Taking out a second mortgage
A second mortgage is financing you take out on top of your existing mortgage, a kind of supplementary mortgage. So you take out an additional mortgage, as it were. You usually do this with the same bank or mortgage provider as your first mortgage.
Second Mortgage with Another Bank
It is generally possible to take out a second mortgage with another bank, although there may be some complexities involved. You can seek advice on this from a mortgage advisor.
Why Take Out an Additional Mortgage?
The most common reason for taking out a second mortgage is for a home renovation. If you can prove that the money is being used for improvements to your home, the interest on your second mortgage is tax-deductible, provided it is an annuity or linear mortgage. This tax benefit does not apply if the funds are used for other purposes.
Would you like to make use of your home's equity? In that case, a second mortgage can also be a solution. However, the mortgage interest in this scenario is not tax-deductible.
Conditions for Taking Out a Second Mortgage
Taking out a second mortgage is not a decision to be made lightly. Whether you qualify for a second mortgage depends on several factors, including:
- Your income;
- The value of your home;
- The type of renovation you intend to carry out (e.g., energy-saving measures or a new kitchen);
- Your current mortgage: is it still appropriate for your situation?
- A mortgage advisor can provide you with more information about the rules for a second mortgage and help determine whether you are eligible based on the factors mentioned above.
How Much Can a Second Mortgage Be?
The total mortgage, including the first and second mortgage combined, may not exceed 100% of your home's current value. Additionally, the amount of the second mortgage depends on your income and any fixed monthly expenses, such as loans or a private lease car.
Costs of a Second Mortgage
Taking out a second mortgage involves certain costs. For example, the mortgage advisor will charge advisory and brokerage fees, and in most cases, a new property valuation report will need to be prepared.
If you have already repaid a significant portion of your mortgage, or if your mortgage is registered for a higher amount, you might be able to increase the mortgage privately. This would mean you don’t need to revisit the notary for the second mortgage. If a private increase is not possible, you will also need to pay notary fees. These costs vary but average around €700. If there is sufficient financial capacity, these costs can be financed within the second mortgage. Additionally, the costs are tax-deductible from your income tax.
Disadvantages of a Second Mortgage
The main disadvantage of a second mortgage is, of course, that your monthly payments will increase. You will also incur one-time costs, as mentioned above. Additionally, a second mortgage may not always be possible based on your income. Whether a second mortgage is feasible for you can be calculated by a mortgage advisor.
Calculating a Second Mortgage? Schedule an Appointment
To properly calculate your second mortgage, we recommend scheduling an appointment with one of our advisors. Taking out an additional mortgage involves many questions. What type of mortgage should you choose for the second mortgage? What will an additional mortgage mean for your current financial situation and your future? And what fixed interest rate period should you choose for the second mortgage?
These are all questions that an advisor from De Hypotheker can help you with. This way, you can take out a second mortgage with confidence and full information. Want to know more about taking out a second mortgage? Schedule a free consultation with an advisor in your area.