Family Mortgage: Borrow from Parents or Family | Libero Financieel
- Lower monthly costs through a market-rate interest within the family
- Interest tax-deductible if you follow the rules
- Can be combined with a regular bank mortgage
The housing market is expensive. Banks finance a maximum of 100% of the property value, and you pay the additional costs out of pocket. For many first-time buyers, support from parents or other family members is the only way to purchase a home. A family mortgage makes that possible: you borrow money from a family member, documented as a proper mortgage with interest and repayment.
We arrange the family mortgage for you, from determining the right interest rate to handling the tax agreements. So it works well for you and for your family.
What is a family mortgage?
A family mortgage is a loan from a family member, usually your parents — that you use to buy or finance a home. You agree on interest and repayment terms just like with a bank, but with more room and flexibility.
The word "mortgage" can be confusing here. A family mortgage can be set up with a formal mortgage right, registered through a notary with the property as collateral, or without one, as a private loan with a written contract only. If you want to claim mortgage interest deduction, you must always document the loan in writing and meet a number of tax conditions.
A family mortgage is often combined with a regular bank mortgage. The bank finances the largest share, and your parents cover the remainder. This way you can purchase a home that would otherwise just be out of reach.
What are the benefits of a family mortgage?
A family mortgage has advantages for both the buyer and the family member providing the loan.
For you as the buyer
- Lower interest rate. Family members often charge slightly less than a bank, reducing your monthly costs.
- Interest deduction. The interest you pay is tax-deductible, just like a regular mortgage, as long as you meet the requirements.
- More borrowing capacity. If you combine the loan with an annual gift, you can borrow more in total towards your home.
- Flexible terms. You can negotiate the duration, repayment schedule, and interest rate yourself.
For your parents as the lender
- Better return. The interest you pay is often higher than savings rates, making it more attractive for their assets.
- Smart wealth transfer. Through the family mortgage, parents can help their child while receiving a return.
- Gift cycle possible. Parents may return the received interest as a tax-free gift up to the annual exemption. In 2026, that is a maximum of €6,908 per year.
What are the tax rules?
The Dutch Tax Authority treats a family mortgage the same as a regular mortgage — but only if you follow the rules correctly. If you don't, the interest deduction may be denied, or a below-market interest rate may be treated as a taxable gift.
The key conditions for mortgage interest deduction:
- The loan must be documented in writing in an agreement stating the amount, interest rate, term, and repayment schedule.
- The interest rate must be market-rate, comparable to what banks charge for a similar loan. An interest rate that is too low will be treated by the Tax Authority as a disguised gift.
- The loan must be repaid within 30 years, just like an annuity or linear mortgage.
- You must report the loan to the Tax Authority via your tax return.
Not sure whether your situation meets these conditions? We will go through it with you and make sure everything is in order.
How to arrange a family mortgage in 4 steps
- Agree on the amount and interest rate together
Discuss with your parents or other family members how much they can and want to lend. The interest rate must be market-rate. We help you determine the right rate based on current mortgage rates, so the Tax Authority has no grounds to question it. - Put everything in writing
A family mortgage without a written contract is fiscally worthless. Together with you, we draw up a solid loan agreement with all required elements: amount, interest rate, term, repayment schedule, and any collateral. - Combine with a bank mortgage if needed
Is the bank financing part and your parents the rest? We handle the coordination with the bank. The bank receives first mortgage right, your parents second. We make sure both loans align properly. - Report the loan correctly to the Tax Authority
Both you and your parents must report the loan in your tax returns. We explain exactly how that works and what documentation you need to keep as proof.
Family mortgage and the gift cycle
A popular structure with the family mortgage is the so-called gift cycle. Here is how it works: you pay interest to your parents, and they return part of that interest to you as a tax-free gift. On balance, you pay little or no net interest, while still being able to claim the full mortgage interest deduction.
In 2026, parents may give a maximum of € 6,908 per year tax-free. Family members other than parents may return up to €2,769 per year tax-free. The gift and the interest payment must always be made separately and never offset against each other, to remain fiscally correct.
The gift cycle is a smart structure, but requires care. We make sure everything is properly documented and that the Tax Authority has no grounds for objection.
Frequently asked questions about the family mortgage
What is a family mortgage?
A family mortgage is a loan from a family member, usually parents, that you use to buy or finance a home. You document the terms in writing with an interest rate, term, and repayment schedule, just like with a bank. If you meet the tax conditions, the interest is deductible from your income.
What is the difference between a family mortgage and a generation mortgage?
The terms are used interchangeably. A generation mortgage refers to the same structure: a loan where an older generation (parents or grandparents) lends money to a younger generation to buy a home. There is no official legal distinction. The tax rules are the same for both.
Does a family mortgage need to be registered with a notary?
That is not required. A private loan agreement is sufficient for the tax deduction. If you want to use the property as collateral for the loan (mortgage right), a notary is required. We always recommend documenting the terms properly in writing, even when a notary is not mandatory.
How high should the interest rate be for a family mortgage?
The interest rate must be market-rate, comparable to what banks charge for a loan with the same term and collateral. If the rate is too low, the Tax Authority will treat the difference as a gift, which may result in gift tax. We help you determine the correct rate based on current market rates.
Can I combine a family mortgage with a bank mortgage?
Yes, and this is actually the most common setup. The bank finances the largest share, often up to 80 to 90% of the property value — and your parents cover the remainder. The bank receives first mortgage right, your parents second. The bank must agree to this arrangement. We handle the coordination.
What is the gift cycle in a family mortgage?
With the gift cycle, you pay interest to your parents, and they return part of that interest to you as a tax-free gift, within the annual gift exemption. In 2026, that is a maximum of €6,908 per year for parents. On balance, you pay little or no net interest, while retaining the full mortgage interest deduction. The payment and the gift must always be made separately.
Is the interest on a family mortgage tax-deductible?
Yes, provided you meet the conditions: the loan is documented in writing, the interest rate is market-rate, and the loan is repaid within 30 years. You report the loan in your tax return. The Tax Authority then treats the family mortgage the same as a regular mortgage.
Want to know if a family mortgage suits your situation?
A family mortgage can be a smart solution, but it requires the right agreements. We look at your situation together, explain the tax rules in plain language, and make sure everything is in order. Online or at our office in Enschede.