What is a WOZ credit? By a WOZ credit we mean a revolving credit especially for owners of a home. This involves looking at the WOZ value of your home to determine the credit limit for which you are eligible. You do not have to use the money for your home. You also do not have to go to the notary and no valuation report is required (it is not a second mortgage). The conditions are otherwise the same as with a "normal" revolving credit, only the interest offered is often much sharper. This is related to the fact that you have your own home, which means that the lender assesses your risk lower.
With a revolving credit, you (the borrower) may withdraw money from the lender, up to a predetermined maximum amount (the credit limit). So you do not have to withdraw the full amount in one go. In fact, you decide which amounts to withdraw and when. You only pay interest on the amount withdrawn. The interest you owe is variable. So you do not know in advance exactly what your interest costs will be. The loan is repaid during the term. In addition to the fixed repayment amounts, you can repay extra amounts at any time without penalty. The moment you have repaid part of the loan in the meantime, you can always decide at a later time to use this amount again. Of course again up to the credit limit.
A revolving credit is mainly chosen when flexibility is important. Consider, for example, the situation where you do not immediately need the full amount. Or if you do not know exactly how much money you will need when taking out the loan. A revolving credit is also often chosen if you regularly run out of money and can use the revolving credit to cover these shortages.
An important disadvantage of the WOZ credit - because it concerns a revolving credit - is that the interest is not deductible . Even if the loan is used for the renovation of the owner-occupied home. Because the interest on a personal loan can be tax deductible during a renovation, nowadays a personal loan is almost always chosen for a renovation. The WOZ credit is therefore less and less common.
Main features of the WOZ credit We have listed the most important properties of a WOZ credit below:
- a WOZ credit has very competitive rates and is only available to owners of an owner-occupied home;
- a limit is set to where you can withdraw money (credit limit);
- you can withdraw repaid amounts again. Maximum up to the limit;
- you can voluntarily repay additional amounts;
- you only owe interest on the amount withdrawn, not on the credit limit;
- sometimes a term life insurance is included in the loan;
- no appraisal is required and you do not have to go to the notary (low costs);
- a variable interest rate applies.
- the interest is not tax deductible
Rates for a WOZ credit A WOZ credit has a variable interest. This interest is of course primarily dependent on the market interest rate. This is the interest that the lender has to pay on his money (ie the purchase price for the lender). The higher this market interest rate, the higher the interest on the revolving credit. In addition to the market interest rate, however, there are a large number of factors that can determine the level of the interest. We have listed the most important ones below:
Amount of the loan It is often the case that the interest rate decreases with a higher credit limit.
Additional insurance For a number of WOZ credits, insurance is included in the loan. For example, the construction is often used that the loan expires if the borrower (the person who has borrowed the money) dies during the term of the loan. In that case, a term life insurance is attached to the loan. Of course you often pay a slightly higher interest rate for such insurance.
The above factors show that not everyone is eligible for the same interest rate! In fact, there can easily be a 5% difference between the lowest rate that is offered and the highest rate! Moreover, not all companies deal with the above variables in the same way. Before you take out a WOZ credit, it is therefore very wise to make an extensive comparison between the different providers.