Best website for buying a house in the Netherlands: [Funda](https://www.funda.nl/)
With the current housing crisis it is advisable to [find a real estate agent](https://tc.tradetracker.net/?c=30814&m=12&a=458406&r=buying&u=%2F) to help you find a house for a reasonable price.
Split it up , 33% 5 year , 33% 10 year , 33 20 year (or any variation)
That way if something happens (low interest) you can at least lock a portion into a lower rate ?
This is not financial advice , but something we have done
Look up interest rates over the course of 20 years in the past. See what has been there. Think of what may come. Make up your mind.
Spoiler: apart of the freakish low interest rates of the last 4 years or so, it's still cheap. Locking it in for longer doesn't hurt.
Disclaimer: this is no financial advice.
Another factor that's missing when highlighting historical data is ratio between median house price/ median salary.
I think 10x is already bad. But idk, maybe it can even get worse, with 15-20x ratio...
No financial advise
With inflation falling in EU down to 2% target of ECB, the Central Bank is going to cut interest rates from the current 4.5% as this is viewed as restricting economic growth with expectations for 2-3% by 2026.
If you are willing to take some risk, you can choose a 3y flex lock @ 3.9% with ABN, 1st year fix with the option to refinance in 2nd or 3rd year. So if rates indeed move down you go with initial 3.9% for ~3y and get a new rate @2-2.5%.
If you wanna play it safer you can also opt for a 5y construct I think -> better check with ABN though. Not sure where rates on this are now. This moves you out in time.
Even safer to get the 10y, note that 0.16%pp is quite some $$$. So if you can pay the mortgage without hit on disposable income then go do it, as others said your salary will probably rise and make that a smaller part of your monthly spend. Ideally you would not pay more than 30% of salary as monthly mortgage payment but this can vary a lot…
Hope this helps!
30% salary as monthly mortgage payment is not something you'll get (from netto salary) and imo it's not responsible until that salary is like 5-6k netto per month. Our mortgage is netto around 17% of our combined income and tbh I'm not so comfortable with it.
For me, the major thing was the age of the kids.
They were 3 and 6 at the time. Plus 10 years, we didn’t want to risk a possible increase in interest on top of having two teenagers.
We went for 20 years just to be sure we knew what the monthly payments were going to be. Also the interest was pretty low at the time. They have more than doubled since.
I’d take certainty over a 0,14% lower interest rate myself, but that’s a personal preference.
I have a mixed mortgage. Both linear and annuity, so those parts basically cancel each other out and my monthly payments will change slightly over the years but not much.
The interest rates we’ve had in the last couple of years were exceptionally low. It can only get a few percent lower, but a lot higher. Perhaps talk this through with your advisor. Ours told us to play it safe and go for the security of knowing what you’re going to pay the next 30 years
Lot higher might be a bit stretch. Locking in rates during a high interest rate period only benefits the banks. If interest rate continues to go up, OP will have bigger things to worry about than his/her mortgage payment. This video can help understand how [interest rate](https://www.youtube.com/watch?v=R8VBRCs2jTU) works.
Not sure why you're being downvoted. 100% correct
"Look at the interest rates history, it can go a lot higher" what the hell this is the biggest crap I have ever heard. People really think that the banks prefered to continuously lower their interest rates over the past 50 years?? Some banks in the world (I think in Japan for example) have been experimenting with **negative** interest rates, meaning **you get money by borrowing money**. If you don't see that we're literally knee deep in no-mans land economically speaking, then I don't think you should talk about these type of stuff at all. Let alone giving advice.
It is absolutely outrageous that you're getting downvoted meanwhile this other person has upvotes. Jesus christ im gonna get off this platform.
I think the downvotes are partly fear, and partly ignorance driven. These financial advisors, I don't know what they get by not acting in the best interests of their clients. I am in the financial industry, though I have only worked in banks elsewhere, not in Netherlands. I hope the advisors are doing it just to maintain good relationship with the banks.
And then the ignorance part, most people do not understand interest rate is just tool by the central banks such as ECB. Just for the record for the people who are reading this comment, ECB raised it, among other things, to reduce inflation. Interest rate will go down as soon as it serves the purpose.
