Striking last month were three different situations making sense to adjust the mortgage.
Spaarhypotheek
In two cases, it involved using the value in an interest rate sensitive insurance policy linked to the mortgage in order to reduce the debt. So-called “spaarhypotheken” are a complex product family. Using the mortgage interest rate, it is calculated in advance how much needs to be saved to repay the mortgage amount at the end of the term of the mortgage. The term of the mortgage is 25 or 30 years, but the period for which the interest rate is fixed is much shorter at 5, 10 or 20 years. If the interest rate changes, the savings amount will also change. As a result, the development of the net debt is erratic. This was certainly the case for the client who made use of a variable interest rate. These clients wanted clarity and asked us to convert the savings mortgage into an annuity mortgage with a fixed interest rate.
Renting out your home
A more difficult case is still in progress. Someone who decided to rent out his apartment in Amsterdam but did not inform the bank. The bank found out anyway and gave the man three options:
- Make the tenant leave and use the apartment himself again
- Sell the apartment, or
- Convert the mortgage into a buy-to-let mortgage.
Dutch tenancy law complicates the position of the mortgagee and thus increases the risk for the bank. That is why banks do not want to cooperate in structural (or structurally incidental, such as Airbnb) rental of the home for which they have provided a mortgage loan. Getting a buy-to-let mortgage is very different from the rule book for a “regular” mortgage.
Whether we will be able to solve that puzzle is not yet clear. But we are certainly making an effort!