There is no First Aid for Execution Only mortgage victims, and it will not come either!

19 December 2019

Your Financials opposes Execution Only mortgages. These are mortgages where advice costs can be saved by shifting many of the responsibilities for verification to customers and artificial intelligence. We are not against it because our business model is under attack or because we see technology overtaking us. We are against it because perhaps 90% of mortgage candidates do not know what a mortgage is, how it can become a harness or even worse: what damage it can do to income, assets and even relationships. Therefore advice is essential.
We only come across intelligent customers, so that’s not the problem. But it costs an army of Dutch advisers, personal bankers, private bankers, wealth managers no childish entrance exam with periodic maintenance, an Authority for the Financial Markets on your back checking if you are Permanently Up-to-Date, a very substantial investment in time to keep up with the law and regulations and last but not least EXPERIENCE to apply all this in a meaningful way to your financial future. And not one of them is the same. So we say: if you need a shoemaker, don’t go to the heel bar. One carelessness, one wrong decision about the duration of your commitment may have a small chance that you will suffer from it, but very large consequences. We have seen distressing cases, enough even. And there were some who even we didn’t get straightened out. More than a century of life experience, more than 60 years of experience in the financial sector and you cannot get straight what is crooked. Frustrating for us but a disaster for those concerned.
With astonishment, we read that Minister Knops will propose that the mandatory knowledge and experience test, even for Execution Only Mortgages be canceled. As a result, costs for the advice can be reduced, so that they are in any case not stopping mortgage applications for sustainability investments. Well intended maybe – we are all for energy-efficient living, we also advise that if we can – but this is exactly what should not happen. Because that mortgage application is of course not just about making your home more sustainable. The existing mortgage also comes along because the sustainability amount is often a small part of the total financing of a home and “it pays the costs better” to adjust the whole.
That depends on the situation, but let’s assume it is. But then you are no longer talking about the limited extra financing of a renovation, but about a total refinancing that therefore involves a much greater financial interest. And do we want to leave that to well-intentioned, right-minded but financially inexperienced consumers without expertise in tax, financial and legal matters? We find that really irresponsible.
Advice costs should be minimized where possible, if sensible. But please use a less risky element to stimulate sustainability!

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