Mortgages: things worth knowing for 2014
If you are taking out a new mortgage or your current fixed-interest period will end this year, it is important to know what the most significant changes are for 2014.
Lower maximum mortgage
As of January 1, 2014, mortgages will have a maximum of 104 per cent of the purchase price.
In practice, this means that buyers will almost always have to use their own financial resources when buying their house.
Limit for NHG further reduced
The upper limit for a National Mortgage Guarantee Scheme (NHG) will be further reduced in the coming years.
Currently the limit is still 290.000 euros, but the following reductions have been planned:
› as of July 1 2014, to 265.000 euros
› as of July 1 2015, to 245.000 euros
› as of July 1 2016, to 225.000 euros
What will the interest be in 2014?
In 2013, the long-term interest rate increased by about 0,75 per cent.
The long-term interest rate in particular determines the fixed-interest periods between five and 10 years.
As banks did not calculate the effects of this increase entirely in the mortgage interest rates, it is expected that the long-term interest rate will increase by about 0,5 per cent in the coming 12 months.
The short-term interest rate (variable) increased by 0,1 per cent in 2013. The European Central Bank (ECB) is not expected to change the interest rate in 2014.
The variable interest is also expected to increase by about 0,1 per cent within a period of 12 months, although over the next two years the variable interest is expected to remain at the current low level.
Maximum tax advantage for mortgage interest deduction
This year, the mortgage interest can be deducted with a maximum tax advantage of 51,5 per cent, down from 52 per cent in 2013.
Imputed income from homeownership
The notional rental value will increase this year from 0,6 per cent to 0,7 per cent for houses with a value, for the purposes of the Valuation of Immovable Property Act (WOZ waarde), of between 75.000 euros and 1.040.000 euros.
The increase is due to annual indexation based on the development of house prices and rents. In 2013, house prices decreased by five per cent and rents increased by five per cent. For a house with a WOZ value of 500.000 euros, net housing costs will increase by 20 euros per month.
Henk van Seijen is a partner at Finsens, specialists in rendering services to expats in the areas of tax, mortgages and investment advice. For more information, please comment below or contact them directly.