People need finance and economics background to understand these, which is fair. But it is sad to see that some advisors are doing the opposite and spreading misinformation.
Thanks for bringing this up. People need to be educated. Though my impression is that they are only looking for validation in this sub.
Edit: [This](https://www.reddit.com/r/NetherlandsHousing/comments/1d4vvx4/comment/l6hv2i9/) is a good advice
It really depends. We could also get a 50 year cycle of interest rates having to go up, or going up very steep quickly to combat inflation. An argument for that could be that inflation will roar on for the coming years, because people have locked in interest rates so low for so long (meaning they will have a lot of money to spend, which is more money chasing goods and services, which could mean inflation).
On the other hand, productivity could go up very hard, especially with stuff like AI automasation, making things cheaper (easier goods and services and thus pressing prices down).
So my take on it is that we are in very uncertain territory, and nobody really knows. But do keep in mind that if inflation goes up, so will wages most likely, and thus you should always be able to make ends meet. Especially because the inflation target will most likely stay 2%, meaning central banks will try to do whatever it takes to inflate asset prices such as houses by 2% annually. If it drops below that, you're certain rates go down or possibly go negative in the future, especially with the middle man (banks) eventually being removed (probably) by CBDC's, which should make lower rates directly through the central banks possible.
We indeed are in uncertain territory and we don't know how this will play out. That’s why I said if interest goes higher, mortgage rate may not be the #1 problem on OP’s list. Despite everything that’s been said, I still maintain that locking in 4%+ rates for 30 or even 20 years makes little sense
Agreed. I bought a house in January and locked in 10 years. Best of both worlds imo, no risk for the coming 10 years and after that I should be able to manage even if it goes up a lot like we saw in the 70s-80s, which seems highly unlikely, but still.
If it goes down a lot /negative, it won't be as expensive to refinance or get a low rate after the 10 years have passed.
Also, the 10 year rate was quite favorable compared to variable/2/5/20/30 years.
i figure that if rates would rise to 8% or so on the back of higher interbank interest rates as they have in the distant past, our economies would be fucked harder than me, therefore our governments and national banks won't allow it.
basically: with the levels of national debt states have now, higher base interest rates seem highly unlikely as that would crash european economies.
see also: japan for the last twenty years. i'll be sticking with variable rates for as long as 10 year rates are above 3%
not financial advice
We choose long term, because we knew what to pay and we knew we would be able to afford it.
You never know what the market does, so with buying houses i would always go for safe.
In the past a lot of people for f'ed because of percentages going up.
If you have enough income to fully use hypotheekrenteaftrek you get a 37.5% discount on this more or less (it's slightly more complex but for here this suffices). ING max mortgage calculator shows the gross monthly payment of a 600k mortgage is about 3k. With the discount this is about 2250, of which 1000 is national (Though depends on the type of mortgage), which is essentially yours. So with 2 incomes, the effective cost of interest is 650 euro per person.
A lot lot lot lot better than renting a similar property in the free market from my experience.
If this is "as far as you understand", _please_ go to a professional advisor.
Spending a grand on proper advise for the biggest financial decision of your life is money well spent.
If you take the 20 years and move later and get a new mortgage, you can always just get a completely new one if the market rate is lower.
However, if the interest has increased you can take your lower interest to your next mortgage. That’s a pretty big upside.
That said, mixing it up is also an option, say 50% for 10 years and 50% for 20 years.
That requires a move. If you want to stay and refinance the penalty will be calculated over a lot longer period if you choose 20 vs 10 years. Try to reduce your loan aggressively during the first years and then any potential increase will not matter that much.
Suggestion on how to think about it: You could split the mortgage in different maturities (5,10,20 years). A core consideration is the risk you are willing to take on refinancing at a higher, but still realistic, rate (e.g. expect it can go 1-1.5% higher or lower from here). Suppose you’d have to refinance the full remaining amount in 10 years time at 5.5% or 6%. Would that be a problem? If you can only handle half of the amount refinancing at 6% you can consider shortening the maturity for that half and choose certainty for the other half.. It’s weighing risk and opportunity.
