Your mortgage is one of the longest financial commitments you make. 30 years in most cases. Many people plan to make that obligation disappear completely by amortizing or repaying the loan. This is sometimes also “helped” by the disappearance of tax deductibility. That is the moment that you will no longer receive a tax subsidy on your housing costs. If you expect your future income to be significantly lower, it is wise to reduce these. But if your income is more than enough later on, that repayment may not be absolutely necessary. There are also interest-only mortgages; they are less common than some time ago.
During the term of the mortgage, you can choose different periods during which the interest rate does not change. These can be fixed periods of, for example, 5 years or successive periods of, for example, 2 or 10 years. What many people don’t know is that at the end of the term of the mortgage, the financier makes a new decision about whether the mortgage, if it has not been repaid, will be extended. This means that not only the value of the property is considered, but also the income.
Unlike in the past, the value of a home determines to a lesser extent how much mortgage someone gets. For older people, the amount of pension income that plays a role. In many cases this is substantially less than during their active career. Add to that there is no interest deduction after 30 years and it is not surprising that for many people the later borrowing capacity is often lower than before.
For this reason, we also advise you to look ahead at the moment when the mortgage ends if the mortgage is not repaid in full. This way you avoid surprises.