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Interest averaging cheaper in 2019 due to new rules

 

Due to new rules, interest averaging has become cheaper. Banks may not charge extra costs for averaging. Can your mortgage interest rate be lowered?

Only current costs with interest averaging

Only current costs with interest averaging

New rules for interest averaging apply from 1 July 2019. From then on, banks are not allowed to charge more costs than the ‘current financial disadvantage suffered’. Just as this is already the case with reshuffling. This means that banks are no longer allowed to charge interest surcharge when averaging.

Banks are now using this scope to cover the risk that customers will move in the short term and thus switch to another bank without penalty. It therefore becomes less attractive for banks to offer interest-rate averaging.

Consumers better protected with new rules

Consumers better protected with new rules

The new rules must protect consumers better. On the other hand, the right to reimbursement-free scope expires in the case of interest averaging. Previously, you did not pay penalty interest on 10% to 20% of the mortgage sum, just as with a transfer. After all, you do not redeem with interest averaging.

Interest rate averaging is a way to take advantage of the low interest rate. The interest you have set is then averaged with the market rate at the same bank. The costs are largely in the new interest rate, which means you ‘feel’ it less. Read more about the advantages and disadvantages of oversuiting and interest averaging.

As a result, interest averaging is especially popular with homeowners who want to lower their mortgage interest rates, but recoil from the high costs. The disadvantage is that you are still stuck to your old bank and mortgage. The saving is often lower than with a transfer, because you can rebuild the mortgage on the latter.

Do you want to reschedule or interest averaging? Start a calculation of your benefit without obligation.

(Temporary) stop interest mediation at banks

(Temporary) stop interest mediation at banks

The new rules also mean that interest-rate averaging becomes less interesting for banks. In an explanation, given their calculation method, it is no longer possible to offer interest averaging.

ABN AMRO also had to adjust the calculation system to the new regulations. As a result, interest-rate averaging at the bank was temporarily not possible. 

In it, ING indicates that it is already using the right method, which means that nothing will change for them. Goodbank does have to adjust the systems, but it continued to offer interest-rate averaging. 

Of the banks that now offer interest-rate averaging, three do not yet want to give a definitive answer about this service in the future.

No reimbursement for customers

cash

According to the Netherlands Authority for the Financial Markets, anyone who has used interest-rate averaging cannot claim reimbursement. After all, the interest surcharge was simply permitted. The regulator makes the comment ‘as long as banks have adhered to the rules’. This has not always been the case in the past.

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Is it worth reaching for a consolidation loan?

Consolidation loan

Consolidation loan

A consolidation loan is a bank product that serves to pay off earlier commitments. The bank chosen by the borrower allows the repayment of several existing debts, in return offering one loan, covering the amount necessary to return. The consolidation loan can be used to repay consumer, home and car loans as well as overdrafts on the borrower’s existing accounts or credit card debt. More exposition at nmsbaseball.com

Several loans (especially loans in cash and on credit cards ) can be converted into one – the most profitable option here is usually a mortgage. Interest on such a loan is usually a maximum of 6-9 percent. Meanwhile, the interest rate on cash loans is about 15% higher. As for the credit card – after exceeding the interest-free period, the percentage is very large – many cards reach the maximum legal limit, which is currently 24%.

Also, a client who does not own real estate can take a consolidation loan. The condition of profitability is finding a bank that offers the lowest interest rate on a loan without a mortgage (it can be 10-15%). However, here the savings will be less than for a mortgage.

Save on interest

Save on interest

So, by consolidating your loan, you can save on interest. But this is not the only advantage! Often, it is possible to spread the repayment over a longer period of time. Note here: when deciding on such a move, you should be aware that usually the amount that you will have to give back to the bank will increase compared to what would have to be paid back in a shorter repayment time.

Repayment of several loans at the same time often involves the necessity of making several transfers at a bank branch. One such transfer has a chance to cost up to PLN 5. Multiplying this amount by the number of monthly transactions and the number of months that the customer has to pay, it may turn out that the amount allocated to these fees will be significant – on the order of several hundred zlotys. Then reducing several transfers to one – what happens in the case of loan consolidation – will contribute to reducing borrower’s expenses.

However, you should exercise caution and caution when making consolidation decisions. Not everyone pays off. It is necessary to check whether the value of the property is sufficient for the bank to grant the loan in the amount needed by the client. Real estate valuation made by the bank causes additional costs for the borrower of several hundred zlotys (PLN 200-500).