interest is usually not deductible
Interest is only deductible if the loan is an owner-occupied home loan (eigenwoningschuld), and that term is narrow: it concerns the home that you yourself live in as your main residence. A home in the garden where your father or mother lives is, for tax purposes, generally not your own home. The loan is then an ordinary debt and the interest is not deductible; the home also counts as an asset in box 3 (the tax on savings and investments).
There is some room in the question of how self-contained the home is, and that is exactly where it gets tricky: a garden home is by definition self-contained, with its own front door, kitchen and bathroom. Have your adviser and your lender give a ruling on this before you sign, and have it put on paper. The wider tax side is covered in are the costs tax-deductible.
What the lender wants to know
- How much surplus value there is. The market value of your house minus the outstanding mortgage determines the room you have.
- Whether your income can carry the higher cost, with the usual assessment. With AOW income (the Dutch state pension), that is often the limiting factor.
- What the home does to the value of your plot. A valuer looks at this; do not assume the investment will come back one for one in the valuation.
- Whether the structure is movable or immovable property. A home that is permanently attached to the ground belongs to your plot and therefore to the collateral. A movable home that remains movable property does not count towards it.
What it costs per month
An example to give you a sense of scale, with the caveat that interest rates differ per lender and per month. If you borrow €80,000 at 4.5 per cent, repaid as an annuity over twenty years, the monthly cost comes to roughly €506. Over ten years instead of twenty, that becomes about €829 per month, because you repay twice as fast.
Compare that with the rental price. Renting from us starts at around €1,100 per month, where you repay nothing but also do not own a home. So the comparison works out in favour of buying once the care period lasts long enough, and that is exactly what you do not know in advance. What buying one costs is explained in what a garden home costs.
What not to forget to include in the financing
The item most often left out of the application is not the home but everything that goes with it. The foundation and utility connections are a separate budget that is only finalised after the site visit, and their cost rises directly with the distance to your meter cupboard.
So do not ask for the amount of the home but for the amount of the whole project, and include a margin. If you borrow exactly enough for the home, you will still run short of money for the groundwork in the final weeks, and increasing a loan then means going through the whole process again.
Also think about the annual costs that come on top: the WOZ value (the municipal property valuation) of your plot may rise, and with it the tax assessment, and there are energy and maintenance costs as well. What that means is explained on the page about the WOZ value.
If the resident pays
Often the money is with the person who will live there: savings, or the proceeds of the house they sold. That is the simplest financing there is, and at the same time the route with the biggest pitfall.
A structure that is permanently attached to the ground becomes the property of the owner of the land. If your mother pays for the home while it stands on your plot, you become the owner, through accession (natrekking), of something she paid for. For tax purposes that can be a gift, and when an inheritance is divided it causes resentment.
The solution is a right of superficies (recht van opstal) set up at the notary: with it, the home remains the property of the person who pays for it. That is one deed and it prevents both problems. See inheritance tax and garden homes.
The municipal loans
Many municipalities are affiliated with the Stimuleringsfonds Volkshuisvesting (the national housing incentive fund) and offer loans for living at home for longer. The Blijverslening is intended for making a home suitable for later life; the Verzilverlening is for people with surplus value but too little income for a regular loan, where the interest is added to the debt and only settled when the house is sold.
Whether a garden home qualifies is decided by your municipality in its own bylaw. If you run up against the income test with AOW income, this is the first route to ask about. More on this in are there subsidies.
The loan within the family
Children who advance the money for a parent, or the other way round: it happens often, and it goes wrong as soon as it stays verbal. Put an agreement in place stating the amount, the term, the interest and what happens on death or on sale of the home.
With a loan from parent to child, pay attention to the tax side. If an amount is owed or gifted on paper, six per cent interest must actually be paid every year; if that does not happen, the amount still counts for inheritance tax on death. An agreement that ends up in a drawer is therefore not enough.
What to bring to the meeting
- The result of the permit check for your address, so it is clear that the plan is possible.
- An itemised quote: home, foundation, utility connections and care facilities listed separately.
- The floor plan with dimensions, which you can download from us as a PDF.
- Your latest WOZ assessment notice and the outstanding mortgage debt.
- The question of whether the interest is deductible, in black and white.
Start with the permit check. A financing meeting about a home that is not allowed on your plot is wasted effort, and conversely, the conversation is a lot easier with a concrete plan on the table.
Sources
- [Act] Wet inkomstenbelasting 2001 — art. 3.111 (own home), art. 3.119a (owner-occupied home loan) and box 3 — accessed 2026-08-20
- [Act] Burgerlijk Wetboek Boek 5 — art. 5:20 (accession) and title 8 (right of superficies) — accessed 2026-08-20
- [Explanation] Stimuleringsfonds Volkshuisvesting — Blijverslening and Verzilverlening — accessed 2026-08-20
- [Supervisor] Autoriteit Financiële Markten — standards for responsible lending — accessed 2026-08-20
