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Is the problem of interest-only mortgage loans greater than we think?

Many Dutch people have ever taken out an interest-only mortgage loan . They do not have to repay anything during the term. About 15 to 16 years old, many people who have taken out this form of mortgage loan reach the end of the term. Many homeowners have, however, probably been able to build up insufficient capital by that time. Problems arise for those households. Is the problem of interest-only mortgage loans greater than we think?

Prediction of Bank

Bank also anticipates problems and in particular for future pensioners with a mortgage loan interest-only mortgage loan. In 16 years, from 2034, many of these mortgage loans will reach the end of their term. For example, from 2034 – 2038, a mega amount has to be paid off: 340 billion euros. The Dutch Central Bank estimates that the total capital that has been accumulated is far too little to be able to repay the mortgage loans: 120 billion euros. It means that a new financing must be requested for the remainder.

Re-finance

money 2387090 960 720 1 300x200 But it is not that easy, requesting a new financing for a residual debt. of Bank says that people should not think about that as easily. For example, one should be aware that the pension income may be too low to apply for a new financing. The bank is afraid that in the future a large group of retired homeowners with a mortgage loan interest-free mortgage loan will have to sell their property because they will not receive any new financing. And even though the income is sufficient by that time, then one can still have to deal with exorbitantly rising housing costs.

mortgage loan interest relief

These rising costs have an important cause and that is the mortgage loan interest deduction. The Dutch can only benefit from this deduction for 30 years. And since the mortgage loan payments for a interest-only mortgage loan consist solely of interest, the expenses can double when the mortgage loan interest deduction right disappears. In this case, you must assume that the interest rate is higher than at this time.

Interest + mandatory repayment

When the right to interest deduction disappears after 30 years, you as a home owner with a new financing suddenly have to deal with much higher charges. In addition, you also have to repay the new financing on a linear basis (with a linear mortgage loan ) or annuity (with an annuity mortgage loan ). And the older you are by then, the shorter the maximum term of the new mortgage loan will be. This means that you pay a much higher mortgage loan payment per term.