10/04/2018

Switching mortgage providers could save expats in the Netherlands money (even if their mortgage term is not coming to an end yet)

Is your mortgage term coming to an end? If so, you want to read this blog. And, if your mortgage term isn’t coming to an end yet, you might also want to read this blog because you could save money too by switching mortgage providers. Yes, even if your mortgage provider specified in your contract that you have to pay an interest penalty for terminating your contract before your term ends.

What happens when your mortgage term expires

Three months before your mortgage term comes to an end, your mortgage provider will send you an offer to renew your mortgage with them. A study by the Vereniging Eigen Huis (The union of homeowners) shows that more than 90% of homeowners take the offer from their current mortgage provider without considering to switch to another provider. However, the offer your mortgage provider gives you might not be the best deal you can get. In fact, the Vereniging Eigen Huis strongly advises homeowners at least to inform themselves about other options.

They’ve seen that homeowners can profit from an interest rate on a 10-year term that’s 0,3% lower by changing mortgage providers. For a mortgage of €200.000, it means you’re saving €50 gross a month by switching your mortgage provider. For mortgage terms of 20 years, the difference goes up to 0,7%.

Switching mortgage providers could also save you money if your term isn’t coming to an end yet

Even if your mortgage term isn’t coming to an end soon, you might benefit from switching to a different mortgage provider. Your bank will usually give you a penalty for terminating your contract early, but in some cases, the difference in the interest rate can make up for the costs of that penalty. Especially if you got your mortgage before the start of the financial crisis. Interest rates are at an all-time low right now and might be able to make up for the fine your bank will impose on you.

What to find out before switching mortgage providers

Switching to another mortgage provider is obviously only beneficial if your net monthly costs go down. Usually, there are costs involved in changing providers so you need to inform yourself and find out if the decrease in your net monthly costs can compensate for what you have to pay to switch to another provider. When you receive the mortgage renewal offer from your bank, we advise you to do the following:

  1. Check if your mortgage provider has used the correct information. If you’ve redeemed a lot on your mortgage already or if the value of your house has increased a lot, the interest group might have changed which means that you could get a lower interest rate than the bank is offering.

  2. Check the period to which the offer applies. Mortgage providers usually make you an offer for the same mortgage term you already had, even if another term could be more beneficial in your current situation.

  3. Compare the offer your current mortgage provider gives you to the offers of other mortgage providers.

  4. If you find a better deal, ask the potential new mortgage provider to calculate if the costs of switching to them won’t outweigh the benefits.

Some costs that you make to switch to another mortgage provider are tax deductible. The expenses that you can deduct are:

  • Advisory and take out costs

  • Taxation costs

  • Notary costs

  • Cadastral rights for the mortgage contract

  • Fees for the National Mortgage Guarantee

  • Cadastral cancellation costs

  • Interest penalty

If you don't have money lying around to pay for the switch, you can pay for it through your mortgage. You'll need to increase your mortgage for that. If you do, the costs are still tax deductible, but the mortgage interest won’t be deductible on the part of your mortgage that you used to pay for those costs.

Or, you can just let us do the research for you

It’s unclear why the majority of homeowners doesn’t consider to switch mortgage providers. It might have something to do with the perceived hassle you have to go through to make switching possible. The research done by the union of homeowners is obviously concentrated on Dutch homeowners. If they dread researching their options and going through the trouble of switching mortgage providers, how must expats feel? Researching your options is a lot harder for expats since there’s a language barrière for most of them. Most mortgage providers in the Netherlands only provide their website, online calculators, information, and contracts in Dutch. Going through that once is hard enough, and it’s easier to just stay with your current mortgage provider. However, if you happen to be curious about how the offer of your mortgage provider compares to other offers, you shouldn’t let fear stop you.

After all, you have a secret weapon: us.

We can help you by picking out the provider with the best deal for you like we did for our client Nelson Nji:

“I was marveled when the Notary handling the mortgage and transfer deeds exclaimed that the interest rate was the lowest he had seen in the past five years.”

Contact us at +31 (0)23-3030110 or info@inexpatfin.nl for a non-binding appointment where we can discuss your needs and calculate how much money you can save by switching to another mortgage provider.

And don’t worry about having to pay an extra fee for our services. Since we’re licensed to set up mortgages in the Netherlands, you won’t have to pay for any extra advisory fees other than what you would normally pay for taking out a mortgage.

Contact us

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