Changes to mortgage interest deduction: what are the consequences?

As everyone has heard, the mortgage interest deduction system is being overhauled. The deductibility is limited or even expires in certain situations. But what exactly will change? And what are the consequences for your personal situation? Below is an explanation for common situations.

Mortgage interest deduction is going to change

For years, mortgage interest deduction was a topic that politicians did not dare to touch. However, the new cabinet has decided that there will be changes to the mortgage interest deduction. If the Senate also agrees, these changes will become final. The Senate may vote on the proposed changes on December 20, 2012. For the most common situations, we have listed what will change and how you can best deal with those changes.

I want to take out a mortgage

A lot is changing for new mortgages yet to be taken out. For example, a mortgage is only deductible if it concerns a linear mortgage or annuity mortgage. Popular mortgage types, such as the interest-only mortgage, are therefore no longer deductible. You will therefore not receive any mortgage interest deduction.

I already have a mortgage

Nothing will change for existing mortgages for the time being. Regardless of your mortgage type, you remain entitled to mortgage interest deduction. So you do not have to have your mortgage adjusted. Even if you have an interest-only mortgage, you continue to receive mortgage interest deduction.

I want to move

When you move, you usually take out a different mortgage. But the stricter rules for new mortgages make it attractive to take your current mortgage with you. This is also possible! This way you can continue to receive mortgage interest deduction. Be careful when buying a more expensive house. In that case, your current mortgage is not sufficient and a mortgage will also have to be taken out for the additional amount. However, the new rules apply to the additional mortgage. You will therefore have to take out a linear mortgage or annuity mortgage for this extra amount.

I’m moving, key transfer only in 2013

It is also possible that you have already signed the purchase agreement in 2012, but the key transfer will not take place until 2013. In such cases, the 2012 rules apply. You are therefore entitled to mortgage interest deduction regardless of the mortgage type.

I want to convert my mortgage type

It is always possible to have your mortgage type converted to another type. To continue to be entitled to mortgage interest deduction from 2013, you must choose a linear mortgage or annuity mortgage. For example, if you opt for an interest-only mortgage, you lose the right to mortgage interest deduction.

I want to increase my mortgage

It often happens that people increase their mortgage. One reason may be, for example, to free up money for a renovation or renovation. Also when increasing the mortgage, from 2013 you must take out the extra amount via a linear mortgage or annuity mortgage in order to remain entitled to mortgage interest deduction.

read more

  • Interest-only mortgage: refinance or pay off?
  • Fixed mortgage interest for a short period: low monthly costs
  • Save on fixed costs & financial products
  • Take out an affordable German mortgage