What does financing a residual debt mean to you? In the Netherlands, many houses are still ‘under water’. Maybe your house is one of those houses. This means that you will be left with a residual debt after the sale of your home that you must finance. For example, by borrowing money for your residual debt through residual debt financing, by using your savings or through a donation from third parties.
Previously it was always the case that the interest for a residual debt financing was tax deductible. Financing a residual debt together with a new mortgage was therefore an attractive choice, because it was possible with favorable monthly payments.
However, from 1 January 2018 the interest deduction for a residual debt financing will lapse, as a result of which the net monthly costs will rise, and with it the costs for homeowners.
If the interest deduction lapses, financing a residual debt becomes more expensive and the borrowing capacity when moving out becomes lower. Moving with a residual debt will therefore become more difficult, if not impossible, from 2018 onwards. Fortunately there are possibilities to finance a residual debt with a personal loan.
This means that you are going to borrow money for the remaining debt. But there are ways to prevent this or to reduce the residual debt now.
Do you know that your house is under water? Try to repay your mortgage extra now or start saving for the probable residual debt. The new rules make moving a lot harder. Therefore, arrange the residual debt financing on time because at the moment that your house is transferred to the notary, the entire mortgage must be repaid, including your residual debt.
The decrease in borrowing capacity and the cancellation of the interest deduction are in addition to another reduction. From January 1, 2018, a maximum of 100% may be borrowed instead of 101% of the home value.
All additional costs, such as transfer tax (2%), appraisal and notary fees, will then have to be paid from own resources. All these rules ensure that you can borrow less money. A lower mortgage amount makes moving a lot harder.
From 2018, banks are expected to see the financing of the residual debt as a normal consumer credit. Good Finance is happy to look with you at the options for taking out a personal loan, residual debt loan or revolving credit to finance your residual debt. The duration of these loan forms is shorter and you do not have to pay costs such as notary fees and appraisal fees.
Make an appointment with your Good Financee Coach directly for more information and a customized solution. We are happy to look at the possibilities with you, how much you can wear each month and what best fits your personal and financial situation.
As an independent specialist, we have many years of experience in taking out affordable loans. Wouldn’t you rather pay more than necessary?