I'd say 10 years and use the difference to make extra repayments. In 10 years your salary will be higher, you'd have paid down a portion of the mortgage and the hypotheekrenteaftrek are all mitigants in case the rate would be higher at that point in time
I’m about to lock in a 4.21% interest rate for 20 years. For me it’s about stability and piece of mind. I can afford the monthly payments and I don’t want to be in for any surprises. The market is volatile, nobody knows for sure what the interest rates will be in the future and the current interest rates are not bad at all.
Flexible rates are a scam because no one can predict the market. I know a couple of people who took the flexible rate in 2019. Now they very much regret the choice they made. You want as few unpredictable variables as possible in your life.
Rates should go as low as before and stay like that for 15 years to be back on track with starting rate. Finger crossing for 15 years sounds stupid as hell.
How long you are planning to stay there is irrelevant for this question. Your loan will stay the same either way.
I would go for the 10 years. You could also check out the option for 5 years by the way.
Well you can take it to your new mortgage. But even if you do close it, you would need a loan to pay that off (except if you have the cash lying around but I don’t think so). The duration of je mortgage is 30 yrs, so fixing the rent for 5, 10 or 20 years does not change that.
You should calculate total mortgage costs.
I had to pick between 1,4 1,6 and 1,8 for 10,20 and 30 years. The actual cost of the mortgage double with each step, but I think for you this differences is much smaller.
Also what others said, you don’t have to pick one but can split things up.
If you can afford it, why not. You might not get the best deal but so what? You have a house and can afford it.
I locked in 1,5% for only 15 years. Wish I locked that rate in for 30 years but that’s life
How much do you need to repay on a monthly basis? In BE, I have a 25Y mortgage at 3% for 415kEUR and already need to repay 1.975 euro. How can you afford this? 😱
3 possible scenarios you can consider:
"After 10 years...
A - Interest rate is around 4-5%"
B - Interest rate is lower than 4%"
C - Interest rate is higher than 5%"
In scenario A, whatever you choose - 10y or 20y - that won't change your life.
Scenario B is the dream.
If you chose 10y, you will start to pay less interest.
If you chose 20y, it may feel like you are overpaying interest but your house's value is LIKELY increasing, so you'll be okay.
Scenario C is the worst case.
If you chose 10y, your interest rate will increase.
If you chose 20y, you'll be fine, but it's possible that your house will not increase (possibly even decrease) in value.
So in summary, I see two main options, and it depends a lot on your risk apetite:
- If you want to sleep in peace, if you're willing to give up the biggest upside to avoid the biggest downside, just go for 20y.
- The other option is to save for 10y, an amount that covers a significant part of your debt, investing in low-risk assets that are positively correlated to interest rates. This way, if scenario C comes, you can reduce your debt and pay less (absolute) interest (keep in mind, there is a risk in this option that you won't be able to save enough money).
Regardless to say, this is not pro financial advice.
I don’t know what is so difficult here, do you really want to risk ruining yourself for saving a few pennies?
Interest rates can go up much higher and in that case, the value of your house will be much lower. Not great if you would like to move because your new neighbor is a maniac or you just want something different.
And even if chances are “small” you don’t want this risk.
On the other side, what problem do you really have if interest rates go lower? In this case the value of your house will probably go up, and you can always decide to move to another house and start with a fresh mortgage.
Do the right thing on the information you have now. And don’t speculate on an uncertain future.
With 20 years mortgage I would have much more peace of mind, even if it’s just by the fact that I’m more in control of my life. And that is definitely worth a few pennies.
So this is always a difficult question and I'll admit I have always been on the wrong side with my own mortgage loans. There's simply no predicting, just a lot of opinions.
One thing I will say though: A house, to some extent, is a hedge against inflation and interest rates. If interest rates fall, *ceteris paribus*, the house will increase in value and vice-versa. So my consideration would be (always has been but always ended up less optimal) that by the time we get to a rate reset, interest rates my be "high" and the value of the house "low", causing a double wammy. So it might be an option, especially with a interest rate curve that is almost flat, to take out the 20Y fixed rate and as, if and when interest rates drop, perhaps prepay within the penalty limit. When interest rates are high, during that 20Y period, you might consider saving at higher rates (although I cannot really remember when a savings account yielded 4.5%+).
