40-Year Mortgages: The New Trend or Just a Trap?
Well, well, well! Ladies and gentlemen, it seems that Vivium, in cahoots with hypotheek.winkel, has decided to pop the 40-year mortgage champagne. Who knew that pouring a sweet 40 years into a place would be the new way to keep people in debt until they’ve got grandchildren with college tuition payments of their own!
This little offering is aimed at those brave souls who can’t quite get their mitts on traditional loans. It’s available until December 31, 2024—so mark those calendars, and let’s hope you’re under 27 when you apply! Because, let’s face it, if you’re older than that, you might want to forget about a loan that runs longer than your last relationships!
The Alluring Yet Deceiving Offer
Now, they’re dangling a tasty 3% fixed rate in front of you. Tempting, isn’t it? Monthly payments plummeting to around €889 if you’re looking at a €250,000 loan (serving up a sweet deal compared to the €1,180 of a 25-year loan). But before you paint the walls and call it home, remember, there’s always a catch! Like a first date that turns out to be a hostage situation.
First off, sanity check: the total cost of the loan skyrockets! For our €250,000 example, you’re marching up a staggering €176,000 in total interest over 40 years. Compare that to a mere €104,000 for the 25-year option, and you’re left thinking: “Did I just sign up to give my children an inheritance—consisting solely of my mortgage debt?”
A Higher Cost? Surely Not!
Of course, you’ll also have to insure against that outstanding balance, which is basically code for, “We’re going to squeeze even more money out of you.” So, if you thought you’d be wearing a shiny new set of house keys, you might instead find yourself being handed a hefty insurance policy—which, if we’re honest, might just keep the lawyer on speed dial!
Options for the Young & Bold
Now, if you’re sighing at the thought of borrowing till the grave, fear not; other offerings are available at hypotheek.winkel! They’ve got “growth” loans, “accordion” loans, and frankly, terms that require you to bring your own therapist for the emotional rollercoaster those repayments will take you on. Ideal for young families or anyone recovering from a divorce—it appears the Dutch have their fingers on the pulse of the Belgian mortgage blues!
But, let’s circle back to the age limit: while they’ll entertain loans for anyone under 67 (phew!), there’s a fine print that states all loans must be repaid by retirement age. This means if you’re over 27, you’d better start dreaming of a retirement home now because you’re on the fast track to debt city!
The Final Curtain Call
So, there you have it! A mortgage that lasts longer than most relationships, offers monthly payments that sound friendly, but ultimately shrouds you in a fog of total costs that’ll have you sweating like it’s an episode of “The Office.” Should you take the plunge, remember: owning a home is great, but being tied to a 40-year mortgage? That’s a binge-watch of regret waiting to happen!
So, gather around, weigh the pros and cons, and for heaven’s sake, at least think about engagements that last a lifetime—like a gym membership or a Netflix subscription—before you commit to a 40-year mortgage!
Explore more about mortgage options at hypotheek.winkel!
Vivium, in partnership with hypotheek.winkel, is offering 40-year mortgages for the first time. Currently, 30 years is the longest duration on the Belgian housing loan market. Be careful, however, that the total cost of the loan will be much higher and strict conditions apply to subscribing to it.
This mortgage loan offer Life in collaboration with mortgage.shop over 40 years is aimed at people who have difficulty obtaining traditional loans. It is only available until December 31, 2024, with a possible extension until 2025, mentions David Geerts, CEO hypotheek.winkel in a press release.
The fixed rate offered is around 3%, which allows for a lower monthly payment. 889 euros for a loan of 250,000 euros, compared to 1,180 euros over 25 years illustrates Vivium. The rate is quite competitive in the market, with the average rate over 20 years being 3.05%, reports Litter. The other side of the coin: it comes with fairly strict conditions. Among these, the loan must not exceed 80% of the purchase price of the accommodation, the property must be energy efficient, fire insurance and outstanding balance insurance must be taken out with Vivium, details the economic daily .
A higher cost
IF the 40-year mortgage loan offered by Vivium and Hypotheekwinkel makes it possible to reduce monthly payments, the total cost is higher, calculated L’Echo. Taking the example of a loan of 250,000 euros, the monthly payment would therefore be 890 euros over 40 years compared to 1,180 euros over 25 years. However, the total interest charge over 40 years would be 176,000 euros, or 72,000 euros more than over 25 years (104,000 euros). In addition, outstanding balance insurance will be more expensive. Finally, the mortgage will need to be renewed after 30 years, potentially incurring additional costs.
Reimbursed before pension
Other “affordable” loan formulas are also offered by hypotheek.winkel, notably so-called “growth” loans where the monthly payments are reduced at the beginning, as well as “accordion” loans, which adjust the duration of the loan according to the interest rate. These new options aim to meet the needs of people in difficult or special financial situations, such as young families or people who have experienced a divorce. Hypotheek.winkel notes an increase in demand for these solutions for this type of audience in Belgium.
If there is no age limit, the offer however provides as another condition that “the loan is repaid at retirement age”, specifies Vivium. As the legal pension age will be 67 from 2030, the 40-year loan is therefore only accessible to young people up to 27 years old.
