The hybrid mortgage
What is a hybrid mortgage? A hybrid mortgage is - just like the savings mortgage - a form of a life mortgage . With the hybrid mortgage, you can indicate yourself whether you want to invest the insurance premium or whether you want to save at a savings interest rate that is equal to the mortgage interest rate. To take full advantage of the possibilities, you can switch from saving to investing and vice versa.
Taxation regarding the hybrid mortgage: With a hybrid mortgage, the tax authorities offer the option of classifying the life insurance 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 hybrid mortgage is only available to existing mortgage holders who bought their home before 1 January 2013 and have already taken out a hybrid mortgage on that home. They can still transfer, convert or take this existing hybrid mortgage with them to the 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. For starting home buyers from 1 January 2013, the hybrid mortgage is no longer an interesting option, because if they choose a hybrid mortgage, they are not entitled to mortgage interest relief. To get a mortgage interest deduction, startups must opt for an annuity mortgage or a linear mortgage .
Benefits of a hybrid mortgage:
- great flexibility within insurance. Both savings and investments can be made. During the term you can switch between these options;
- because you do not make repayments and accrue capital in the insurance, you can benefit from both the interest deduction and the accrual of tax-free capital (provided that the mortgage was taken out before 2013 and KEW before 1 April 2013).
Disadvantages of a hybrid mortgage:
- at the moment, the hybrid mortgage is now hardly offered by any mortgage provider (for new customers);
- many possibilities and a lot of flexibility often also creates many decision moments. When do you invest? When do you save? When do you switch? With all these possibilities it is easy to lose sight of the main goal; stable long-term capital accumulation to pay off your mortgage. The question is how often you will use the many possibilities in practice;
- great dependence on the lender. Because you borrow, save, invest and take out insurance with the same bank, it can be difficult to transfer your mortgage to another lender;
- usually a mark-up is calculated on the standard interest rates;
- often the costs within the policy are relatively high;
- you are usually bound to one and the same body with regard to borrowing, saving and insurance;
- the hybrid mortgage is hardly interesting for starting homebuyers from 2013, because the mortgage interest on this mortgage is then not deductible.