Savings mortgage
Considering buying a home and looking for a mortgage with low net monthly payments? A savings mortgage could be an interesting option – especially if you already had a mortgage from before 2013. At Crefin & Partners, we help you understand how this type of mortgage works and whether it suits your situation. Below, you’ll find everything you need to know about the savings mortgage: what it is, how it works, the advantages and disadvantages, and more. Feel free to schedule a free, no-obligation consultation to explore your options!
What is a Savings Mortgage?
A savings mortgage is a type of mortgage in which you do not directly repay the loan during the mortgage term. Instead, you save money monthly through a linked savings account or savings insurance policy. This allows you to build up the amount needed to repay the mortgage in one lump sum at the end of the term.Each month, you pay interest on the full mortgage amount as well as a premium for the savings component. The savings account grows at the same interest rate as your mortgage interest rate, ensuring that you build up the exact amount required.For new mortgages (since 2013), stricter rules apply to mortgage interest tax relief, but older savings mortgages often retain their tax advantages. At Crefin & Partners, we compare offers from more than 35 banks to determine whether a savings mortgage – or a modern alternative – is suitable for your situation. We explain everything clearly and transparently.
How Does a Savings Mortgage Work?
Suppose you borrow €200,000. Each month, you pay interest on this amount (for example, €500 at a 3% interest rate) and an additional premium for the savings account or insurance policy (for example, €200).The savings account grows at the same interest rate as your mortgage (for example, also 3%). After 30 years, the savings account will contain exactly €200,000, which is then used to repay the mortgage in full.During the mortgage term, your debt remains unchanged, while you simultaneously build up the guaranteed repayment amount. It is slightly more complex than an annuity mortgage, but especially for older mortgages it can offer significant tax advantages. Our mortgage advisors are happy to calculate how a savings mortgage – or a combination mortgage – would work in your personal situation, completely free of charge.
Advantages of a Savings Mortgage
A savings mortgage offers several unique benefits:
- Low net monthly payments: especially with older mortgages, mortgage interest tax relief often remains fully intact, keeping your net monthly costs low.
- Guaranteed repayment: through the savings account, you build up exactly the amount required to repay the mortgage.
- Tax advantages: for mortgages from before 2013, the interest is often fully tax-deductible, even without direct repayments.
- Stable monthly payments: as long as the interest rate remains fixed, your monthly costs stay stable and predictable.
Our mortgage advisors at Crefin & Partners help you discover how to make the most of these advantages.
Disadvantages of a Savings Mortgage
There are also several important considerations:
- Complexity: the combination of a mortgage with a linked savings account or insurance policy makes this mortgage type more complicated.
- Limited tax relief for new mortgages: since 2013, repayments are required to qualify for mortgage interest tax relief, making savings mortgages less attractive for new borrowers.
- Higher premiums when interest rates are low: if interest rates decline, you often need to contribute higher premiums to reach the target amount.
- Less flexibility: making extra repayments may result in penalty interest or affect the savings component.
Not sure whether this is still the best option for you? We compare all alternatives and provide honest, tailored advice.
Who Is a Savings Mortgage Suitable For?
A savings mortgage is particularly attractive for:
- People with an existing savings mortgage from before 2013 who want to retain their tax advantages.
- Homeowners who value low net monthly payments.
- Home movers who want to transfer their existing savings mortgage to a new home.
Our mortgage advisors carefully assess your personal situation to determine whether this mortgage type – or a suitable alternative – fits your needs.
Costs and Mortgage Interest Tax Relief
Your monthly payments consist of mortgage interest and the premium for the savings component. In addition, there are one-time costs such as mortgage advice and notary fees.For mortgages taken out before 2013, the interest often remains tax-deductible. At Crefin & Partners, we charge a fixed fee for our mortgage advice, which may also be tax-deductible. Please visit our rates page for more details.
Why Choose Crefin & Partners?
At Crefin & Partners, we make even complex mortgage types like the savings mortgage clear and easy to understand. As your mortgage advisor, we offer:
- Personal guidance tailored to your situation and wishes
- Extensive comparisons from more than 35 banks to find the best deal
- A free initial consultation
- Transparent, fixed advisory fees with no surprises
Frequently Asked Questions About the Savings Mortgage
Can I Refinance My Savings Mortgage?
Yes, that is possible, but it is often not advantageous because of the linked savings account. We are happy to calculate the consequences for you.
What Happens if Interest Rates Fall?
In that case, your premium may increase in order to reach the target amount. We explain this clearly and explore possible alternatives with you.
Is a Savings Mortgage Still Available for New Mortgages?
For new mortgages, savings mortgages have become less attractive due to changed tax rules. Together, we will look for the best modern alternatives for your situation.
Get in Touch!
Would you like to know more about a savings mortgage – or a suitable alternative – for your home? Schedule a free, no-obligation appointment with Crefin & Partners. Our mortgage advisors will help you find the solution that suits you best. Feel free to contact us and request your free consultation today.
