During our personal and comprehensive advisory meeting, we prefer to avoid the use of a computer as much as possible. The reason for this is that we want you to understand properly how your personal mortgage calculations come about and what factors affect your monthly charges. And we manage it every time!
Man and wife, both aged 30. They have a joint gross income of € 70,000. They are looking at a house with an asking price of € 360,000. They hire a real estate agent and the final price for the property is € 350,000.
|Purchase price||€ 350,000|
|Costs paid by buyer 5%||€ 17,500|
|Mortgage requested||€ 367,500|
|Own savings||€ 17,500|
|Maximum mortgage||€ 350,000|
(100% of the value of the property in 2023)
After a comprehensive meeting, the preference is for an annuity mortgage of
€ 350,000 with a fixed interest for a period of 10 years with for instance 5% interest.
The corresponding monthly charges are:
I Interest (e.g. 5% for 10-year interest)
|Interest per month = 5%||€ 1,458|
|* € 350,000 / 12 months|
|Refund of the tax benefit of 37%||€ 540|
|Monthly net interest||€ 918|
II National rental value (based on the Real Estate Valuation Act value of €325,000)
Real Estate Valuation Act value of € 325,000
* 0.35% * 37% / 12 months = € 35,–
Home owners can deduct interest and costs of the loan for the property. They must however add a percentage (0.35%) of the value of the property to their income; this is the so-called notional rental value.
The notional rental value is the Real Estate Valuation Act value multiplied by 0.35%. The Real Estate Valuation Act value is set by the municipality to enable the level of local charges to be calculated.
III Mandatory annuity mortgage repayment of € 350,000 € 421,-
The characteristic of this mortgage is that the gross monthly remains the same throughout the mortgage. Over the years, the monthly net payment becomes higher so the couple pays the entire loan back over 30 years. To give an idea about the increase per month, you can think of a yearly increase of the monthly payment of about € 10.
IV Potential mandatory annuity mortality of € 175,000 € 15,-
Possibly the lender demands a life insurance or you will find it advisable to have a coverage in case of unexpected death. We can advise about the level of insurance and will also depend on your needs and available facilities such as a partner’s pension.
The amount of the monthly premium depends on age, term of the insurance, the insured amount and who is being insured (1 or 2 people). This example is based on a couple in their early 30’s.
V Insurance against unemployment or incapacity for work € 20,-
This insurance is not compulsory, but many people will want to have it, since in the event of unemployment or incapacity for work a considerable loss of income occurs. Paying the mortgage charges can then become a problem. We can calculate the amount of the income loss. On the basis of this we can map out the risks and either insure you or not. The amount of the premium depends among other things on age, the term of the insurance, the insured amount and who is being insured (1 or 2 people).
Total net monthly charge is the sum of I+ II+ Ill+ IV+ V € 1,409,–
The above calculation is only intended as an example. During our comprehensive meeting we will be happy to discuss in greater detail the aspects that allow us to affect the monthly charge. Examples are the effect of a shorter or longer fixed interest period, higher death cover, etc.