Apply for a mortgage – Which mortgages are there?

16 Aug

Apply for a mortgage

Apply for a mortgage

When will you apply for a mortgage? As soon as you want to buy a house, it is wise to immediately apply for a mortgage here. Almost no one can redeem a house at once and, in addition, this would not be smart to do. Applying for a mortgage is a loan from the bank to finance your home. You often repay a certain amount to the bank each month. There is interest on this amount of money to compensate the bank for the amount of money that you can borrow from the bank. Of course there is also the possibility to invest your money. This is done in the form of a mortgage.

Although there are many advantages to applying for a mortgage, there are of course disadvantages. The advantages and disadvantages of this type of loan vary per type of mortgage. There are therefore a lot of mortgage types for the repayment of your house. These types of mortgage differ from each other in terms and conditions and constructions. There are four basic mortgage types that are used most to date. Read the mortgage types below carefully so that you can see which mortgage is best for you.

Debts deducted when applying for a mortgage

Debts deducted when applying for a mortgage

Do you want to apply for a mortgage? Then keep in mind that any other loans that you have may have a major impact on this. A mortgage lender will check the financial scope for you and will possibly issue a quote based on this. It is important that you have sufficient income at your disposal, but it is just as important to first repay other current loans in full.

Check at the BKR

Check at the BKR

When applying for a mortgage, a check will in any case be carried out at the BKR in Tiel. This is the body that keeps track of the debts of all Dutch people, from a personal loan to a revolving credit and from a credit card to the option to be red on your checking account. Are you well aware of the (possible) debts that have been registered for you? Deferred payments without an interest obligation also form part of the debts and loans, which means there is a good chance that you too will be affected. More information: BKR mortgage

Debt against limit amount

Debt against limit amount

In addition, keep in mind that a lender will always weigh any debts against the full limit amount. For example, did you take out a revolving credit and still have to repay € 1,500? If you have ever taken out the credit with a limit of € 5,000, that is the amount that the bank will hold, which means that you must first repay the full amount to get rid of this. This is due to the fact that within a revolving credit facility you have the option of re-using previously repaid amounts.

Repay the debt by applying for a mortgage

Repay the debt by applying for a mortgage

Therefore, make sure you first repay your debts before you apply for a mortgage loan. Do you want to buy a home earlier? Then check whether you have sufficient financial room. This means that you must be able to pay the mortgage loan from the income that you have left when you have deducted the costs for the other (possible) loans from this. Keep in mind that the bank will nevertheless look critically at possible other loans and, for example, your reliability in terms of repaying and paying interest. You can find more information about this subject on our website.

Apply for a mortgage – Classic type of mortgage

Apply for a mortgage - Classic type of mortgage

The so-called classic mortgages are the linear mortgages and the Annuity mortgages. These mortgages can be characterized by various points. This way there is always a fixed end date. In addition, the repayment occurs during the term. Unfortunately, these mortgages are less favorable for tax purposes and there is no return on repayment. However, you do have a lot of certainty with regard to the types of mortgages since you agree in advance how much you will pay off each month.

Apply for a mortgage: Annuity mortgage

Monthly charges will remain the same during the term of the annuity mortgage. The same amount must therefore be paid every month. The composition is different per month. For example, more interest has to be paid at the start of the mortgage loan than can be repaid at the bank. As you go through the years, the interest you pay becomes less and you can start paying more for the repayment of your house.

Apply for a mortgage: Linear mortgage

Just like with the Annuity Mortgage, a fixed monthly amount must be repaid. Also with this mortgage you will pay more in interest at the start than you can actually pay off for your house. Over the years you will pay less and less interest as the loan on your mortgage shrinks. You will then also be able to pay more money for the repayment of your house. One of the disadvantages of this mortgage application is that it is less favorable for tax purposes.

As mentioned earlier, both loans are not exactly favorable, but do offer security. Since these loans are not deductible, and therefore fall within Box 3, these loans are still taken out even though this has decreased in recent years.

Apply for a mortgage: Savings mortgage

Another form is the savings mortgage. The principle of this loan form is that the loan does not have to be fully repaid. At the end of the term you are therefore left with a residual debt. To apply for this mortgage loan, a contract is concluded so that you know exactly what residual debt you are with at the end of the term of your mortgage loan. This residual debt can be repaid with your savings, but can also be repaid by taking out a life insurance policy.

