Remortgaging
Easily refinance your current mortgage with specialist advice from De Ondernemershypotheek.
Is it smart to refinance your mortgage?
Refinancing your mortgage can be attractive, especially if, as a self-employed professional or entrepreneur, you want lower monthly payments or need additional financing. Before taking this step, however, it is important to determine whether remortgaging is truly beneficial in your situation. As a self-employed entrepreneur, you want to be sure it is financially feasible.
When you take out a new mortgage on your existing home, we call this remortgaging. This offers the opportunity to revise your interest rate, term and possibly the mortgage amount. There are several reasons to consider this:
- Renovation: Do you want to renovate your home and need additional financing? You can remortgage and combine it with an increase to cover the renovation.
- Lower interest rate: When interest rates are historically low, remortgaging can save you a lot of money.
- Changes in your personal situation: A new mortgage may better suit your current life situation.
- Using surplus value: Does your home have surplus value? You may consider taking out a higher mortgage to use this surplus value.
Remortgaging an interest-only mortgage
Do you have an interest-only mortgage and want to refinance it? Be aware that you cannot always keep the same conditions. Many lenders apply the rule that the interest-only part of your mortgage may not exceed 50% of the market value of your home. This may mean you have to adjust your mortgage type when remortgaging.
In addition, since 2013 you only receive interest deduction if you choose an annuity or linear mortgage, where you repay the full loan over a 30-year period.
What should you keep in mind as a self-employed professional or entrepreneur?
As a self-employed person, there are a number of specific things to watch out for when remortgaging:
- Home value: The value of your home must be higher than the amount of your mortgage. If your home is "underwater", it becomes harder to get approval for remortgaging.
- Savings mortgage: With a savings mortgage, remortgaging usually offers little benefit, because the interest on your savings pot is linked to the mortgage interest rate. With a lower rate, you have to contribute more to reach your target capital.
- Costs: Think of notary fees, brokerage fees, advice fees and valuation costs. A penalty may also apply if your current fixed-rate period has not yet ended.
- Income statement: As an entrepreneur, you must be able to demonstrate how much you earn. This can be done with annual accounts and other financial documents. Even if you have only been self-employed for a year, it is often possible to get a mortgage through us.
Costs of remortgaging
When remortgaging, you will face various costs, including notary fees, advice fees, valuation costs and possibly a guarantee fee for NHG. If your fixed-rate period is still running, you must also take a penalty into account. Fortunately, these costs are tax-deductible if the new mortgage replaces a loan for your own home.
Pitfalls of remortgaging
Remortgaging your mortgage can be beneficial, but watch out for a few pitfalls:
- Mortgage interest deduction: With a lower interest rate, your mortgage interest deduction also decreases. In the first year, the remortgaging costs are deductible, but this is only a one-time benefit.
- Conditions: Do not only go for the lowest interest rate, but also pay attention to the bank's conditions, such as risk surcharges and how the bank handles interest rate adjustments during the term.
Get advice from De Ondernemershypotheek
Would you like to refinance your mortgage? Whether it concerns an interest-only mortgage or a regular remortgage, we are here to guide you. Our advisors specialize in mortgage advice for the self-employed and entrepreneurs, so you can be sure you are making the right choice.