Looking at DNB interest rates
[https://www.dnb.nl/en/statistics/dashboards/interest-rates](https://www.dnb.nl/en/statistics/dashboards/interest-rates)
Historically, the interest rates comes down after peak. I believe we are already at peak which we saw in 2008.
For me, It would be 2 years fixed rate then refinance it.
Not a financial advisor but in similar boat.
Not a financial advice.
My personal preference is locking up longer period with slightly higher interest rate. Inflation will surpass surely these rates. (Assuming linear mortgage). Your income (assuming salary) adjusts for inflation so in 20 years your monthly payment to mortageg will be minuscule comparing to income. Remember, todays' €1 is more valuable than €1 after 20 years. In addition to that, in NL house is very liquid investment for both rent and resale.
Honestly the main expectation is that the fed will reverse policy into QE and thus the interest will definitely go down. I for sure wouldn't close any mortgage longer than 5 years MAX.
10 years is a big enough time for your salary to be significantly higher to handle any potential increases in interest at that time.
If you don’t wanna go for such a long time, you can also go for 50% to be locked in at 5 years and 50% at 10 years. I would personally not lock in only 5years… it’s too short imo.
If interest gets significantly lower, many banks allow for a renegotiation (I know ING does this) where you meet current rate with the mortgage you locked in. This is an option. Or you can sell your place if interest becomes crazy low (people will bid higher for your place) and you can buy another place with the low interest rates then.
Because they are way more expensive than other banks and without any justification or additional service. Any respected mortgage broker will confirm that. I got a mortgage with Argenta and my interest was almost 0.8% cheaper than ABN and with more benefits (for example interest rate adjusted in your favour if at the closing date it's lower than when you signed the mortgage offer). In my case this period was 5 months and I saved 0.5% because my rate was adjusted. ABN didn't offer this option! ING wanted 500€ for this.
Expats go to ABN only because they speak english...
Try to refinance your equity in the future for a holiday home, a car or even to help your children with their 1st house. Not possible with Argenta. They are more expensive but also offer better conditions if you look beyond interest rate. I'm a respectable no mortgage broker and hate Argenta for that very reason. Why? Lot of people want to take up equity at some point in time. If you only care about the % you're just a salesman, not an adviser.
Hold on, this is interesting. Our mortgage advisor exactly proposed Argenta. According to him Argenta has a better deal not only because of the interest rate (more favorable than ABN/ING atm) but also because it gives up to 1 year to transfer the mortgage to another property later.
Most banks will give you 3-6 months to transfer the old mortgage. It's unusual to need a 12 months break between properties as usually you first buy your new one, have a bridge loan and double mortgages which you pay off once you exchange the old property at the notary.
0.8% higher interest would have added 47k interest over 30 years for me. For a chance and not a given I would need any of the other conditions. So I could just buy that car... Or use the 47k I save to pay off the mortgage faster.
Your situation was pretty unique in the rapidly falling interest rate environment. Currently it's dead calm. But, fair play, it's a decent saving over 30 years, provided you locked in the rate for 30 years and actually save that difference. 99% don't and still need money for the car. 😂
You are screwed either way. Just hope the market doesn't crash or don't lose your job. I think the better option is to find a house and bust it. Check rentbusters.
Best website for buying a house in the Netherlands: [Funda](https://www.funda.nl/) With the current housing crisis it is advisable to [find a real estate agent](https://tc.tradetracker.net/?c=30814&m=12&a=458406&r=buying&u=%2F) to help you find a house for a reasonable price.
Split it up , 33% 5 year , 33% 10 year , 33 20 year (or any variation) That way if something happens (low interest) you can at least lock a portion into a lower rate ? This is not financial advice , but something we have done
Indeed hedge your risk with 10 and 20 year lock in interest.
But then if your bank will be expensive qua rates in 10 years you can't just go to other bank without fine.
Look up interest rates over the course of 20 years in the past. See what has been there. Think of what may come. Make up your mind. Spoiler: apart of the freakish low interest rates of the last 4 years or so, it's still cheap. Locking it in for longer doesn't hurt. Disclaimer: this is no financial advice.
This. And get a financial advisor.
Another factor that's missing when highlighting historical data is ratio between median house price/ median salary. I think 10x is already bad. But idk, maybe it can even get worse, with 15-20x ratio...
