Bank savings is a way to build up capital for old age or to repay a mortgage. Bank savings were introduced at the beginning of 2008 as an alternative to expensive, opaque savings and investment policies from insurers. The benefits of bank savings that are intended for saving for a mortgage and pension.
What is bank savings?
With bank savings, people can put aside tax-favorable money in a savings or investment account that is blocked. A big advantage is that this way of saving is very transparent. For example, anyone who also wants to take out term life insurance can simply do so separately and will not be confronted with an account on which both things are done. Bank savings products are often cheaper and the costs are much more transparent.
Bank savings for the mortgage
Since 2008, many people have taken the opportunity to use bank savings to pay off their mortgage. Of all new mortgages that are taken out, the majority are bank savings mortgages.
Why bank savings?
Until 2008, insurers had the exclusive right to tax-favorable savings. When it turned out that they had abused that right by selling exorbitant policies, a clear and cheaper alternative was introduced.
Intermediaries and bank savings
In 2010, intermediaries still seem to prefer to ignore bank savings . They still prefer to sell traditional insurance products from which they earned more or are not well informed about the products. Many more costs could often be included and hidden in insurance products, while this is no longer the case with bank savings. In addition, intermediaries often have relationships with insurers that they do not want to give up. They are so used to selling an insurance product that it seems difficult for them to focus on another product in the market. Moreover, they understand insurance and bank savings is often a completely different sport for them.
Why is bank savings so popular?
Initially, it was mainly small banks that introduced bank savings. Large banks therefore felt under pressure to also introduce this new product. For example, market leader Rabobank mainly offered mortgages with bank savings in 2010. Initially, only the insurers Allianz and Delta Lloyd offered bank savings. In addition, the extortionate policies mean that sales of investment policies are becoming less and less successful. The crisis came on top of that. People who wanted to put their money away safely for a mortgage or their old age therefore looked for products that guaranteed this and did not entail too high costs.
Ways to build tax-efficient capital
You can build up tax-attractive capital to ensure a good old age or to pay off your mortgage in four ways. There are also methods that mix all 4 or some of them:
- Savings insurance, such as the savings mortgage
- An investment insurance policy such as the investment mortgage
- Save in a savings account
- Investing in a bank savings account
Advantages of bank savings
The advantages of bank savings are:
- No ‘built-in’ term life insurance
- The costs are spread evenly
- Sometimes bank savings are cheaper (but not always)
Disadvantages of bank savings
However, there are also disadvantages to bank savings. They are:
- Bank savings account cannot be transferred to a new mortgage tax-free.
- In the event of death, the credit goes to the heirs who then have to pay inheritance tax