The interest-only mortgage: from a matter of course to a strategic issue

For years, interest-only mortgages were the logical choice. Low costs, maximum flexibility and scope to use your capital elsewhere. But that obvious choice is disappearing.

Behind the scenes, banks are changing their policies. Not of their own accord, but under pressure from regulators such as the ECB and De Nederlandsche Bank. And that could have consequences for anyone with an interest-only mortgage.

Why is the policy changing?
In the Netherlands, approximately half of all mortgages have an interest-only component. In other European countries, this figure is much lower. Regulators see this as a risk to the stability of banks and the financial position of households. Banks are therefore being urged to reduce the proportion of interest-only mortgages.

What does this mean in concrete terms?
The first banks have already published their new policies. Other lenders are expected to follow suit soon. The main consequences are:

• Less scope for new interest-only mortgages
• Lower maximum loan amount for interest-only portions
• Stricter conditions for refinancing
• Periodic review of financial situation This may be particularly noticeable when the fixed-interest period expires.

Why is this an important moment?
An interest-only mortgage is not necessarily a problem, but the context is changing. What was logical and comfortable for years may suddenly require different choices. This affects not only your monthly expenses, but also:

• liquidity
• wealth accumulation
• tax position
• long-term planning

Thinking ahead prevents pressure
Those who gain insight now remain in control. Those who wait for the bank to contact them often have fewer options. That is precisely why now is a good time to review the interest-only part of your mortgage within the overall picture of your income, assets and future plans.