How to reduce your monthly mortgage payments to future-proof your house
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Six months after the coronavirus epidemic began in the Netherlands, the economic effects are really starting to bite. Despite a third government support package for businesses, the latest unemployment figures show that an average of 44.000 people have been joining the ranks of job seekers each month, while leading credit insurance company Atradius expects bankruptcies to rise by a third this year.
With Dutch prime minister Mark Rutte continuing to advise people to work from home wherever possible, and predictions that the Dutch economy will shrink by 5% in 2020, very few of us can guarantee that our incomes will remain stable.
Bearing this in mind, Expat Mortgages' founder Henk Jansen advises homeowners to look at smart ways they can reduce their mortgage costs, both in the short and long term.
“Most people have already heard of the three or six-month payment pause banks offer because of corona but this is only a temporary measure,” he says. “It’s possible to apply for this “betaalpauze” until the end of September or beginning of October at most banks. Be aware that you will still need to repay it in the upcoming one and a half years. But other options are also available to restructure your mortgage.”
Your mortgage options
Expat Mortgages can offer people with existing mortgages advice and help in restructuring their loans to reduce the fixed costs, without necessarily incurring a huge bill. There are four main options to consider:
Lower LTV (loan-to-value)
Over the past years, the value of your property has probably gone up and your amount of mortgage has probably gone down (because of repayments from your monthly fee that reduce the capital). This might make you eligible for a lower LTV band and a lower interest rate for the same mortgage.
Many people have a relatively high-interest rate with a short remaining fixed period. Some banks offer interest mediation to lower this rate.
Sometimes, it is smart to check if remortgaging is an option. This does mean paying a penalty and some other costs, but it will open the option of remortgaging using the low rates on offer right now.
Type of mortgage
It might be to your advantage to switch from, for example, a savings or life insurance type of mortgage to an annuity-based mortgage.
How does it work?
Of course, you can explore these options on your own, but Expat Mortgages also offers a free “intake” meeting to see what might be possible for you.
You simply need to gather relevant information about your mortgage, such as the amount still owed, the current value of your property (WoZ value), remaining term, interest rate and mortgage type. Then, send an e-mail to [email protected] and one of their aftersales consultants will get in touch with you to organise a free (online) meeting.
Expat Mortgages will review your financial situation and come up with tips and a simple plan. The intake is free of charge and existing Expat Mortgages clients are eligible for a reduced fee if they go ahead with organising a mortgage change with our help.
Throughout the coronavirus crisis in the Netherlands, their motto was to #StaySafeStayPositive and Jansen believes that one way to help protect your home in future could be to take some straight-up advice now and make the necessary changes. “There is an English proverb, saying things are as safe as houses,” he says. “So, let’s make sure that your house is safe too, whatever the future throws at us.”