Which mortgage should I take out? It is a question that I can very well imagine, firstly there are many types of mortgage and secondly the information that is given is not always easy to compare.
Let’s try to take a closer look at the most popular mortgage types, so that comparing them becomes a little easier.
Which mortgage should I take out?
A mortgage is actually a mortgage loan, but because most people know this form of borrowing better as a mortgage, we will use this term. Before the crisis broke out, banks pushed hard to make sure that people who came for a mortgage were mainly required to take out an investment mortgage.
It has now become apparent that a lot of people have got into trouble because of this, not only because of poor returns on investments, but mainly because so much was left on the bank’s bow. Even with good investment results, the consumer would not see much of it. The only ones that benefited maximally from this were the banks.
Perhaps one of the first types of mortgage that was granted in the Netherlands. With an annuity mortgage, the consumer does not run any risk with regard to interest and prospects.
With an annuity mortgage, the entire loan is repaid at the end of the term.
The entire structure of this form is that the total loan amount including interest equivalent is spread over the repayment term. So you pay the same amount per month for the entire period and at the end everything is repaid.
With this form you do not pay even an amount per month, in the beginning you pay more than with a later period. This is because the interest is calculated on the basis of the principal amount of the loan.
As time goes by, the main sum decreases and the interest rate therefore goes down. At the end of the journey you therefore only pay a low monthly amount. Also with this loan form everything is paid off to the end and you are completely rid of it.
A top mortgage is characterized in that the loan amount exceeds the foreclosure value of the house. This means that in addition to paying for the house, you still have money left over for a possible renovation or furnishing the new house.
The disadvantage of a top mortgage is that the interest is higher than with other mortgage types. This is because the bank must take a risk into account when you are no longer able to repay your mortgage. Due to the over-financing, the bank has the risk of losing money on the transaction.