Linear mortgage loan

The linear mortgage loan is a cheap mortgage loan form where the homeowner has higher net monthly payments, mainly at the beginning of the term. But as the term of the linear mortgage loan progresses, the costs go down.

With this mortgage loan loan you have the certainty that the house is paying off before the end date of the term. You pay the same amount every month. What is a linear mortgage loan? And how is it that your monthly payments with this form of mortgage loan go downwards, while you do pay the same amounts every month?

With the linear mortgage loan you are becoming more and more affordable every month

With the linear mortgage loan you will always pay off more cheaply. It’s like this: every month you pay the same amount to the bank. After 30 years your mortgage loan has been repaid in full. You pay the same amount of repayment monthly during the entire term (you therefore pay off linearly). Because your total debt continues to decrease, you will also pay less and less interest. So you pay 1 / 360th less interest every month.

Faster mortgage loan repayment

Because you pay faster with linear mortgage loans than with, for example, the annuity mortgage loan, you pay less interest in its entirety. Although borrowing money with this mortgage loan is cheaper than with an annuity mortgage loan, it is not very popular. The monthly expenses are mainly high in the first few years because you then pay extra. Not everyone is willing to offer such a “precious” sacrifice. And not everyone is capable of that either.

Monthly charges linear mortgage loan

As you now know, the monthly costs are particularly higher at the start than with a mortgage loan where you pay off on an annuity basis; the annuity mortgage loan. But every disadvantage has its advantages! Because you pay off a lot in the beginning, the monthly costs will eventually decrease because you will pay less interest.

With the linear mortgage loan you are therefore somewhat more expensive in the beginning. At half the duration the costs are already a lot lower. The linear mortgage loan is considered cheap in its entirety. At least, this mortgage loan loan is cheaper than the annuity mortgage loan if you calculate the mortgage loan costs over the entire term.

Inflation is a bit of a spanner in the food …

With an average linear mortgage loan, homeowners are about four percent cheaper than with an annuity mortgage loan. Inflation does throw a little bit of spanner in the food. Yearly life is slightly more expensive and money is therefore always worth a little less. If inflation in the Netherlands rises, your linear mortgage loan can turn out to be more expensive. Because you solve a lot in the beginning. In fact, an annuity mortgage loan is cheaper with inflation at 3% or more …

What about the mortgage loan interest deduction & linear mortgage loans?

For both types of mortgage loan, the linear and annuities mortgage loan, there is an important advantage: The mortgage loan interest deduction. Without this ‘subsidy on living’ it would be impossible for many people to buy a home. The amount of mortgage loan interest deduction you receive depends on the amount of the mortgage loan and your income. The more you earn, the more tax you pay. It means that people with a higher income benefit the most from the mortgage loan interest deduction for a linear mortgage loan. After all, the interest on your mortgage loan will be deducted from the upper part of your income ….

How to calculate maximum linear mortgage loan?

For calculating your maximum (linear) mortgage loan, there are a number of factors that determine the level of your home loan. You can also calculate online what your monthly costs will be if you would opt for this mortgage loan via Loans.nl or on the website of any bank. The mortgage loan must be fully repaid within a certain period. Usually an ideal term of 30 years is chosen.

Online calculation example mortgage loans

Most banks use this term (30 years) for their online calculation examples. You pay a gross amount of repayment on a monthly basis. This amount is always fixed for linear mortgage loans and therefore does not change. In the course of time, the interest amount you have to pay will fall. To gain insight into your actual monthly expenses (the net monthly expenses = after interest deduction), you can best use a ‘mortgage loan calculator’. This determines for you up to 99% accurately your net mortgage loan monthly payments.

In summary: calculate monthly expenses linear mortgage loan payments as follows:

  • Go to the website of the relevant bank or hypotheker.
  • Use their ‘mortgage loan calculation module’ to calculate your maximum mortgage loan.
  • Fill in all data truthfully.
  • Then click on “calculate” and you will get an indication of the maximum loan amount and the monthly costs.

Current interest rate linear mortgage loans

In 2017 and 2018 you borrow money for a home at very competitive interest rates. The interest rate partly determines the maximum amount that you can borrow. In general, the following rule applies: The longer you keep the mortgage loan interest rate fixed, the higher the interest rate becomes during the term.

Short term mortgage loan or long term?

An adviser can assess what is sensible for each situation: Do you opt for a short term with a linear mortgage loan? Or does the choice fall on a long term? A short term is recommended by banks if you do not intend to stay in your new home for a long time. After all, when you move, you are not stuck to a mortgage loan.