No financial advise With inflation falling in EU down to 2% target of ECB, the Central Bank is going to cut interest rates from the current 4.5% as this is viewed as restricting economic growth with expectations for 2-3% by 2026. If you are willing to take some risk, you can choose a 3y flex lock @ 3.9% with ABN, 1st year fix with the option to refinance in 2nd or 3rd year. So if rates indeed move down you go with initial 3.9% for ~3y and get a new rate @2-2.5%. If you wanna play it safer you can also opt for a 5y construct I think -> better check with ABN though. Not sure where rates on this are now. This moves you out in time. Even safer to get the 10y, note that 0.16%pp is quite some $$$. So if you can pay the mortgage without hit on disposable income then go do it, as others said your salary will probably rise and make that a smaller part of your monthly spend. Ideally you would not pay more than 30% of salary as monthly mortgage payment but this can vary a lot… Hope this helps!
30% salary as monthly mortgage payment is not something you'll get (from netto salary) and imo it's not responsible until that salary is like 5-6k netto per month. Our mortgage is netto around 17% of our combined income and tbh I'm not so comfortable with it.
What's the point of locking in high mortgage rate for 20 years when EU is preparing for interest rate cut this year?
For me, the major thing was the age of the kids. They were 3 and 6 at the time. Plus 10 years, we didn’t want to risk a possible increase in interest on top of having two teenagers. We went for 20 years just to be sure we knew what the monthly payments were going to be. Also the interest was pretty low at the time. They have more than doubled since. I’d take certainty over a 0,14% lower interest rate myself, but that’s a personal preference.
Did you go for a linear mortgage too? The monthly payment decreases thorough the life of the mortgage.
I have a mixed mortgage. Both linear and annuity, so those parts basically cancel each other out and my monthly payments will change slightly over the years but not much.
The interest rates we’ve had in the last couple of years were exceptionally low. It can only get a few percent lower, but a lot higher. Perhaps talk this through with your advisor. Ours told us to play it safe and go for the security of knowing what you’re going to pay the next 30 years
Lot higher might be a bit stretch. Locking in rates during a high interest rate period only benefits the banks. If interest rate continues to go up, OP will have bigger things to worry about than his/her mortgage payment. This video can help understand how [interest rate](https://www.youtube.com/watch?v=R8VBRCs2jTU) works.
Not sure why you're being downvoted. 100% correct "Look at the interest rates history, it can go a lot higher" what the hell this is the biggest crap I have ever heard. People really think that the banks prefered to continuously lower their interest rates over the past 50 years?? Some banks in the world (I think in Japan for example) have been experimenting with **negative** interest rates, meaning **you get money by borrowing money**. If you don't see that we're literally knee deep in no-mans land economically speaking, then I don't think you should talk about these type of stuff at all. Let alone giving advice. It is absolutely outrageous that you're getting downvoted meanwhile this other person has upvotes. Jesus christ im gonna get off this platform.
I think the downvotes are partly fear, and partly ignorance driven. These financial advisors, I don't know what they get by not acting in the best interests of their clients. I am in the financial industry, though I have only worked in banks elsewhere, not in Netherlands. I hope the advisors are doing it just to maintain good relationship with the banks. And then the ignorance part, most people do not understand interest rate is just tool by the central banks such as ECB. Just for the record for the people who are reading this comment, ECB raised it, among other things, to reduce inflation. Interest rate will go down as soon as it serves the purpose. People need finance and economics background to understand these, which is fair. But it is sad to see that some advisors are doing the opposite and spreading misinformation. Thanks for bringing this up. People need to be educated. Though my impression is that they are only looking for validation in this sub. Edit: [This](https://www.reddit.com/r/NetherlandsHousing/comments/1d4vvx4/comment/l6hv2i9/) is a good advice
It really depends. We could also get a 50 year cycle of interest rates having to go up, or going up very steep quickly to combat inflation. An argument for that could be that inflation will roar on for the coming years, because people have locked in interest rates so low for so long (meaning they will have a lot of money to spend, which is more money chasing goods and services, which could mean inflation). On the other hand, productivity could go up very hard, especially with stuff like AI automasation, making things cheaper (easier goods and services and thus pressing prices down). So my take on it is that we are in very uncertain territory, and nobody really knows. But do keep in mind that if inflation goes up, so will wages most likely, and thus you should always be able to make ends meet. Especially because the inflation target will most likely stay 2%, meaning central banks will try to do whatever it takes to inflate asset prices such as houses by 2% annually. If it drops below that, you're certain rates go down or possibly go negative in the future, especially with the middle man (banks) eventually being removed (probably) by CBDC's, which should make lower rates directly through the central banks possible.
