In the past, one could choose from a range of mortgage loan forms. That is still possible now. Even though the types of mortgage loans from which you can choose are significantly restricted. This is because homeowners – if they want to claim mortgage loan interest deduction – can only choose between an annuity mortgage loan and a linear mortgage loan.
And that’s good too! Because these are two very safe forms of mortgage loan, where you have the security not to be burdened with a residual debt at the end of the mortgage loan term …
Mortgage loan interest deduction rules are rigorously curtailed
Since January 1, 2013, the government has changed the rules regarding the interest deduction on mortgage loans. In order to benefit from the interest deduction, you are in fact obliged to choose between an annuity and linear mortgage loan. With these 2 types of mortgage loan you resolve the debt in its entirety during the term.
All types of mortgage loan types from before 2013 to the present
Despite the fact that starters – who are buying a house for the first time – can now only opt for mortgage loans that have to be redeemed in their entirety during the term, a lot of Dutch people still use an older mortgage loan. An older mortgage loan type is, for example, the interest-only mortgage loan or savings mortgage loan. But there are many more (old) mortgage loan types. With most of them, the homeowners can pay off at the end of the term.
Characteristics and properties of mortgage loan loans
Below we explain briefly what the characteristics are of all types of mortgage loan (mortgage loans are also called ‘mortgage loan loans’) that could be applied for before 1 January 2013. We then inform you about the 2 mortgage loan types for which starters can only choose today: the annuity mortgage loan and the linear mortgage loan. Let’s start with the black sheep of the family: the interest-only mortgage loan.
The interest-only mortgage loan: not paying off causes problems
There has been much to do about the interest-only mortgage loan. Hundreds of thousands of Dutch households still use this form of mortgage loan. In recent years, however, this mortgage loan loan has been banned. Every new mortgage loan must be repaid on a monthly basis.
With interest-only mortgage loans you only pay monthly interest on the mortgage loan amount. You therefore do not pay off the mortgage loan and you can not build up any capital. The debt always remains the same.
If you move house, you pay off the mortgage loan loan. And if you do not move, you are obliged to repay the outstanding debt to the bank at the end of the term. You can do this with money you have saved or you take out a new mortgage loan and thus solve the old one.
The bank savings mortgage loan – in savings form
The bank savings mortgage loan can no longer be requested by starters. Nevertheless, there are still many homeowners who have bought their home with this loan. It is a mortgage loan type where one does not pay off the mortgage loan in parts during the term. As with the interest-only mortgage loan, the total loan amount must be repaid at the end of the term.
This mortgage loan loan form, the bank savings mortgage loan, was very popular in 2008. The mortgage loan was linked to a bank savings account. The final repayment should be possible with the proceeds from the savings account. This form of mortgage loan guaranteed low monthly costs as optimal use could be made (and still continues) of the mortgage loan interest deduction.
With a bank savings mortgage loan you save money. You will receive compensation in the form of interest on the money you save. This compensation is equal to the mortgage loan interest you have to pay to the bank. We will briefly discuss a form that is virtually the same as the bank savings mortgage loan.
Bank savings mortgage loan – in investment form (investment mortgage loan)
A variant of the bank savings mortgage loan is the bank savings mortgage loan but in investment form. In this case there is an investment account instead of a bank savings account linked to the mortgage loan. We also call this mortgage loan form the ‘bank savings mortgage loan’. You thus invest in box 1 tax-free and pay the mortgage loan with the proceeds of your investment. You do this on the end date of the term.
The ‘bank savings mortgage loan investing’ is a risky form of borrowing. After all, you never know for sure what the investment will bring you …! This means that the final capital and therefore the final payment is also uncertain. Incidentally, this mortgage loan loan is also popularly known as the ‘investment mortgage loan’.
The savings mortgage loan
With a savings mortgage loan you pay monthly interest on the loan amount. You always combine the savings mortgage loan with a compulsory life insurance policy. In addition to the interest to be paid, you must also pay the premium for that life insurance every month. You thus save your own capital. With this you are assured of a benefit in the event of (premature) death.
The final capital that you save by paying monthly premium for the life insurance is equal to the total mortgage loan amount. With this form of mortgage loan you are assured that you can always meet the repayment. You pay the mortgage loan amount at the end of the term in one go with the savings you have accrued. Also in case of premature death. You have taken out compulsory life insurance for this.
The life mortgage loan
Even with the mortgage loan you will only pay off the mortgage loan sum at the end of the term. The life mortgage loan is an investment mortgage loan. But unlike investment mortgage loans where it is still the question whether your investments yield something, you usually receive a guaranteed (minimum) benefit with the life mortgage loan.
The profit is shared with other mortgage loan users. A variant of the life mortgage loan is the so-called ‘hybrid mortgage loan’. With this, you opt for savings and investments or you can switch between investing and saving. You are always obliged to take out an insurance (life insurance) with the life mortgage loan.
The credit mortgage loan
The credit mortgage loan is a fairly unknown form of loan that is only very sporadically offered. Credit mortgage loans were granted until 2013. From 2013, this mortgage loan form is only available to homeowners under very strict conditions. This mortgage loan is in fact just a revolving credit.
Your home is therefore considered as collateral. The level of this mortgage loan is highly dependent on the home value and the income of the applicant. No interest deduction applies to the credit mortgage loan. It is in fact a form of consumer credit.
Close an annuities mortgage loan
From 2013 home owners and future homeowners can only choose between 2 types of mortgage loans. That is the annuity mortgage loan and the linear mortgage loan. Do you want to take out a cheap annuity mortgage loan? This is a mortgage loan where you pay off a fixed sum every month. This sum consists of interest and repayment.
Particularly in the first years you pay more interest and you can therefore fully benefit from the mortgage loan interest deduction. As the term progresses, you will pay more money. This mortgage loan has a fixed end date and you pay a fixed amount every month. As a result, the monthly costs remain the same throughout the term.
Request the best linear mortgage loan
The linear loan is requested a little less often than the annuity mortgage loan. And that is actually quite remarkable. Because this type of mortgage loan is cheaper. However, you also pay the same amount monthly with the linear mortgage loan. In the beginning you pay a lot of interest but this decreases as the maturity progresses. However, the repayment component remains the same during the entire term.
Did you know that ….
A mortgage loan not only consists of a loan itself, but often also many other products are added to it? For example, you also take out a term life insurance policy or an investment account with a mortgage loan. The total product is called a mortgage loan.