A shorter term is therefore often requested by starters. mortgage loans with a short term of 1 to 5 years have a lower interest rate. A term of 10 years fixed interest is also relatively cheap. Between 1 year fixed and 30 years fixed, the difference can be up to 2% interest! You can also opt for a variable loan rate.

Request a mortgage loan quote without obligation

Do you know enough and would you like to apply for a mortgage loan offer? Which can! Search on Leningen.nl for a cheap and reliable mortgage loan provider and request them a mortgage loan quote without any obligation. We will not see your details. All correspondence is made via the relevant bank or mortgage loan lender. This way your privacy is guaranteed.

Why take out cheap linear mortgage loan through Leningen.nl?

Leningen.nl provides independent information. On our website we also show the cheapest mortgage loan providers in the Netherlands. So you do not have to look for a cheap mortgage loan yourself. We do not leave loans and mortgage loans ourselves. We adhere to the rules of the AFM and therefore never issue an advice. For an expert mortgage loan advice on linear mortgage loans, we refer you to the providers that you find on our website. 

Types of mortgage loans

The choice for a mortgage has financial consequences for the next 30 years. The monthly costs depend on the amount you borrow, the interest rate and the type of mortgage. A mortgage advisor helps you to choose the right mortgage. With this information you are well prepared for the interview.

For new mortgages you can only deduct the interest under certain conditions. You must repay the mortgage in 30 years according to at least an annuity scheme. The linear and annuity mortgage are therefore now the most attractive types of mortgage.

Annuity mortgage

  • You pay a fixed monthly amount. This amount consists of interest and repayment.
  • In the beginning of the term you pay a lot of interest and you do not pay much off. Later that is the other way round: you pay little interest and then pay off a lot.
  • At the end of the term you have repaid the entire mortgage.
  • If you use mortgage interest relief, the net costs are initially low. Later the monthly costs increase.

Linear mortgage

  • You pay the same amount every month. For example 1 / 360th part with a duration of 30 years.
  • You pay interest on the remaining debt.
  • The monthly expenses are high at first, but decrease later.
  • At the end of the term you have repaid the mortgage completely.

Older mortgage forms

If you bought a home before 1 January 2013 , it may be that you have taken out another type of mortgage. The interest was at the time also deductible for these mortgages. If you buy a new home and you already had such a mortgage, you can sometimes take part of it into your new mortgage. Discuss the possibilities with your mortgage advisor.

Savings mortgage

  • You pay interest on a monthly basis.
  • You do not solve anything.
  • Instead of redeeming, you save the entire amount during the term to redeem the mortgage.
  • At the end of the term you can certainly repay your mortgage.
  • You save via a life insurance policy or a bank savings account . With a life insurance policy you pay part of the premium for a term life insurance policy. This is not the case with bank savings. You can choose to take out a separate term life insurance policy. The interest you receive is always equal to the mortgage interest. So you do not suffer from interest rate fluctuations.

Investment mortgage

  • In addition to interest, you pay a monthly amount with which you invest.
  • The proceeds at the end of the term are, according to plan, enough to repay your mortgage. However, this depends on the developments on the stock market.
  • An investment mortgage can yield more, but you also have more uncertainty.
  • You invest yourself or through a life insurance policy. You also often pay a premium for a term life insurance policy.

Interest-only mortgage

  • You do not pay anything during the term. You only pay interest, which is deductible.
  • This can only be done for part of the mortgage, or if there is enough surplus value.
  • You take care of building up your own assets so that you can redeem at the end of the term.

Hybrid mortgage

This is a combination of mortgages: part of a savings mortgage, a part of the investment and a part of a redemption

€ 290,000

is on 1 January 2019 the maximum purchase price for a house with a mortgage with NHG

Overvalue and residual debt

Sometimes there is a difference between the value of a home and the remaining mortgage debt. There is then an overvalue or a residual debt.

Overvalue

Suppose you have taken out a mortgage for 200,000 euros. Your home is now worth 250,000. Then there is surplus value. You can then increase your mortgage and get extra money.

This is called a second mortgage. You then have to pay more per month. Also, changing the mortgage costs a lot of money. The interest on the extra mortgage is only deductible if you use the money for the maintenance of your own (first) home. If you use the money for the purchase of a car or boat, the interest is not deductible. You must also repay the additional mortgage at least as an annuity to qualify for mortgage interest deduction.

Residual debt

The inverse of surplus value can also occur. Your mortgage is then higher than the value of the home. As long as you pay the monthly costs, that is no problem. As soon as you want or need to sell the property, you can remain with a residual debt. The proceeds from your home are not enough to pay off the mortgage. Read more about a residual debt on wijzeringeldzaken.nl. Or look at AFM.nl: ‘Problems with payment of your mortgage’ .

