In the mortgage offer, the lender describes what you have agreed. Below we answer the two most frequently asked questions about the quotation.
The interest and the Annual percentage rate of charge (APRC) in the mortgage offer
The quotation mentions two rates, the nominal interest rate and the annual percentage rate of charge.
In Dutch the APRC is called: Jaarlijks Kosten Percentage (JKP)
The (nominal) interest: the interest you pay to the lender
The annual interest to be paid on your mortgage is also called the nominal interest. To calculate the actual monthly payment, the lender uses the (nominal) interest rate and divides the nominal interest rate by twelve months. This interest rate is an annual rate, but payment is almost always made at the end of each month and not annually.
The published rate of all lenders always refers to the (nominal) interest.
The annual percentage rate of charge (APRC): the interest including the one-off and ongoing costs
In addition, the mortgage offer states the annual percentage rate of charge (APRC).
The way in which this APRC is calculated is laid down in European guidelines. This concerns the costs that are reasonably known to the lender and that are necessary for obtaining the mortgage. In addition to the nominal interest, consultancy, appraisal and notary costs are also included in this APRC, since the mortgage cannot be provided without incurring these costs. If the exact amount of these costs is unknown when applying for the mortgage, as is often the case with home insurance, an average of those costs is assumed. This annual percentage rate is intended to provide better insight into all one-off and ongoing costs in addition to the interest.
At A&H Finance we make good price agreements with as many parties as possible (such as appraisers, architects and civil-law notaries), so that the annual percentage rate of charge remains as low as possible. We are happy to help you with any questions. Feel free to contact us.
What is an (increased) mortgage registration?
The mortgage registration is part of the offer. When you take out a mortgage, you give the lender the right to mortgage the home. This is a security right for the lender. In concrete terms, this means that if, for example, you do not pay the interest and/or repayment, the lender can sell the house. The lender may withhold everything they owe from you from the sale proceeds, up to a maximum of the amount stated in the mortgage deed plus an extra percentage, often 40%. A lender can of course never recover costs more than actually incurred.
An increased mortgage registration in the mortgage offer means that the mortgage amount stated in the mortgage deed is higher than the amount that is actually borrowed.
The advantage of an increased mortgage registration is that the loan with the same lender can be increased to the amount stated in the mortgage deed, without a new mortgage deed being required. The possible disadvantage is that some notaries charge some extra costs for this. Ask your notary about this. The civil-law notaries with whom we often work do not charge these extra costs.
An example: If you have a mortgage registration of € 350,000, while you actually borrow € 250,000, you can get an additional loan of € 100,000 from the same lender, without having to go to the notary again. Due to the higher registration, you therefore save notary costs if, for example, extra money is needed in the future for renovation or improvement of the home.
For this additional loan, a quotation process must be started again with the lender with the associated costs (advice costs, appraisal costs, etcetera).
Of course the advisers of A&H Finance can tell you more about this.
We are happy to advise you!
Call us on +31 (0)20-4651951 for a first introduction. Or fill in our contact form and we will contact you.
