Homeowners with a savings mortgage may pay too much interest. Banks often do not change the interest surcharge during an interest rate review. Own Home Association (VEH) warns that homeowners with a savings mortgage may pay too much interest. This is because banks often do not change the interest surcharge when revising the interest rate on savings mortgages.
Banks ignore the savings that homeowners accumulate over the years in their savings mortgage. A combination of savings and interest-only mortgages in particular can be an expensive choice, whereby interest may be paid up to hundreds of euros per year.
What is a savings mortgage?
With a (bank) savings mortgage you borrow money to buy a house. Every month a certain amount is put in a ‘money box’. After 30 years you can pay off your mortgage in one go with the saved money. With a savings mortgage, the homeowner does not gradually repay the mortgage. Instead, money is set aside to repay the mortgage in one go on the end date of the mortgage.
You may suddenly be unable to pay your mortgage, in which case the bank will be forced to sell your house. Because a bank runs the risk of not getting back all the borrowed money, the bank charges a risk premium on top of the mortgage interest. The amount of this risk surcharge depends on your debt and the value of your house.
Savings mortgage benefits
– For mortgages taken out before 1 January 2019, a maximum interest deduction applies during the entire term
– Relatively stable monthly charges
– The certainty that the mortgage can be repaid on the maturity date
– Changes in interest rates have less impact on monthly payments
Disadvantages savings mortgage
– During the term, you are bound to one mortgage lender (disconnecting insurance from the mortgage loan is not possible)
– The interest rate is often slightly higher with this type of mortgage. This is especially disadvantageous in the beginning, because the savings balance you have built up is still low, but you do have to pay interest on the total loan.
Half banks does not look at savings that have already been built up
If you have saved enough money in your savings deposit, the risk premium can be canceled. Now it should be that banks have to deduct this money box from your savings mortgage. After all, the money may not be used for anything other than paying off your mortgage.
Research by the Good Finance Association now shows that no less than half of the banks do not look at the amount that homeowners have saved up in the meantime. You may pay an excessive mortgage interest if you have a savings mortgage.
These are the banks that do and do not charge an interest surcharge
Banks that always charge an interest surcharge to homeowners with a savings mortgage are: ING, SNS, Delta Lloyd, Achmea and Obvion. Banks that do take into account the piggy bank that is being built up and delete or reduce a surcharge when interest rate is revised are: It is true that you often have to ask yourself to lower or scrap the surcharge when interest rates are revised.
It is wise to check with each interest rate adjustment whether the risk premium can be canceled. If the savings mortgage runs longer than ten years, that is almost always the case. As a rule, homeowners with a mortgage with a National Mortgage Guarantee do not pay a risk surcharge.
Savings mortgage? You may pay too much interest
For more information about this difficult subject you can visit various websites, the NHG provides extensive neutral information, there is also a newsletter that you can subscribe to if you want to be kept informed about this subject. Of course you can also request information from your own bank about your specific case.