However, homeowners with an interest-only mortgage are in a split. The banks want to “force” their customers to (partly) repay their interest-only mortgages. This repayment of an interest-only mortgage takes place at various times:
- At the end of the term (usually after 30 years)
- When selling the property
- In the meantime through additional repayments
Bench at the wheel
In the past, banks still arranged interest-only mortgages with an unlimited duration. In recent years this has been changed to 30 years. The banks have taken the lead. After 30 years, the customer must come to the mat and the interest-only mortgage will be taken.
The bank will then look closely at the relationship between the amount of the mortgage on the one hand and the value of the home and the income on the other. If the income is sufficient, the interest-only mortgage will be “forced” into an annuity / linear mortgage. The new term will also be determined by the bank. This can therefore be shorter than 30 years. In this case, the bank determines what a customer will pay per month.
If a customer is going to be difficult, the bank will point out to the customer the letters sent earlier about the repayment of the interest-only mortgage. Moreover, the customer will be told that he can always go to another bank. The chance is very high that every bank will use the same method.
Extra repayments in the meantime?
The question is whether interim repayment on the interest-only mortgage is advisable. Of course this depends on the situation. However, there is an intermediate solution.
It is also possible to continue saving outside of the mortgage and only to pay off the repayment-free mortgage (in whole or in part) when the Hillen Act becomes applicable.
A homeowner still benefits from the interest deduction. Here too, what the other mortgage type is besides the interest-only mortgage is important.
Cabinet and banks unreliable
In any case, it is clear that the interest-only mortgage has become taboo. In the coming years, the banks will do everything they can to get their customers to redeem them. If we take a look at the past then this is of course very strange.
Almost every homeowner was advised to close at least 50% of the mortgage interest-only. The banks themselves gave this advice to their customers.
This total has changed in less than five years. How changeable can a person be. It is clear that the government and also the banks cannot be trusted.