How to get a better interest rate on your mortgage
A&H Finance, a prize-winning independent mortgage broker in Amsterdam, explains how you may be able to get a better interest rate on your mortgage.
If you bought a house in the Netherlands several years ago, you can probably make a lot of profit on it by selling it right now. The market values have risen extremely in the past years. In Amsterdam, the value of properties increased by 23% in 2016 and again by 13,5% in 2017. This market rise can help you to get a better interest rate on your mortgage.
The loan-to-value ratio
In general, the higher the loan to value, the higher the risk for the lender, which means the higher the interest rate. If you have repaid part of the loan, the risk for the provider is lower and therefore the interest rate can potentially be lower as well. However, most mortgage providers do not adjust the loan-to-value ratio automatically. Ask your financial advisor to assist you in lowering your interest rate.
You bought a house for 350.000 euros, and the mortgage at the time was 350.000 euros. The loan-to-value rate was 100%. Since then, your house has increased in value to 475.000 euros, the mortgage is now 330.000 euros, and the loan-to-value rate is just below 70% (330.000 / 475.000).
This means the risk is lower and depending on the conditions of the provider, your current interest rate can be lowered, sometimes even up to 1%. Ask your mortgage provider to do so or consult your financial advisor. If you have NHG (Nationale Hypotheek Garantie), the interest rate is already based on the lowest loan-to-value and re-mortgaging is the only way to lower your interest rate.
Go all-in with re-mortgaging
Another way to lower the interest you pay is by refinancing your mortgage. If you choose this option, you might have to pay a penalty to break your current interest contract. The benefit of the lower interest rate on your new mortgage will compensate for the re-mortgage costs over time. Also, you can secure your lower interest rate for a longer time.
Check if a better interest rate is possible for you by answering these questions:
- Has your property value risen in the past years?
- Are you paying off the principal amount or have you made extra payments?
- Is your income the same or better?
If the answer to one of these questions is yes, contact your financial advisor to apply for a better interest rate on your mortgage.
A&H Finance expat mortgages started in a small back room in the Indische Buurt in Amsterdam with a clear goal: to make sure price and quality went hand in hand with the best possible service. This approach paid off: in 2013, 2014, 2015, 2016, and 2017, comparison website Independer.nl awarded them with the title “Best mortgage advisor in the Netherlands”.
Contact them now to find out if you can get a better interest rate on your mortgage!