Savings mortgage: how does it work again?

What exactly is a savings mortgage?

A savings mortgage consists of two parts that are tied together. You have an interest-only loan from the bank, plus a savings insurance policy (spaarpolis) into which you pay a monthly amount. That savings balance grows at an interest rate exactly equal to the mortgage rate you pay. At the end of the term, the amount in the policy, including all the accrued interest, is exactly enough to repay the loan in one go. So you never actually pay the loan down along the way: you save up the full amount in parallel.

Why can't you take one out anymore?

Since 2013 it has not been possible to open a new kapitaalverzekering eigen woning (home endowment insurance), spaarrekening eigen woning (home savings account) or beleggingsrecht eigen woning (home investment account). Existing products may fall under transitional tax rules, which means the tax treatment can differ from what applies to a new mortgage. That is why you shouldn't simply compare an existing savings mortgage with a new annuity or linear mortgage.

The tax advantage: existing exemptions and transitional rules

With an existing savings mortgage, the value built up in the policy can, under certain conditions, be treated differently for tax purposes than ordinary savings in box 3, the Dutch tax box for savings and investments. Which exemption applies, and under which conditions, depends among other things on the type of product, the date you took it out, and what has happened to the policy or account since. That is why we deliberately leave the exact exemption amount out of this article: with these products, a small change can have major tax consequences.

Refinancing a savings mortgage: what to watch for

A lower rate elsewhere can be tempting, but refinancing a savings mortgage is not a simple copy-and-paste job. Your existing policy or savings account may be part of the transitional tax arrangement, and ending, changing or transferring it can have tax consequences. The insurer may also charge fees or apply conditions of its own. So before you commit to anything, have the numbers done: what is your existing arrangement actually worth to you, and what would refinancing really save?

When is refinancing worth it after all?

Sometimes a lower rate outweighs the tax advantage. Perhaps you were planning to renovate anyway, you expect to move within a few years, or your policy only covers a small part of the loan by now. A change in your circumstances, such as a divorce or the loss of an income, can also make a different mortgage type a better fit. There is no standard answer: it depends on your remaining term, the value built up in your policy, and your personal plans for the home.

Curious what your savings mortgage is worth?

Want to know whether refinancing makes sense in your case, or whether you're better off leaving things exactly as they are? We're happy to run the numbers with you: no hassle, no obligations. Call us on 06 52 69 88 22 or email Martin@belderbrandt.nl. We're based in Tilburg, and we're glad to help whether you stay put or have your eye on something new.