Tip: House sold? Any costs of cancellation of the mortgage can be stated in the tax return as deductible costs. When deleting the mortgage, the right of security is removed from the land register.

Convenient e-book

When purchasing your first home, you enter into a long-term financial obligation. Good preparation for what is affordable helps to make a good choice. The e-book ‘Affordable mortgage’ helps you with this.

Order ‘Affordable mortgage (e-book)’

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Fortunately, I was able to take my savings mortgage to my next home. “

– Jaap van Steegeren, Breda

Contact

You can contact the Nibud in various ways.

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Mortgage loan management

During the term of the mortgage loan, it is important that mortgage loan owners keep a grip on their housing costs. Personal circumstances can change, and the housing market is also constantly evolving.

How can you, as an advisor or provider of funds, properly guide your clients? And what to do if households get payment problems?

Conduct timely advice

Many mortgage loan owners wonder how their mortgage loan stands for. House prices are on the move, rules on mortgage loan interest deductions are changing. This creates financial uncertainty for homeowners. Are and will their housing requirements remain affordable, are they at risk and what are possible solutions? Here lies an important role for the advisor.

The timely discussion of bottlenecks helps to find an effective solution. This way problems can be prevented. And that is both in your interest and your customer.

Bank supports

Bank can assist advisers or departments (special) management in various ways in contact with the customer. These are both materials that help your customer to better understand his situation, as well as training to increase your skills as an advisor.

Advancement of expertise for the consultant

The mortgage loan is a complicated product. After taking out the mortgage loan, most people are no longer working on their mortgage loans. Knowledge is sinking and many no longer know exactly which mortgage loan construction they had chosen. The better the customer is aware of his or her own financial situation, the more pleasant an advisory interview is.

  • The Bank Grip reading on my mortgage loan payments gives professionals the opportunity to provide their clients with independent information during an information meeting of one hour.

Bank training offers tailor-made training for your advisers. We develop training courses that offer consultants knowledge and practical tools for making a balanced budget based on reference figures, recognizing risk groups and guiding clients.

Especially for consultants, Bank developed the two-day Grip training on mortgage loan arrears. Here you will learn how to guide clients with budget problems efficiently and effectively.

Tip: the free Bank calculation tool Personal Budget Advice gives the customer insight into his current financial situation: which living expenses fit within the budget?

With structural problems

Bank advises various parties on the financing burden standards in the context of mortgage loan lending. These standards include a number of cases that reduce the risk of default in a household.

Nevertheless, consumers can get into financial problems if there are long-term negative circumstances. For example, in case of continuous unemployment or divorce. Selling the home is often not a structural solution. In that case, the mortgage loan lender has to look for other solutions.

Restructuring mortgage loan

Part of that solution can also be a restructuring of the mortgage loan. In such a case, it may not be useful to maintain in full the financing burden standards as applied to disclosure.

Management criteria

In the context of the National mortgage loan Guarantee (NHG), different standards are applied in those situations than the provisioning standards. Bank advised on the formulation of these so-called management criteria.

 

Is it time to scrap your old mortgage loan?

 

The mortgage loan is replaced by the replacement of the old agreement, with a more recent and certainly more favorable one. In detail, there are several possible options, which must be studied with due care based on the specific needs of the client and the offers offered.

  • The renegotiation of the loan provides for the possibility of contracting directly with the banking institution with which the original loan was stipulated, in order to modify the duration, installment frequency and repayment plan (for example, you can switch to increasing or decreasing installments) , according to customer needs).
  • Conversely, the mortgage loan is replaced when it is intended to pay off the contract already in advance, with the capital obtained from the new loan. In this case, the charges borne by the customer are greater because it requires the stipulation of a new contract will incur costs of appraisal and investigation and substitute tax. In this case, the advantage is the possibility of being able to request an amount higher than the amount of the residual capital of the old mortgage loan.
  • The subrogation of the mortgage loan guarantees instead the possibility of passing the debt to a different bank that offers better conditions, without necessarily having to support the costs to be able to formalize the replacement, obtaining the exclusion of penalties and other charges of any kind. The bank thus takes over the mortgage loan guarantee already registered and will have to pay off the old debt, replacing the original creditor.

The extremely low rates of recent years, today at historic lows, have made the scrapping of the mortgage loan a very usual operation, thanks to the possibility of lowering the installment without additional costs or, alternatively, obtain additional liquidity.

The consultants of Auxilia Finance are professionals in the sector and can offer a number of very appealing opportunities, in order to evaluate any possibility of improvement of their mortgage loan.

