The bank savings mortgage is a fiscally attractive mortgage. You save tax-wise and tax-free for the mortgage repayment and at the same time have a maximum mortgage interest deduction. The bank savings mortgage has the savings mortgage as a competitor. This is also tax-efficient saving with a mortgage. There are differences between the regular savings mortgage and the new bank savings mortgage. You can have a bank savings mortgage SEW or BEW or savings mortgage from before 2013, since then this mortgage cannot be taken out again. Anyone who still has such a mortgage in 2020 or 2021 can still enjoy the many benefits that come with it.
The bank savings mortgage savings account for owner-occupied home SEW or BEW: tax-efficient savings with a mortgage
Since January 1, 2008, you have been able to save in banks for pensions or mortgage repayments in our country. You do bank savings with a bank, and not with an insurer. Bank savings involves a blocked savings account or investment account into which you regularly deposit money. Saving through the blocked savings account is known by the abbreviation SEW, and capital accumulation through the blocked investment account, investment right for home ownership, as BEW. With the BEW, the ultimately accrued capital depends on the investment results, which can be better than expected but can also be disappointing. With the bank savings mortgage you know where you stand. For both forms of bank savings, the tax authorities’ exemptions apply after 15 or 30 years, as they apply to the savings mortgage. Moreover, the mortgage interest deduction is also maximum here, because you do not pay off the mortgage in the meantime. The requirements for bank savings for your home at a glance:
- You have your own home.
- You use the accrued amount to repay the home acquisition debt.
- You invest money for at least 15 consecutive years.
- The highest annual contribution is not higher than 10x the lowest contribution.
The savings mortgage via a is a fiscally smart mortgage for saving
The essence of a savings mortgage is that you take out an interest-only mortgage in combination with term life insurance, while you also save in a blocked account to repay the mortgage. You do not pay tax on what you save in the blocked account in the years that you build up the capital. Moreover, when the saved money is released, you will benefit from a large tax bonus. This concerns the following amounts of tax benefits per person:
- 2017: 162,500 since April 1, 2017.
- 2018: 164,000.
- 2019: 166,500.
- 2020: 168,500.
- 2021: 171,000.
In other words, if you receive 400,000 euros in 2020 to pay off your mortgage, a maximum of 168,500 euros will be tax-free. You pay tax on the capital minus contributions and exemption. Since April 1, 2017, there is no longer a separate exemption after 15 years or 30 years.
The interest-only mortgage
In addition, the mortgage interest deduction remains maximum, because you do not pay off the mortgage in the meantime. This is also less risky than a regular interest-only mortgage, because:
- You are forced to save in the blocked account and thus build up capital. This is not the case with a normal interest-only mortgage.
- You have purchased mortgage protection and housing costs protection in case you die.
- The level of the mortgage interest is linked to the level of the savings interest. If the mortgage interest rate increases after the fixed interest period, this will also apply to the savings interest rate. This combination has a dampening effect on the monthly costs, because with a higher savings interest rate you have to deposit less in the savings account.
Advantages and disadvantages of a savings mortgage
The most important advantages of a savings mortgage are:
- The interest rate dampening effect because savings interest and mortgage interest are the same.
- You are assured of a guaranteed accrued capital.
- The savings part is tax-free during the build-up.
- There is a large tax-free allowance you may be entitled to.
- The mortgage interest deduction is maximum because no interim repayments are made.
The most important disadvantages of a savings mortgage:
- Cannot be stopped prematurely with high costs.
- There is often a small interest surcharge.
Differences between bank savings mortgage and savings mortgage
Four differences between the savings mortgage and the bank savings mortgage are certainly noticeable:
- With a bank savings mortgage you are not obliged to take out life insurance or term life insurance. The big advantage of this is that you do not have to pay high premiums for this insurance policy and everything remains transparent. The disadvantage is that you have no built-in protection against loss of income when you die. You may take out additional insurance, but you are not obliged to do so.
- Another difference is that with a bank savings mortgage, the savings interest rate does not have to remain linked to the mortgage interest rate. The automatic link has a dampening effect on the monthly costs, but if the mortgage interest rate falls in a period when the savings interest rate is rising, you are also better off without linking the savings interest rate to the mortgage interest rate.
- The deposit guarantee scheme guarantees a maximum of 100,000 euros in savings per person with a bank, even if a bank goes bankrupt. This guarantee does not apply to capital accumulation through an insurance company.
- Upon your death, the savings balance is transferred to your heirs, as you wish, while with a savings mortgage the terms and conditions of the term life insurance policy will apply.
Bank savings mortgage: advantages & disadvantages
A bank savings mortgage also has advantages and disadvantages. Just take a look:
Advantages of a bank savings mortgage:
- Maximum mortgage interest deduction, because no repayments are made early.
- You build up guaranteed capital so that you can repay it later.
- The savings are covered by the savings guarantee of the deposit guarantee scheme.
- Tax benefits, including tax-free savings.
- Term life insurance not mandatory.
- Major tax exemptions are possible.
Disadvantages of a bank savings mortgage:
- Due to the difference in savings interest and mortgage interest, there is no dampening effect.
- If the accrued capital is higher than the mortgage, tax must be paid on it.
- Higher mortgage interest with an average 0.2% surcharge.
- Transferring a bank savings mortgage is often only possible at the same bank.
Anyone who has a bank savings mortgage has the maximum mortgage interest deduction. The disadvantage in 2020 and 2021 is that in most cases you cannot take your bank savings mortgage with you when you move and cannot transfer it.