Finance your holiday house with a second mortgage
Are you going to the same favorite place for years to get your well deserved rest? And did you always dream of owning a holiday house there? Check out whether you can make your dream come true with a second mortgage on your current house.
The value of your current house has increased remarkably in the past years. Because of this and paying off your mortgage for some years, you have realized surplus value on your home. Therefore, this is a perfect moment to look at your financing position with a financial advisor. The outcome could just as easily be that a vacation house at that beautiful place is within reach!
You can use the surplus value to buy a holiday house. A mathematical example: your current home has a value of € 400.000, and the mortgage debt is €250.000. Then, you realized a surplus value of €150.000, which makes buying a vacation house possible.
After you discuss the situation with your financial advisor, you know what your options are. Now, you can look for the holiday house you always dreamt of.
What do I need to take into account?
No interest deduction
The mortgage on your current house qualifies for an interest deduction. For your holiday house, this is not the case anymore. Even though you put the second mortgage on your current house, you do not use the money for this house. Therefore, there is no right to a deduction. Because the second mortgage does not have to meet all the financial conditions, you will have the possibility to choose for a (partly) interest-only loan. Your financial advisor can find the best option for you.
You holiday house is taxed as capital
The Belastingdienst will see the value of your second house as capital. So, you need to pay taxes on this house in the so-called box 3. The mortgage on your holiday house can be seen as debt in box 3. You need to pay tax on the difference between your capital and debt. Keep in mind that there is a tax-free amount (in 2021, €50.000 for singles and €100.000 for partners).
A mortgage on your holiday house
If you don’t have enough surplus value on your current home, a good option would be to get an extra mortgage on your second home. The bank demands that the house is immovable. In addition, this house can’t be fully financed with a second mortgage. It is often the case that the bank will finance about 60-80%.
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.