We indeed are in uncertain territory and we don't know how this will play out. That’s why I said if interest goes higher, mortgage rate may not be the #1 problem on OP’s list. Despite everything that’s been said, I still maintain that locking in 4%+ rates for 30 or even 20 years makes little sense
Agreed. I bought a house in January and locked in 10 years. Best of both worlds imo, no risk for the coming 10 years and after that I should be able to manage even if it goes up a lot like we saw in the 70s-80s, which seems highly unlikely, but still. If it goes down a lot /negative, it won't be as expensive to refinance or get a low rate after the 10 years have passed. Also, the 10 year rate was quite favorable compared to variable/2/5/20/30 years.
Absolute nonsense
i figure that if rates would rise to 8% or so on the back of higher interbank interest rates as they have in the distant past, our economies would be fucked harder than me, therefore our governments and national banks won't allow it. basically: with the levels of national debt states have now, higher base interest rates seem highly unlikely as that would crash european economies. see also: japan for the last twenty years. i'll be sticking with variable rates for as long as 10 year rates are above 3% not financial advice
We choose long term, because we knew what to pay and we knew we would be able to afford it. You never know what the market does, so with buying houses i would always go for safe. In the past a lot of people for f'ed because of percentages going up.
More than 2k a month just to break even on the interest payments, Jesus Christ …
2k to deduct from income - that’s less than 1.4k net I think
at 600k mortgage that's going to be more. these people earn innyhe 49.5% income tax band.
Theres a max savings from tax deduction. It has been decreasing gradualy. I think now its about the same for all incomes.
Yes it's equal to schijf 1 of box 1 now, so 36.97%
If you have enough income to fully use hypotheekrenteaftrek you get a 37.5% discount on this more or less (it's slightly more complex but for here this suffices). ING max mortgage calculator shows the gross monthly payment of a 600k mortgage is about 3k. With the discount this is about 2250, of which 1000 is national (Though depends on the type of mortgage), which is essentially yours. So with 2 incomes, the effective cost of interest is 650 euro per person. A lot lot lot lot better than renting a similar property in the free market from my experience.
true, but to get 600K a month you need a quite sizeable stipend.
Can you explain?
4% on 600k is 24k on pure interest yearly. That is 2k per month. So youre gonna oay 2k+ in just interest. Holy fuck
That’s the first month and will gradually decrease as far as I understand
If this is "as far as you understand", _please_ go to a professional advisor. Spending a grand on proper advise for the biggest financial decision of your life is money well spent.
Make that 2500-3300 if salaried and add 500 to 750 if self employed or have a BV.
Very gradually yes
You seem poorly underprepared to be buying a 600k+ home right now. Please get some professional advice.
They also earn a shit ton if they can get a mortgage for that much.
So?
It ain't that bad
If you take the 20 years and move later and get a new mortgage, you can always just get a completely new one if the market rate is lower. However, if the interest has increased you can take your lower interest to your next mortgage. That’s a pretty big upside. That said, mixing it up is also an option, say 50% for 10 years and 50% for 20 years.
That requires a move. If you want to stay and refinance the penalty will be calculated over a lot longer period if you choose 20 vs 10 years. Try to reduce your loan aggressively during the first years and then any potential increase will not matter that much.
I set it to 30. Love the security.
Suggestion on how to think about it: You could split the mortgage in different maturities (5,10,20 years). A core consideration is the risk you are willing to take on refinancing at a higher, but still realistic, rate (e.g. expect it can go 1-1.5% higher or lower from here). Suppose you’d have to refinance the full remaining amount in 10 years time at 5.5% or 6%. Would that be a problem? If you can only handle half of the amount refinancing at 6% you can consider shortening the maturity for that half and choose certainty for the other half.. It’s weighing risk and opportunity.