A major disadvantage of applying for this mortgage is the risk of death. If you die, the residual debt of your mortgage loan is for your surviving dependents. It is therefore smart to immediately repay as much of your debt as possible as soon as you are financially strong. The monthly costs of this type of loan mainly consist of mortgage interest and premium. This premium is partially reimbursed by means of an interest, the other part is used for life insurance. The interest rate that you receive on your savings premium is mainly the same as the mortgage interest that you pay. If you have a low mortgage interest, you will also receive a low interest on your savings premium. If your mortgage interest rate is high, you will automatically receive more interest on your savings premium. The advantage of this mortgage credit is that your monthly payments do not fluctuate too much, which can be very beneficial for your living situation.

Apply for a mortgage: Life mortgage

Just as with the savings mortgage, you will be left with a residual debt at the end of the term of your mortgage. A life mortgage saves money for the repayment of your house. This money is saved through the investment that is made for you. At the end of the term of this loan, you do not always have the guarantee of a high payment since an investment can sometimes go wrong. However, you can be sure that you have repaid 60 to 70 percent of your debt at the end of the term of the mortgage loan. This amount may of course come to be higher, but this depends on the return achieved on the investment. 

Mortgage pros and cons

Mortgage pros and cons

A variant of the life mortgage is the modern life mortgage. An advantage of this mortgage is that it is fairly flexible. The capital insurance policy that you take out with the mortgage loan can be adjusted according to circumstances. A capital insurance policy is a form of a life insurance policy whereby the insurer pays a certain insured amount to the insured person on the agreed date. With this type of mortgage, a certain monthly premium must be paid for the term life insurance coverage and your capital build-up. Amount that you pay monthly on these two can vary.

Beyond that, the amount of the death cover depends on your age and the capital that you must have saved before you die. The higher the capital you have saved, the less insurance premium is required. As the term of this mortgage comes into view, you should also insure less since you have built up a capital. This means that part of the premium can be invested to build up an even larger capital.

Apply for a mortgage: Investment mortgage

Another mortgage type is the investment mortgage. You put in an amount each month that is invested for you in the hope of achieving a high return. The freedom you have with this mortgage really appeals to people. However, you must think carefully before you take out an investment mortgage. Investing can be very risky and cause problems with a low return. With this mortgage loan you use an investment account, so other than the life or capital insurance that you take out with a life mortgage. So no premium has to be paid to the insurer. The monthly costs of the mortgage credit mainly consist of mortgage interest and investment money. With a high return on this investment money, the mortgage interest can often already be paid.

A disadvantage of a high return is the high risk that you run. With a high return, risk must often be taken with investing. So there is a chance that you can repay less money in certain months than in other months.

Apply for a mortgage: interest-only mortgage

When applying for an interest-only mortgage, you do not have to pay interest. Your monthly charges will therefore be low. Please note that the value of your house is sufficient to be able to repay the mortgage loan. If you cannot repay your house within 30 years, there is a chance that you will lose your mortgage interest deduction. Your monthly expenses can then rise considerably after these 30 years.

Applying for the pros and cons of a mortgage

Applying for the pros and cons of a mortgage

When purchasing your new house, it is smart to take a good look at the advantages and disadvantages associated with the type of mortgage that you take out with your partner for each mortgage loan. The living situation of every family is different and can therefore be perfectly matched to the mortgage that you take out. A bank adviser, or even better, an independent adviser can help you with that. They not only look at your monthly payments and your income, but they also look carefully at whether you might run into problems at the end of the term of your mortgage. If this proves to be the case, other types of mortgages are often looked at further or the problem can be solved.

Request a mortgage: the quote

Request a mortgage: the quote

If you do not have an interest in a consultant, you can apply for a mortgage. Normally it is smart to request this immediately after purchasing your home. This is possible at various independent websites where you can compare exactly which mortgage credit and mortgage provider suits you best. Of course you also have the option to request a mortgage quote from the bank with which you are affiliated. You can see exactly what advantages and disadvantages the mortgages of these banks have to offer and how much it will cost you in terms of any interest.

Applying for a mortgage afterwards is not that simple at all. Look in advance very carefully which type of mortgage suits you best and which bank you can best take out. After all, you are stuck with this mortgage all your life and can cause trouble if everything does not go completely according to plan.