Have a Dutch "banksparen" mortgage, want to get a new mortgage for a new house

Question

One type of mortgage in the Netherlands is a "banksparen" ("bank savings", the word isn't very descriptive) mortgage.

It is designed to make maximum use of tax laws: instead of paying down the mortgage, you put money on a savings account at the same bank that pays the same interest rate as is owed on the mortgage, and that can only be used to eventually pay off the mortgage. In the meantime one still pays full interest on the mortgage (that can be deducted from income for income tax) while the money in the savings account is exempt from wealth tax as long as it will be used for paying off the mortgage.

New mortgages of this kind are not tax deductible anymore since 2013 or so (and so they're not offered anymore), but I have an existing one at ABN Amro.

To qualify for the tax exempt status of the savings account, there are strict rules -- money has to be paid into the account yearly for at least 15 years, the lowest amount and the highest amount paid may not differ by more than a factor 10 and the resulting sum has to be used to pay off a mortgage in the end.

Questions:

1. Are there any special rules when paying off the mortgage before the end of those 15 years, for instance when selling the house to buy a new one?

2. If the answer is no, and one has to keep the savings account, is it possible to pay off the mortgage and get another one, eventually using the savings to pay off that one?

3. If yes, what will the interest rate on the savings account be, considering that it's tied to the rate of the mortgage now?

Answer 1

Note that after 15 years, the tax exemption is €36800 per person, which includes both the principal you desposited and the accumulated interest. It's possible that you will have a higher balance than this in your savings account at this point and would still owe tax on the interest accumulated above the exempted amount. After 20 years, you get the full tax exemption, the lesser of your portion of the mortgage debt and €162000 per person.

In direct answer to your questions:

1. I'm not aware of any exceptions to the 15 year rule for allowing the accumulated interest to be tax free when selling your house. If your accumulated interest is low enough, you might consider just paying the tax on it as it would give you the most flexibility in choosing a new mortgage. This is why I asked about more details about your interest rate and how long the mortgage has been running.

2. It may, however, possible to couple the savings account to a new ABN AMRO Bankspaar mortgage when you buy a new house. You should check your mortgage terms and conditions. For example, Section 23.12 in ABN AMRO's terms and conditions from 2010 describes this. See here. It is probably best, however, to speak directly with either your mortgage broker or with a mortgage adviser with ABN AMRO. If your mortgage broker still worked on commission (aflsuitprovisie) when you closed your mortgage, then they are obligated to assist you with this type of question.

3. In order to qualify for the tax exemption, you must use the saved value to pay off debt on your primary residence (eigenwoningschuld). Decoupling the savings account entirely from a mortgage will disqualify you from the tax advantages. You will owe tax on all accumulated interest.