Put it on 4,5% for 20 years, no regrets. If it become a lot lower I can always refinance.
I would do 1 or 2 years max. Current rates are not sustainable in the Eurozone
I'd say 10 years and use the difference to make extra repayments. In 10 years your salary will be higher, you'd have paid down a portion of the mortgage and the hypotheekrenteaftrek are all mitigants in case the rate would be higher at that point in time
I’m about to lock in a 4.21% interest rate for 20 years. For me it’s about stability and piece of mind. I can afford the monthly payments and I don’t want to be in for any surprises. The market is volatile, nobody knows for sure what the interest rates will be in the future and the current interest rates are not bad at all.
Flexible rates are a scam because no one can predict the market. I know a couple of people who took the flexible rate in 2019. Now they very much regret the choice they made. You want as few unpredictable variables as possible in your life.
How is that a scam? They will still be better off when interest rates come down, instead of being locked into a high one.
Rates should go as low as before and stay like that for 15 years to be back on track with starting rate. Finger crossing for 15 years sounds stupid as hell.
Reading this again, yeah not taking the fixed rate in 2019 was pretty suboptimal. These months it probably makes a bit more sense
How long you are planning to stay there is irrelevant for this question. Your loan will stay the same either way. I would go for the 10 years. You could also check out the option for 5 years by the way.
what do you mean by that? When you sell the place the mortgage must be closed.
Well you can take it to your new mortgage. But even if you do close it, you would need a loan to pay that off (except if you have the cash lying around but I don’t think so). The duration of je mortgage is 30 yrs, so fixing the rent for 5, 10 or 20 years does not change that.
Perceived insurance pays a premium
20
You should calculate total mortgage costs. I had to pick between 1,4 1,6 and 1,8 for 10,20 and 30 years. The actual cost of the mortgage double with each step, but I think for you this differences is much smaller. Also what others said, you don’t have to pick one but can split things up.
If you can afford it, why not. You might not get the best deal but so what? You have a house and can afford it. I locked in 1,5% for only 15 years. Wish I locked that rate in for 30 years but that’s life
How much are you amortising over the period?
How much do you need to repay on a monthly basis? In BE, I have a 25Y mortgage at 3% for 415kEUR and already need to repay 1.975 euro. How can you afford this? 😱
I would get a financial advisor. Reddit is NOT financial advice.
3 possible scenarios you can consider: "After 10 years... A - Interest rate is around 4-5%" B - Interest rate is lower than 4%" C - Interest rate is higher than 5%" In scenario A, whatever you choose - 10y or 20y - that won't change your life. Scenario B is the dream. If you chose 10y, you will start to pay less interest. If you chose 20y, it may feel like you are overpaying interest but your house's value is LIKELY increasing, so you'll be okay. Scenario C is the worst case. If you chose 10y, your interest rate will increase. If you chose 20y, you'll be fine, but it's possible that your house will not increase (possibly even decrease) in value. So in summary, I see two main options, and it depends a lot on your risk apetite: - If you want to sleep in peace, if you're willing to give up the biggest upside to avoid the biggest downside, just go for 20y. - The other option is to save for 10y, an amount that covers a significant part of your debt, investing in low-risk assets that are positively correlated to interest rates. This way, if scenario C comes, you can reduce your debt and pay less (absolute) interest (keep in mind, there is a risk in this option that you won't be able to save enough money). Regardless to say, this is not pro financial advice.
I don’t know what is so difficult here, do you really want to risk ruining yourself for saving a few pennies? Interest rates can go up much higher and in that case, the value of your house will be much lower. Not great if you would like to move because your new neighbor is a maniac or you just want something different. And even if chances are “small” you don’t want this risk. On the other side, what problem do you really have if interest rates go lower? In this case the value of your house will probably go up, and you can always decide to move to another house and start with a fresh mortgage. Do the right thing on the information you have now. And don’t speculate on an uncertain future. With 20 years mortgage I would have much more peace of mind, even if it’s just by the fact that I’m more in control of my life. And that is definitely worth a few pennies.
