Increasing your mortgage to withdraw home equity
It is quite possible that the value of your home exceeds the mortgage you have. In that case there is an excess value. With this excess value you can do all kinds of things, such as renovate your home, but also buy a car, for example. On this page we tell you all the important information about withdrawing the excess value of your home.
What is excess value?
Excess value occurs when the value of your home exceeds the amount of your current mortgage. The two main reasons for the creation of excess value are rising market values and paying off your mortgage. Often it is a combination of the two. Excess value can be seen as equity. However, the money is not immediately available to you. It's in the bricks. There are ways to withdraw your equity by increasing your current mortgage. Of course, the excess value would also be released if you were to sell your home.
It is also possible that your home is worth less than the amount of your current mortgage. In that case you speak of a negative equity. This is also called a residual debt. If you were to sell your home at that time, you would be left with a debt.
Using your excess value
It is important to have a clear picture in advance of what you might want to use the excess value for. If you want to use the excess value to renovate or make your home more sustainable, you can use a construction deposit. This will be a new loan part on top of your existing mortgage. You pay today's interest on this new loan part. The mortgage interest on a construction loan is tax deductible. Here you can find more information about increasing your mortgage for a renovation.
It is also possible to take the surplus value for something else. For example, to buy a car, a second home and so on. In that case we speak of a consumer credit mortgage. This means that the excess value is not used to purchase or improve the property. The mortgage interest you pay on this type of mortgage is not tax deductible. Also, it is not possible to take out such a mortage mortgage with every mortgage provider. In an introductory call we can discuss the possibilities in your situation.
Calculate your maximum mortgage
Refinancing your mortgage and switching to another mortgage provider
If you plan to withdraw the excess value on your home, you may want to look at increasing your existing mortgage. In addition, you can also look at the benefits of refinancing your mortgage and include the increase in that.
Over the years, your needs may have changed. It is also possible that your existing mortgage is no longer entirely appropriate. This could be a reason not to increase your mortgage, but to transfer it to a new bank. In addition, it is also possible that you may be offered a lower mortgage rate at another bank and thus be more financially advantageous.
In an advisory call we will compare the two options. Together we will look at an option that appeals to you the most.
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1. Considering your options
It's wise to first have an idea of what exactly you want to do with your excess value and how much you need for this. It is also wise to have a mortgage advisor calculate by how much you could increase your mortgage based on your income and on the market value of the home. This initial consultation is always free and non-binding, and you can call or email us with questions as often as you like!
2. An advisory call
In this conversation, we will discuss the key elements of the mortgage that best suits your personal situation. When you increase the mortgage, you will need to think about the fixed rate period, the exact amount and the type of repayment. When you refinance the mortgage, we also compare the different conditions mortgage providers have. Income risks are also mapped out, so that you know what risk you run if, for example, you become (partially) unfit for work and with what insurance you can cover such risks. After the consultation you will also receive an advisory report. This summarizes what was discussed during the advisory call, so you can read it at your own convenience.
3. Applying for the mortgage
Your mortgage advisor will apply for the desired mortgage for you. After applying for the mortgage, your mortgage advisor will indicate exactly what documents are needed. After you provide these document, the various documents will be sent to the lender.
4. Signing the offer
Once the mortgage lender has approved your application, you will receive a binding offer. After signing the binding offer, the mortgage is settled. When you raise privately, you don't have to go to the notary. If you take out a second mortgage or refinance your mortgage, you are ready for your appointment with the notary, where you sign the mortgage deed.
5. Mortgage settled!
Once you have applied for a consumer credit mortgageg, you will receive the requested mortgage amount in your bank account.
In most cases, the money for the remodel will be deposited in a construction deposit. You can claim this money by sending a remodeling invoice from a contractor or supplier to the lender.