What to look out for when taking out a mortgage? With these 10 mortgage tips you can avoid high costs or too much risk with a mortgage. Make sure you don't fall into these pitfalls when comparing mortgages.
Tip 1: Surplus value pays off
The higher the equity in your home, the less risk the bank runs. The banks have adjusted their interest rate policy accordingly. In our extensive mortgage comparison you can check which risk category you are in and what the cheapest interest rate is in your situation (per lender). So it can be particularly interesting, if you have your own resources, to use them for a mortgage reduction. Get proper information and advice.
Tip 2: Don't compare on the basis of mortgage interest alone
A mortgage consists of two components: an interest component and a repayment component. A low mortgage interest rate is no guarantee for the lowest monthly costs.Several factors are important here, such as the term of the mortgage and the associated conditions. What is the best way to compare mortgages?? Request a free mortgage comparison, in which these components are discussed in detail.
Tip 3: Choose a low interest rate for a short fixed-rate period
Mortgage providers advertise spectacular discounts on mortgage rates. That low interest rate is then valid for a limited period, which can be disappointing when the interest rate needs to be fixed again. The monthly costs can go up, so you will have to wait and see what interest rate you will be offered by then. Either you accept the new interest rate or you switch to another mortgage provider.
There are of course costs involved in refinancing your mortgage. So if you choose this option, calculate your benefit in the longer term, including any additional costs (switching costs).
Tip 4: Or consider a long fixed-interest period
Again, you need to calculate the savings over the entire period. Keep in mind that mortgage interest rates can rise significantly when your fixed-rate period expires. If interest rates remain the same, your monthly costs will still increase because of the loss of the interest rate discount.
With the historically low mortgage rates, it can be particularly interesting to secure a mortgage for a longer period now. You can fix the interest rate for a longer period with certainty. If you have plans to move, a shorter fixed-interest period may still be interesting.
Tip 5: Take out death risk insurance or not?
If you choose a mortgage that includes life insurance, the provider may give an extra discount for this. You save on the mortgage interest. It is important to be well insured in case of an unexpected death, but this is not always the best option. Get proper advice so that you do not run any unnecessary risks and determine whether this interest rate reduction is interesting for you.
Tip 6: Use your own funds
Equity can be used in various ways, for example by reducing the mortgage amount or to cover the cost of taking out a mortgage from your own resources. This is how you can influence your monthly costs. To make a correct comparison, it is wise to choose a mortgage on the basis of the bare product, i.e. before bringing in your own funds.
When you refinance your mortgage, you usually have to pay a penalty. You can pay this from your own resources, which is most advantageous. If there is no equity, this penalty can be included in the new financing. You will then borrow more, but the interest on the mortgage portion to finance the penalty is not tax deductible. Again: get proper information on whether or not a mortgage refinance is interesting and how you can best finance the costs.
Tip 7: Finance your renovation
Increasing the mortgage can be particularly interesting at this time to realize your renovation plans. If there is room to increase your mortgage based on the value of the home, this can now be done at favorable interest rates. If you are unable to do this you can consider a tax-efficient loan of this amount.
Financing by means of a consumer credit can be interesting when the amount is under € 25.000,- is. With a loan there are no financing costs to be incurred. For this, a personal loan is the most suitable and under certain conditions the interest is tax deductible.
Tip 8: A mortgage with NHG-conditions?
When taking out a new mortgage, it is also possible (under certain conditions) to finance the mortgage under NHG-conditions. This applies to mortgages up to an amount of € 265.000,-. For this you pay a one-time deposit of 1% of the purchase price, but for this you often receive an extra interest discount from the mortgage lender. You also have the guarantee that in case of unforeseen circumstances the guarantee fund will stand guarantor. When refinancing your mortgage, it is also possible to finance under NHG. Be well informed.
Tip 9: Compare the various maturities
When you need a mortgage, you usually ask for several quotations. When comparing, make sure that each offer has the same duration. The monthly costs differ quite a lot if you calculate with a term of 20, 25 or 30 years. No need to compare apples and oranges.
Tip 10: Independent advice
There is currently a lot to choose from in terms of mortgage lenders, conditions, interest rates and advisors. You can do a lot of preparatory work yourself via financial comparison sites, but get good advice on what is ultimately the best choice in your personal situation.