What is a family mortgage?
In fact, it is an ordinary mortgage only to close family members together with each other. It is customary that the collateral concerns a home. Now the term family mortgage is often used for private individuals who are not family members, whereby it is characteristic that no formal mortgage is provided from the bank.
With a family bank you can leave the profit margin of a bank in your own wallet and help your child on the way to his or her first home!
Why close a family mortgage
In most cases a family mortgage is taken out between parent (s) and child (ren) when buying or renovating a house. This is often a part of the required purchase price that is financed as a supplement to the first mortgage with a bank or other lender.
It also happens that parents sell a first or second home that is mortgage-free to their child (ren) against the WOZ value and act as a lender. In this way, the property remains within the family and it is relatively easy to realize a transfer of, for example, a holiday home or parental home.
The reason why a family mortgage is also chosen is the flexibility of the conditions. This way you can make mutual agreements about the level of interest, the repayment term and you can provide financial benefit in this way. You may, for example, deviate from the market interest rate and in this way agree on a higher mortgage interest rate and pay the difference with the annual exemption for donations of € 5,363 (2018).
In this way you can qualify for a lower mortgage rate for the first mortgage. The bank runs a smaller risk and your mortgage falls into a lower risk class with this interest rate cut.