Become a repayment obligation too! With this call, banks want to make customers aware of the risks with an interest-only mortgage. Does this campaign make sense?
Are you a relay bee?
Redemption obligation; You may have already heard this term, otherwise you will definitely hear about it this fall. The Banking Association has started an awareness campaign about the interest-only mortgage.
Homeowners who know for certain that their interest-only mortgage after the term is affordable are ‘repayment obligations’.
Your interest-only mortgage at the end of the term
With an interest-only mortgage, there is a residual debt at the end of the term (often after 30 years). Not everyone realizes that an interest-only mortgage must also be repaid after the term.
You can of course sell the property and thus pay off the remaining mortgage. Homeowners who want to continue living in the home have to refinance the remaining debt.
Risk of payment problems
Those who do not take precautions run the risk of payment problems with the new mortgage, namely:
- The mortgage interest deduction expires after 30 years. Your gross monthly charge becomes net.
- Notwithstanding a high surplus value, the new mortgage will be tested on your future income. The (lower) income after retirement is already taken into account 10 years before the state pension age.
- With an extension you are completely dependent on the bank’s offer. A higher interest rate or repayment obligation has a direct impact on affordability.
Build in more security
If you want to build in more security for the interest-only mortgage, you can easily do this by paying off or saving during the term. The earlier you start this, the lower the impact of your disposable income. This also requires some discipline.
You can also choose to convert the mortgage (in part) into a form in which structural repayments are made. An additional advantage is that the interest surcharge for interest-only interest is canceled. Calculate here whether this is beneficial for you.
Do you want to redeem or are you happy with redemption?
1 million households in the Netherlands have interest-only mortgages. Of these, 27,000 have since gained new insight, according to figures from the NVB. Homeowners do not seem to worry about their interest-only mortgage.
This is partly justified. According to Nemorto Bank, only 200,000 households form a risk group. They cannot sufficiently anticipate their interest-only mortgage. For most homeowners, therefore, ‘happy with interest-only interest’ applies, in particular because of the low monthly charge.
Are you sure you’re in the right place? Have your interest-only mortgage checked without obligation.