Using the surplus value of your property
Is the sale value of your house higher than your mortgage? If so, this means you have accrued surplus value – also known as equity – on your home. The Dutch term for this is overwaarde. Chances are that this will also apply to your home. You can utilise the surplus value in various ways – even if you are not yet planning to sell your home. Find out what you can use your surplus value for.
All about your home equity:
What can you use your equity for?
You can use the surplus value on your home in different ways. For example, your house is worth € 500,000 and your mortgage at that time is € 300,000. This means that you have € 200,000 in surplus value. You can use that surplus value for the following purposes:
- To renovate your home
- To buy a new home (applying for a bridging loan)
- To buy a holiday home or a property that you want to rent out
- To donate
- As a financial buffer, or for a major purchase
You can use the entire amount that you have in home equity, but of course, you don’t have to.
Using surplus value when buying a new home
Selling your home and buying a new one is the most obvious way to make surplus value available. You must then put the surplus value in your new home according to the Additional Credit Regulation scheme (bijleenregeling in Dutch). Your mortgage advisor can tell you more about this.
Has your old house not yet been sold? With a bridging mortgage, you can use the surplus value of your current home to buy your new home.
Using surplus value to renovate a property
Renovating your home costs money – unless you’re a DIY whizz who can do it all yourself. Even so, there are always costs to consider. Whatever your situation, you can also use the equity on your current home for a renovation. You can co-finance a renovation by increasing your mortgage. Read more about financing a renovation.
Using surplus value as a donation
Did you know that you can also use the surplus value of your house for a donation? For example, to help your own children or grandchildren get onto the property ladder, or to study. Good to know: because you’re no longer using the surplus value for your own home, the interest on the mortgage will no longer be deductible. Read more about donating on the website of the Tax Authorities.
Using surplus value for a financial buffer or large purchase
Maybe you’ve been dreaming of that camper van or a new caravan for years. You can increase your mortgage, or take out a second mortgage, in order to obtain money from the bricks of your current property.
Calculating a mortgage with surplus value
In addition to your surplus value, a lender also looks at your income. The fact that you have equity on your home doesn’t mean that you can actually borrow this entire amount, because when you withdraw the surplus value, there are also higher monthly costs involved. The lender, therefore, looks at whether you can afford that on your income.
Discount on mortgage interest for surplus value
The ratio between your mortgage and the market value of your house determines, among other things, the level of your mortgage interest. Do you have enough home equity? If so, the interest rate may be able to be set at a lower rate. Often you have to raise this matter yourself with the lender. We can help you with that.
Advice on the use of your surplus value
Would you like some advice about your own situation? We would be happy to go through a few scenarios with you about how best to use your surplus value. Schedule a free consultation, and we’ll be able to discuss it soon.