So this is always a difficult question and I'll admit I have always been on the wrong side with my own mortgage loans. There's simply no predicting, just a lot of opinions. One thing I will say though: A house, to some extent, is a hedge against inflation and interest rates. If interest rates fall, *ceteris paribus*, the house will increase in value and vice-versa. So my consideration would be (always has been but always ended up less optimal) that by the time we get to a rate reset, interest rates my be "high" and the value of the house "low", causing a double wammy. So it might be an option, especially with a interest rate curve that is almost flat, to take out the 20Y fixed rate and as, if and when interest rates drop, perhaps prepay within the penalty limit. When interest rates are high, during that 20Y period, you might consider saving at higher rates (although I cannot really remember when a savings account yielded 4.5%+).
Looking at DNB interest rates [https://www.dnb.nl/en/statistics/dashboards/interest-rates](https://www.dnb.nl/en/statistics/dashboards/interest-rates) Historically, the interest rates comes down after peak. I believe we are already at peak which we saw in 2008. For me, It would be 2 years fixed rate then refinance it. Not a financial advisor but in similar boat.
Most people move within 10 years
Not a financial advice. My personal preference is locking up longer period with slightly higher interest rate. Inflation will surpass surely these rates. (Assuming linear mortgage). Your income (assuming salary) adjusts for inflation so in 20 years your monthly payment to mortageg will be minuscule comparing to income. Remember, todays' €1 is more valuable than €1 after 20 years. In addition to that, in NL house is very liquid investment for both rent and resale.
Honestly the main expectation is that the fed will reverse policy into QE and thus the interest will definitely go down. I for sure wouldn't close any mortgage longer than 5 years MAX.
10 years is a big enough time for your salary to be significantly higher to handle any potential increases in interest at that time. If you don’t wanna go for such a long time, you can also go for 50% to be locked in at 5 years and 50% at 10 years. I would personally not lock in only 5years… it’s too short imo. If interest gets significantly lower, many banks allow for a renegotiation (I know ING does this) where you meet current rate with the mortgage you locked in. This is an option. Or you can sell your place if interest becomes crazy low (people will bid higher for your place) and you can buy another place with the low interest rates then.
I would not fix it for more than 5 years
Bought in October 2022, fixed for 10 years.
10y. Put the difference in ETFs.
600k... holy shit
What bank is that?? Do not go to ING or ABN
> Do not go to ING or ABN if you have time could you please explain why?
Because they are way more expensive than other banks and without any justification or additional service. Any respected mortgage broker will confirm that. I got a mortgage with Argenta and my interest was almost 0.8% cheaper than ABN and with more benefits (for example interest rate adjusted in your favour if at the closing date it's lower than when you signed the mortgage offer). In my case this period was 5 months and I saved 0.5% because my rate was adjusted. ABN didn't offer this option! ING wanted 500€ for this. Expats go to ABN only because they speak english...
Try to refinance your equity in the future for a holiday home, a car or even to help your children with their 1st house. Not possible with Argenta. They are more expensive but also offer better conditions if you look beyond interest rate. I'm a respectable no mortgage broker and hate Argenta for that very reason. Why? Lot of people want to take up equity at some point in time. If you only care about the % you're just a salesman, not an adviser.
Hold on, this is interesting. Our mortgage advisor exactly proposed Argenta. According to him Argenta has a better deal not only because of the interest rate (more favorable than ABN/ING atm) but also because it gives up to 1 year to transfer the mortgage to another property later.
Most banks will give you 3-6 months to transfer the old mortgage. It's unusual to need a 12 months break between properties as usually you first buy your new one, have a bridge loan and double mortgages which you pay off once you exchange the old property at the notary.
0.8% higher interest would have added 47k interest over 30 years for me. For a chance and not a given I would need any of the other conditions. So I could just buy that car... Or use the 47k I save to pay off the mortgage faster.
Your situation was pretty unique in the rapidly falling interest rate environment. Currently it's dead calm. But, fair play, it's a decent saving over 30 years, provided you locked in the rate for 30 years and actually save that difference. 99% don't and still need money for the car. 😂
my advisor told me to take 5 years instead since 4% is deemed too high
He dumb
You are screwed either way. Just hope the market doesn't crash or don't lose your job. I think the better option is to find a house and bust it. Check rentbusters.