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The savings mortgage

What is a savings mortgage?

A savings mortgage is a type of mortgage that was very often chosen in the past. The savings mortgage was particularly popular with people who want to / want to take little risk. With a savings mortgage, the uncertainty surrounding the amount of the payment has been removed. Both in the event of death and during life, the amount to be paid out with the savings mortgage is always equal to the mortgage debt. As a result, the entire savings mortgage can always be fully repaid. With the savings mortgage, the interest you receive on your savings balance is always the same as the mortgage interest you pay. Any increase in monthly costs if the mortgage interest rate were to rise, will therefore always be partly offset by a reduction in the insurance premium. This construction means that the costs are much more stable during the term of the mortgage than with certain other mortgage types.

Due to the link between mortgage and savings interest, a savings mortgage is especially beneficial when mortgage interest rates are high. Once you have opted for a savings mortgage with a particular company, you are bound by it for the remainder of the term. Switching to another lender is possible, but often not sensible from a financial point of view. However, lower costs are possible if you switch to an investment mortgage or interest-only mortgage.

Compare current mortgage rates of the savings mortgage

Taxation regarding the savings mortgage:

The savings mortgage is basically a kind of life mortgage . The tax provisions surrounding the life mortgage therefore also apply to the savings mortgage. With a savings mortgage, the tax authorities therefore offer the option to classify the savings policy as an owner-occupied home capital insurance policy (KEW). For a KEW, no wealth tax in box 3 is due on the capital accrued in the endowment insurance during the term. This allows tax-favorable capital to be built up during the term of the mortgage.

The savings mortgage is only available to existing mortgage holders who bought their home before 1 January 2013 and have already taken out a savings mortgage on that home. They can still transfer, convert or take this existing savings mortgage with them to a next home without losing their mortgage interest deduction. The Home Ownership Equity Insurance (KEW) is also only available to existing homeowners who purchased their home before 1 January 2013 and who already have an Home Ownership Capital Insurance (KEW) with their mortgage or who have taken out this by April 1, 2013 at the latest. The savings mortgage is no longer an interesting option for starting home buyers from 1 January 2013, because if they choose a savings mortgage, they are not entitled to a mortgage interest deduction . To get a mortgage interest deduction, startups must opt ​​for an annuity mortgage or a linear mortgage

Advantages of savings mortgage:

  • no repayments are made during the term. This ensures optimum benefit from the interest deduction options (provided the mortgage was taken out before 2013);
  • interest rate fluctuations are dampened by linking the mortgage interest to the savings interest rate;
  • by opting for a home endowment insurance policy, you can build up tax-free capital (provided the KEW was taken out before 1 April 2013);
  • you make a high guaranteed return with a high mortgage interest rate;
  • you do not run the risk that you will not reach the final capital.

Disadvantages of savings mortgage:

  • a savings mortgage is very inflexible. As with any life mortgage, you must adhere to the conditions of the tax authorities if you want to benefit from tax benefits. Switching to a lower daily interest rate or other type of mortgage is therefore very unfavorable;
  • For a savings mortgage, a surcharge is often calculated on the interest rates that apply to an annuity mortgage;
  • it is often compulsory to require a life insurance policy. This may be particularly undesirable for singles or the elderly;
  • with a low mortgage interest rate, you make a low return because of the link between the mortgage interest and the savings interest;
  • you are usually bound to one and the same body with regard to borrowing, saving and insurance;
  • not all lenders offer a savings mortgage;
  • the savings mortgage is virtually no longer interesting for starting homebuyers from 2013, because the mortgage interest on this mortgage is then not deductible.
Overview of the current mortgage interest rates for the savings mortgage
More about the KEW on the site of the tax authorities