How to refinance a residential mortgage to a buy-to-let mortgage?
Let say you took a residential mortgage some time ago. Now you plan to move away from the Netherlands, and you want to rent your property out. Your current mortgage lender does not offer investment products, so you must switch mortgage lenders.
Note: not all mortgage lenders offer an investment product in the Netherlands. Only a few lenders like ( NIBC, Nationale Nederlanden, or Dynamic Credit offer buy-to-let mortgages. For more information, please contact us.
If you plan to switch mortgage lenders, you usually pay the prepayment penalty to your current lender. The prepayment penalty depends on:
- The duration of your fixed term.
- Fixed interest rate.
- Difference between your interest rate and current interest rates.
- Mortgage lender terms.
For example, your mortgage sum is € 400,000. The fixed interest rate for ten years is 1.70%. You break the deal with an existing bank after seven years.
You still have three years remaining to pay. Your penalty will be the sum of the interest rate for three years minus the current interest rate payments.