Home buyers often deceived in fixed-rate mortgage deals

houe for sale/sold sign

Home buyers with a mortgage that has a longer fixed interest rate period are often misled by the so-called moving scheme, according to the own home association VEH. New buyers who sign a mortgage with National Mortgage Guarantee and an interest rate period of 20 or 30 years, get duped when the move to a home that is not eligible for the National Mortgage Guarantee, the VEH said on Tuesday, NU.nl reports.

The association examined the moving conditions of 35 mortgage providers and concluded that clients of ING, bijBouwe, Allianz and Hypotrust Goede Start all fall into this trap. 

When moving to a home that is not eligible for National Mortgage Guarantee, home buyers can't move their current fixed-rate mortgage with them and have to apply for a new mortgage. Because they only got to use the fixed interest rate for a short time, it would have been more advantageous for them to take a mortgage with a shorter and more favorable interest period. 

Other restrictions can also lead to home owners not keeping their low interest rates when they move. For example, some mortgage providers stipulate that the low interest rates will expire at any change - even if the changes are due to amendments to laws or regulations and completely out of control of the homeowner. 

VEH demands that mortgage providers remove the National Mortgage Guarantee restrictions for all customers. The association also calls on financial institutions to more actively and clearly inform customers about the moving scheme. 

Due to skyrocketing home prices and a reduced National Mortgage Guarantee limit, more and more new home buyers end up in this situation. Because of the low interest rate in Europe over the past years, about half of customers who took out a mortgage since 2015 opted for a fixed interest rate for 20 or 30 years.