Access to loan: when reputation counts

 

Access to loan: when reputation matters

When evaluating a request for access to loan from a company, how important is the profile of the entrepreneur?

When a few days ago we saw c ome is verified the feasibility of a loan application , the analysis that we have proposed has highlighted especially the historian of the company and the shareholder structure, economic and financial factors, and the bank PERFORMANCE purposes.
All factors always taken into account by banks in the analysis of loanworthiness (probably, what differs from the past, is the degree of severity with which certain parameters are evaluated). In all this an important factor is missing, that is the profile of the entrepreneur / representative of the company.

The “direct bank” takes off
It is a duty, for the lender, to get an idea of ​​the subjects to whom the loans should be provided. This need, always present, is now inscribed in a context in which traditional relationships with banks (I go to the branch, I speak with the consultant, I make an appointment to see the director, etc.) are gradually leaving room for contacts more frequent and aware, but based essentially on technology, then through the use of mobile and the web (thanks to smartphones and tablets). So the so-called “Direct Bank” is made wider, of which we often analyze the characteristics on these spaces.

How to know the customer?
This trend is on the rise above all in the Anglo-Saxon countries, mainly in the private sector, but also special services for companies are beginning to appear on the market. In Italy this trend is less evident, even if some banks have begun to invest in digital services to businesses.
One of the main purposes of the “Direct Bank” is to find new ways to interact with the customer.
How, then, will it be possible for the bank that has to finance a company project to obtain a precise idea of ​​the entrepreneur making the request?

The “loan scoring”
Some American and British financial institutions are beginning to look for useful information to integrate the final evaluation, building a real “loan scoring”, based on the “traces” that a subject leaves on the web . “Social media” therefore become fundamental tools for measuring reputation.
How does it work? For example: if a restaurant makes a request for funding, it is part of the valuation practices to research the online reputation of the business. So: the presence of a site, a continuous management of pages on social networks or reviews on Tripadvisor certainly help to better understand what type of business and entrepreneur is requesting loan. If the restaurant itself was not in any way traceable on the web, it would certainly not be a good sign.

This type of analysis certainly represents the future of loanworthiness analysis . Let’s not forget that information is common on the web: it is therefore important for the entrepreneur, right from the start, to carefully consider everything he talks about him and his activity on the internet.

 

Banks and businesses: the theme of loan requires a change

 

 

Banks and businesses: the theme of “loan” requires change

The access to loan for businesses and the provision of loan by banks are two obstacle courses that often struggle to find a meeting point. Whose fault is it? Of all and nobody: it is a problem of a system (management, evaluation and communication) that struggles to be rethought, which generates numerous debates and opinions and which we can see a resolution in a still too distant horizon. Banks and businesses must somehow change: who starts making the decisive move?

This is often discussed at conferences on the topic, such as financing the recovery: the challenges of loan to companies , the event presented by Banca Finanza a few weeks ago in Turin. Interesting insights about the prospects for changes in banks and businesses emerged from the debate.

The evaluation models of banks
The information assets available to banks to assess companies’ requests for access to loan is increasingly important. There are not only the “accounts” of the company (balance sheets, assets) and relations with the financial institutions of entrepreneurs: it is also important to consider the huge amount of data that applicants leave communicating on the web, in addition to development projects and to entrepreneurial ideas. The need, in short, is to manage a qualitative information asset of outline and perspective, so as to translate it into a more complete assessment of loanworthiness, not just respecting the old rules for loan lines (the company’s accounts and its heritage).

Patrimonialize companies
On the other hand, companies are called to become stronger and therefore be capitalized with the direct intervention of entrepreneurs. 98% of Italian companies are SMEs, ie small and medium-sized companies (often family-owned) whose assets are often not sufficient to guarantee solidity for the business project. But this is just the tip of a much larger iceberg in which critical issues accumulate ranging from unfamiliarity to managing corporate information, to the scarce capacity for timely financial planning, to excessive fiscal optimization (all of which we are deepening in the #Meritoloano initiative)

An example (to understand how things are)
In a nice article by Il Giornale, written by Guido Sirtori, the description of a typical case best portrays a historical moment in which banks and businesses need to respect precise rules and communicate according to a shared code. Here is the example in the article ( which we recommend reading in full here ):

” In the eighties a bar with a company structure of srl, a share capital of 1,500 euro, 50 thousand euro of fixed assets and 100 thousand of declared turnover (but in reality much higher) obtained in the bank a loan line of 150 thousand euros. Today the same bar, according to the rules of Basel 3, would have a loan of up to 10 thousand euros. And so the dilemma of the bank, with respect to this loan openness, is to assess the customer’s solidity or apply rigidly the rules “