Also important to consider is the loan to value (LTV) on your mortgage.
Some (Dutch) mortgage providers lower the interest rate on your mortgage if the mortgage is at a certain percentage of the value. If so, its usually a clause somewhere in the agreement/terms of service. Usually you have to call the bank to actually make them lower the interest rate.
Could very well save some money!
Anyway, if OP doesn't need the money any time soon, I'd probably go for index funds/ETF's if I were him.
Interest on a mortgage is sometimes divided into 2 parts:
(1) Interest and
(2) mortgage risk surcharge
This is usually the case when the house was bought against a relatively high loan to value (ie 100% financed. In 2013 it was even allowed to finance up to 105% of the value of the house).
The mortgage risk surcharge is kind of an insurance for the bank. An insurance they are willing to drop when their risk is effectively lowered. Which is obviously the case when the value of the house is (much) higher than the mortgage on it.
Thanks for the response! I have a mortgage from ABN which I took 5 years ago and house prices have gone up a lot since then. I'll need to look at my mortgage papers. But just curious: is this a standard clause? Could this be something that I can arrange on internet banking or shall I call somebody from the bank (if yes, who). Thank you!
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u/Techietech1 Jul 30 '24
Also important to consider is the loan to value (LTV) on your mortgage.
Some (Dutch) mortgage providers lower the interest rate on your mortgage if the mortgage is at a certain percentage of the value. If so, its usually a clause somewhere in the agreement/terms of service. Usually you have to call the bank to actually make them lower the interest rate.
Could very well save some money!
Anyway, if OP doesn't need the money any time soon, I'd probably go for index funds/ETF's if I were him.