As is the case with houses, one interest rate within a mortgage offer is not the same as another. Is the mortgage interest rate fixed? Or, is there an overnight interest rate or downward-tracked interest rate? And what exactly are interest surcharges? On this page, we’ll explain all you need to know about the interest rate in your mortgage offer.

Mortgage interest rates

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Mortgage offer interest rate

The basic interest rate in your mortgage offer can consist of the mortgage offer interest or agreements about current interest rates and downward-tracked interest rates. Usually, the interest in the mortgage offer is also the definitive set interest rate you will pay when the mortgage term starts. We call this the mortgage interest rate. This interest rate can be fixed during the fixed-rate period that you have chosen, or there may be a variable interest rate.

Dagrente (current interest rate)

Often there are a few months between signing the mortgage offer, and actually taking out the mortgage. Is the current interest rate on the day of signing the mortgage deed lower than the interest rate in your mortgage offer? If this is the case, some lenders will offer you the opportunity to obtain that low interest rate. This principle of making the rate applicable to new mortgages is referred to as the dagrente: the current interest rate.

Dalrente (downward-tracked interest rate)

In older mortgage products, downward-tracked interest rates might apply. This means that the lender will provide the mortgage at the lowest applicable interest rate in the period between issuing the offer and passing the mortgage deed. These days however, dalrente is generally no longer utilised.

About renteopslag (interest surcharge) on your interest rate

If you have a mortgage with an NHG (national mortgage guarantee), you’ll pay interest at the NHG rate. Otherwise, your interest is dependent on the Loan to Value (or LtV abbreviated). The LtV is based on the ratio between the mortgage loan and the value of the home. The higher the mortgage loan in relation to the property’s market value – and therefore the higher the LtV – the greater the risk that the collateral will not yield enough from its sale to repay the mortgage loan. The lender passes on this risk by applying a surcharge on the interest.

Good to know: during the mortgage term, the LtV can change; for example, if you pay off an extra amount of the mortgage total. It is therefore relevant to delve into interest rate surcharges in advance, the number of risk categories, and the terms and conditions attached to a mortgage. This way, you’ll be aware of when you’ll be eligible for a lower surcharge in future. If you have any further questions, you can set up a phone appointment with your mortgage advisor.

Situations entitling you to interest discount on your interest rate

Often, interest discount is linked to certain conditions such as the compulsory opening of a current payment account. You can also get a discount if you have an energy-efficient home: a sustainability discount. Keep in mind that the lender can determine the amount of this discount with each new fixed-rate period. A discount can also be terminated if you no longer meet the discount conditions.

About the annual percentage rate of charge (APR)

Also included in the mortgage offer is the APR (jaarlijks kostenpercentage in Dutch), the annual percentage rate of charge. This is intended to gain a better understanding of the effect of all the one-off and ongoing costs for your mortgage, on top of the actual monthly repayment amount. The way in which the APR is calculated is defined in European directives.

In practice, the APR seems to miss the mark – actually generating more questions and ambiguity than an enhanced understanding. It is more practical to view the one-off or ongoing costs separately, and to compare them where necessary.

The interest rate cool-off period

For mortgages with an interest rate cool-off period, you can decide during 1-2 years at which moment in time you will fix the interest rate. This term is agreed with your lender. It means that you fix the interest free of charge at the interest rate applicable at that time. The interest rate cool-off period can commence at the start of a mortgage term, or after a certain timeframe. With some mortgages, a new interest rate cool-off period starts at the end of a fixed-rate period.

Learn more about the interest rates in your mortgage offer

Are you looking to know more about interest rates and the most suitable mortgage? Please contact us for a no-obligation phone appointment, where we’ll discuss matters such as your financial situation, and find out what possibilities are available to you. And of course, there will be ample time for any questions you might have.

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