2023-08-29 14:44:43
The danger of payment problems and residual debts with interest-only mortgages has largely receded in the past three years. The number of households with a risky interest-only mortgage has decreased from almost 600,000 at the beginning of 2020 to more than 200,000 now.
The number of homeowners with an increased risk due to an interest-only mortgage has decreased by 63 percent, the Netherlands Authority for the Financial Markets (AFM) reports.
Homeowners with an interest-only mortgage can get into serious trouble if the value of their home does not increase or even decreases. They noticed this, for example, during the credit crisis. After a sale with a substantial loss, they fell into debt.
It can also be problematic if you cannot pay off the entire mortgage at the end of the term or cannot take out a new loan.
Homeowners are no longer likely to sell at a loss
That risk has become much less in recent years. This is partly because house prices have risen sharply in recent years. As a result, homeowners with an interest-only mortgage are less likely to sell their home at a loss.
The AFM and mortgage providers have also made efforts in recent years to inform homeowners about the risks and to encourage them to take action.
For example, they can convert their mortgage to a variant in which they do pay off. Homeowners can also save extra so that they can pay off at the end of the term. According to the regulator, many of these mortgages expire between 2033 and 2038.
Interest-only mortgages are now less attractive
Since 2019, the AFM has informed nearly 1.7 million homeowners with an interest-only mortgage about possible risks of residual debts. More than 740,000 of these have taken action, the regulator reports.
The interest-only mortgage was very attractive in terms of monthly costs in a period when house prices were only rising. This was partly due to the mortgage interest deduction. Since 2013, you have to pay off a new mortgage in monthly increments if you want to be eligible for mortgage interest deduction. This has made an interest-only mortgage much less attractive for homebuyers.
If you already had an interest-only mortgage from before 2013, you will still receive interest deduction.
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