A break after a big misfortune

25 January 2021

After a death, the widower / widow has a lot to worry about. Most Dutch homeowners have a mortgage and one of the tasks is to notify the mortgage lender that the partner has died. Sometimes this notification results in part of the mortgage being repaid from a pledged term life insurance policy. The result is that the mortgage burden decreases considerably or sometimes even disappears. This makes continued residence financially more bearable, because income usually decreases considerably due to the loss of the partner. This often gives the next of kin just a little more time to consider whether the house reminding them of the partner would rather be kept or not.

Many do not know this

What many do not know is that almost all Dutch mortgage lenders state in their mortgage conditions that upon death:

  • Penalty-free repayment of the mortgage is permitted and / or
  • The interest on the mortgage if requested can be adjusted according to the market value

This right is not endless. The next of kin often has 6 to 12 months to submit a request to the mortgage lender.

Until a few years ago, no mortgage was taken out without term life insurance and pledged to the bank. Apart from what it did to reduce risk for that bank, there was also a customer interest: the debt after death decreased and so did housing costs. That obligation no longer exists. Only if our death scenarios indicate for both partners that there is enough capital or income for those who survive, do we leave out such insurance, but we recommend that you always have such insurance.

Be wise

Check your mortgage conditions on this point and if you have found you have this right, put a thick circle around it so that you can find it easily when you need it. So the repayment may come from something other than a pledged insurance policy, and if your interest has been fixed long enough ago, just adjusting the interest to market level can provide tremendous relief for the next of kin. And don’t take action too late!

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