Taking advantage of excess value? Here are the possibilities
The extreme craziness in the housing market is now over, but home prices are still very high compared to a decade or so ago. That means many homeowners have a surplus value on their homes. Surplus value is the difference between the current sales value of a home and the mortgage taken out for it.
A large excess value can be created by rising house prices and additionally by paying off the mortgage. In any case, the money is released when you sell the house and, for example, move down in size and therefore cheaper. But there are also possibilities to use your surplus value already while you are still living in the house.
Why cash in surplus value?
"What do you want to use your home's surplus value for? The answer to that question is different for everyone. Some people want to use the money to preserve or renovate their home, while others want to use the money for a major expense or a nice trip. It is also possible to use the money to assist your children financially, for example to buy a home."
Raymond Naedenoen
Mortgage advisor at Alpina Roerdalen
You can take advantage of your home's surplus value in several ways. We list the most common options for you.
Increasing your mortgage
The maximum mortgage depends, among other things, on the value of your home. If you have a surplus value, you can increase your mortgage. Provided your income allows it. Your lender will re-evaluate your income. Is your mortgage registered in the Land Register for a higher amount than the amount of your current mortgage? Then you do not have to go to the notary again.
A second mortgage
A second option is to take out a second mortgage, if that is also financially feasible. You may then choose a different mortgage type and term than your existing mortgage. You also have to deal with the new interest rates for your new mortgage.
Options for seniors
Over-50s in particular have high excess value on their homes. They have often lived in the same house for some time, so the house has increased in value and the mortgage has just been paid off for the most part. Then it is interesting to see what you can do with the surplus value.
An additional mortgage is less appropriate for some seniors. This is because, especially after retirement age, many seniors are dealing with a lower income. This can make taking out an (additional) mortgage difficult.
Fortunately, there are special options for seniors. For example, some mortgage lenders assume the actual cost of a mortgage. This makes an interest-free mortgage interesting because then you only pay interest and no repayment. An installment-free mortgage is possible up to a maximum of fifty percent of the home value. However, keep in mind that you can no longer take advantage of the mortgage interest deduction for interest-free mortgages taken out after 2013.
The notice mortgage
The top-up mortgage is a special type of mortgage for those over 60. You can withdraw part of the surplus value in one lump sum or in monthly installments. A combination of the two options is also possible. The interest you have to pay on the mortgage amount is added to the debt. As a result, you have no additional monthly charges. You pay off the debt - including the interest - in one lump sum when you sell the home.
There are a number of mortgage lenders that offer this type of mortgage. Your maximum loan amount depends on several factors such as your age, interest rate and home value.
Always be well advised
Always get good advice on your mortgage and how to use the surplus value. A mortgage is tailored to your personal situation and needs. Do you have questions about using the surplus value? Or about your mortgage in general? Please contact us. We will be happy to help you.
