Are you planning to buy a home in Curaçao? Our blog articles are intended to help you get started, and we would also be happy to answer your questions.
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Buying a home is an important decision and will probably be the largest purchase of your life. Naturally, you want to be well prepared.
Should you buy or rent in Curaçao?
Many people would like to buy a home, but homeownership is not possible for everyone. Your income may be too low, you may be older, or you may have a costly auto loan. There may also be other reasons why renting is the better choice, so consider your situation carefully. Many people live on the island temporarily and move abroad after spending a few years in Curaçao—most commonly to the Netherlands. This does not apply only to European Dutch residents; many people born in Curaçao also do not remain there throughout their lives. How long do you expect to live in Curaçao? Renting out your home is certainly possible, but make sure you have a reliable real estate agent and handyman looking after your interests. For an additional fee, an agent can also help manage your property.
Costs beyond the mortgage
You may have calculated how much you would pay in mortgage interest and principal. The difference between the mortgage payment and rent is often not very large. Mortgage payments also build ownership, and once the loan has been repaid, you no longer have a mortgage payment. However, homeowners have expenses beyond the mortgage. Most buyers are also required by the bank to obtain term life insurance. If you die during the policy term, this insurance repays all or part of the mortgage loan to the bank.
Did you know that buying a home involves additional expenses known as buyer’s closing costs? Read our article: buyer’s closing costs in Curaçao.
Owners of real estate, including houses, apartments, and lots, must also pay property tax (OZB). The rate starts at 0.4% of the property’s value and increases progressively to 0.6%. If your home is on leasehold or rented land, you must also pay rent or a ground lease fee. Read our article about OZB: property tax (OZB).
If you rent out your home as an individual, you also pay income tax. If you rent it to a business or for a term of less than one year, turnover tax (OB) also applies. To learn more about taxes on rental property, read this article: Paying Tax When Renting Out Real Estate in Curaçao.
It is wise to insure your home properly. Without insurance, you could be left with nothing if the house burns down or is damaged by a natural disaster, while still having to pay to clear away the debris.
Home maintenance
As a tenant, you are responsible for minor, routine repairs to items that were in good condition at the beginning of the lease. Examples include fixing a dripping faucet, applying WD-40 to keep a lock working smoothly, or painting interior walls. These routine repairs are generally inexpensive. As a homeowner, you are also responsible for larger repairs and major maintenance. The roof may begin to leak, a showerhead may need replacement, or the entire kitchen may eventually need to be replaced. You may even discover that your home is being damaged by komehein, also known as white ants or termites.
Benefits of owning a home
Of course, homeownership also offers many benefits, including these three:
Would you like to improve your home with a new kitchen or bathroom? Improvements to a home you own can increase its value. You decide how long you want to remain there, and when you are ready for something different, you can rent out or sell the property.
Each monthly mortgage payment helps you build equity. As you repay the loan, you will eventually—often after 30 years—no longer owe principal or interest. Once the home is debt-free, your monthly expenses will be much lower. If you sell the property, the sale proceeds are yours.
Depending on the interest rate, the mortgage payment remains relatively stable, although the rate can rise or fall. Unfortunately, in Curaçao you cannot lock in an interest rate for 30 years. Rent, on the other hand, generally increases over time and may be adjusted for inflation. Homeowners do not face those rent increases.
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