Types of mortgage loans

The choice for a mortgage has financial consequences for the next 30 years. The monthly costs depend on the amount you borrow, the interest rate and the type of mortgage. A mortgage advisor helps you to choose the right mortgage. With this information you are well prepared for the interview.

For new mortgages you can only deduct the interest under certain conditions. You must repay the mortgage in 30 years according to at least an annuity scheme. The linear and annuity mortgage are therefore now the most attractive types of mortgage.

Annuity mortgage

  • You pay a fixed monthly amount. This amount consists of interest and repayment.
  • In the beginning of the term you pay a lot of interest and you do not pay much off. Later that is the other way round: you pay little interest and then pay off a lot.
  • At the end of the term you have repaid the entire mortgage.
  • If you use mortgage interest relief, the net costs are initially low. Later the monthly costs increase.

Linear mortgage

  • You pay the same amount every month. For example 1 / 360th part with a duration of 30 years.
  • You pay interest on the remaining debt.
  • The monthly expenses are high at first, but decrease later.
  • At the end of the term you have repaid the mortgage completely.

Older mortgage forms

If you bought a home before 1 January 2013 , it may be that you have taken out another type of mortgage. The interest was at the time also deductible for these mortgages. If you buy a new home and you already had such a mortgage, you can sometimes take part of it into your new mortgage. Discuss the possibilities with your mortgage advisor.

Savings mortgage

  • You pay interest on a monthly basis.
  • You do not solve anything.
  • Instead of redeeming, you save the entire amount during the term to redeem the mortgage.
  • At the end of the term you can certainly repay your mortgage.
  • You save via a life insurance policy or a bank savings account . With a life insurance policy you pay part of the premium for a term life insurance policy. This is not the case with bank savings. You can choose to take out a separate term life insurance policy. The interest you receive is always equal to the mortgage interest. So you do not suffer from interest rate fluctuations.

Investment mortgage

  • In addition to interest, you pay a monthly amount with which you invest.
  • The proceeds at the end of the term are, according to plan, enough to repay your mortgage. However, this depends on the developments on the stock market.
  • An investment mortgage can yield more, but you also have more uncertainty.
  • You invest yourself or through a life insurance policy. You also often pay a premium for a term life insurance policy.

Interest-only mortgage

  • You do not pay anything during the term. You only pay interest, which is deductible.
  • This can only be done for part of the mortgage, or if there is enough surplus value.
  • You take care of building up your own assets so that you can redeem at the end of the term.

Hybrid mortgage

This is a combination of mortgages: part of a savings mortgage, a part of the investment and a part of a redemption

€ 290,000

is on 1 January 2019 the maximum purchase price for a house with a mortgage with NHG

Overvalue and residual debt

Sometimes there is a difference between the value of a home and the remaining mortgage debt. There is then an overvalue or a residual debt.

Overvalue

Suppose you have taken out a mortgage for 200,000 euros. Your home is now worth 250,000. Then there is surplus value. You can then increase your mortgage and get extra money.

This is called a second mortgage. You then have to pay more per month. Also, changing the mortgage costs a lot of money. The interest on the extra mortgage is only deductible if you use the money for the maintenance of your own (first) home. If you use the money for the purchase of a car or boat, the interest is not deductible. You must also repay the additional mortgage at least as an annuity to qualify for mortgage interest deduction.

Residual debt

The inverse of surplus value can also occur. Your mortgage is then higher than the value of the home. As long as you pay the monthly costs, that is no problem. As soon as you want or need to sell the property, you can remain with a residual debt. The proceeds from your home are not enough to pay off the mortgage. Read more about a residual debt on wijzeringeldzaken.nl. Or look at AFM.nl: ‘Problems with payment of your mortgage’ .

Tip: House sold? Any costs of cancellation of the mortgage can be stated in the tax return as deductible costs. When deleting the mortgage, the right of security is removed from the land register.

Convenient e-book

When purchasing your first home, you enter into a long-term financial obligation. Good preparation for what is affordable helps to make a good choice. The e-book ‘Affordable mortgage’ helps you with this.