Thanks to lower mortgage interest rates in recent times, many people choose to switch their mortgage. The advantage that switching over offers them is higher than the costs of switching the mortgage. In a period with low mortgage interest rates, it is therefore interesting for many to transfer a mortgage. But even if you want to remodel your home, want lower monthly payments, your fixed-rate period ends, you want to redeem your mortgage more quickly or if your personal situation has changed, switching can offer a financial benefit. We will gladly inform you about the costs that come with switching the mortgage.
Cost of switching your mortgage
Unfortunately, the transfer of your mortgage is not entirely free of charge. Below we have noted which cost items you (probably) have to deal with, we will explain these separately for you:
- mediation costs
- valuation costs
- notary fees
- penalty interest
- costs National Mortgage Guarantee (optional)
The mediation costs are covered by the costs of the transfer of your mortgage . These are the advice and brokerage costs of a mortgage advisor. The amount of these costs is discussed in an initial interview, the orientation meeting. Before you start working with the mortgage advisor you know how much you will spend on mediation costs. For example, you can make a choice whether you want to continue with the advisor, or choose another advisor.
When you transfer your mortgage to another mortgage provider you can count on valuation costs. The new mortgage lender wants to know the value of the home. Based on, among other things, the house value, it is determined what your maximum mortgage is. You should therefore include the registration costs with the costs of transferring the mortgage. The valuation must be done by a certified valuer; the report must meet the requirements of the mortgage lender. The rates vary per appraiser, keep this in mind.
Because you transfer your mortgage to another mortgage provider you have to deal with a new mortgage deed. For this you must visit the notary. The notary fees are therefore also included in the costs of switching a mortgage. Notary fees can vary considerably. Compare therefore the notaries first, to choose an advantageous notary.
Because you will immediately pay off your current mortgage with your current provider when you transfer your mortgage, you may be charged a penalty interest. This is a compensation for the interest income that the mortgage provider misses. The level of penalty interest depends on the amount of the mortgage that you pay off and the remaining fixed interest period. It is more advantageous to close the mortgage if you are close to the end of the fixed-rate period than if you were only at the start of your fixed-rate period. Part of the mortgage can be paid without penalty. How much this is depends on your mortgage conditions.
Any additional costs
Optional costs when transferring the mortgage are costs for National Mortgage Guarantee (NHG). If you want to take out the new mortgage with NHG, you will have to deal with it, otherwise not. The application for a mortgage with NHG is 1% of the mortgage amount. To conclude a mortgage with NHG you must comply with the conditions attached to it. For example, the house value may not exceed a certain amount. This amount differs per year.
Tax consequences transfer mortgage
What tax consequences does the transfer of your mortgage have for you? For the existing mortgage debt that has been taken out before 1 January 2013, the interest deduction remains unchanged, regardless of the form of the mortgage. The current form of mortgage can therefore be transferred without loss of interest deduction. Mortgage repayments after 1 January 2013 must meet the repayment obligation. This means: annuity pay within 30 years. Only then will you keep the mortgage interest deduction.
Costs are mortgage-deductible
If you transfer your home and it falls under the home acquisition debt, the costs incurred for the transfer of the mortgage from the tax are once-only deductible. This includes the following costs:
- the valuation costs
- the notary fees and cadastral costs for the mortgage deed
- the mediation costs
- the costs for NHG’s application
- the penalty interest on redemption of the previous mortgage
This makes the cost of mortgage transfer a bit lower. If you co-finance the cost of the mortgage in the new mortgage, this part of the mortgage will be considered as the box-3 debt. This means that the interest and costs of that part of the mortgage are not deductible.
Calculate mortgage transfer
The costs for the transfer of your mortgage are therefore very dependent on your personal situation. This makes it difficult to calculate for yourself whether you would do well to close the mortgage. An independent mortgage advisor can best make this calculation for you. The advisor looks at all the costs you are confronted with and the factors that influence the costs, such as the fixed-rate period.