Do you want to lower your mortgage interest rate but also retain the benefits of the interest-only mortgage? These are the options for relay-free redemption.
Homeowners with a current mortgage can also take advantage of the current low mortgage interest rates. By taking over the existing mortgage, the interest and conditions of a mortgage can be redefined.
Proceed as follows to transfer the mortgage:
- You take out a new mortgage, with which you pay off the old one in one go.
- You pay penalty interest for breaking the mortgage contract. You also incur costs for taking out a new mortgage.
- If the interest benefit outweighs the costs, you will benefit from a lower mortgage interest rate and better conditions.
Rules for rescheduling interest-only mortgage
In the Netherlands, 1.1 million homeowners have a mortgage that is not repaid or only partially repaid. This results in low monthly payments, while optimally taking advantage of the mortgage interest deduction. Homeowners would like to retain these benefits of an interest-only mortgage.
Those who want to refinance an interest-only mortgage cannot always take it unchanged. These homeowners must consider the following:
- For repayment-free transfer, the old situation must be adopted, also known as ‘pure transfer’.
- In addition, you may not borrow more interest than the current mortgage. If you want to increase the mortgage, you have to pay off.
- Continuing the 100% repayment-free mortgage is no longer possible. With most lenders and under ABC, a maximum of 50% of the home asset may be interest-only.
- A repayment-free mortgage of up to 80% is possible with a number of lenders. Make a mortgage comparison for the best offer.
- The transitional law applies to an interest-only mortgage prior to 2013; the mortgage deduction is retained if the mortgage is transferred.
- The new mortgage sum must match current mortgage standards.
Starting to pay off has advantages
When transferring, you often give up part of your interest-only mortgage. The (partial) repayment of the mortgage also has advantages:
- The risk of payment problems in the long term, for example as a result of an interest rate rise or a fall in income, is becoming smaller.
- By repaying you prevent an interest surcharge and your mortgage interest is therefore lower.
- You increase your choice of lenders. The price fighters in particular do not always offer an interest-only mortgage.
Repayment-free mortgage transfer advantageously?
In short: whether your repayment-free mortgage is beneficial depends on a number of factors:
- Does the interest benefit outweigh the costs?
- What consequences does repaying have on your monthly payment?
- Are you running a risk with your current interest-only mortgage?