A Loan Alongside Your Mortgage

The most important points at a glance

When assessing your mortgage application, a provider looks at your income and your debts. A loan is also a debt. The repayments affect your disposable income and therefore also the size of the mortgage you can get.

1. How loans affect your mortgage

There are various types of debts that affect the maximum mortgage you can get:

Student loan
Lease car
Credit card
Revolving or instalment credit
Phone contract
Alimony obligations
Overdraft on your bank account

Other fixed expenses can also affect how much you're allowed to borrow. It's a good idea to map out all your debts and fixed costs in advance, so you get a realistic picture of your options.

2. Bureau Krediet Registratie

The Bureau Krediet Registratie (BKR, the Dutch credit registration bureau) records all personal loans as well as whether you repay on time. Any arrears result in a negative BKR registration, which affects your mortgage application. A default code at the BKR remains on file for five years after the debt has been repaid.

Being registered at the BKR doesn't immediately mean you can't get a mortgage. Mortgage providers can view your outstanding loans at the BKR and see whether you've ever had payment arrears. In principle, a BKR registration is not a problem in itself, but it does affect the size of the mortgage you can get. Payment arrears have more serious consequences: many providers will refuse to offer a mortgage in that case.

3. How much mortgage can I get with a loan?

You can calculate yourself how much mortgage you can get given your outstanding loans. For almost all types of loans, 2% of the total debt is taken. That 2% of the total debt is then deducted from the maximum monthly mortgage costs.

Example

You want to take out a mortgage. Based on your income and the lending standards, you can spend €1,000 per month on mortgage costs. You have a revolving credit of €20,000. So 0.02 x €20,000 = €400 is deducted from the monthly mortgage costs you can afford. That leaves €600 after deducting your outstanding loans. The revolving credit means you can get a significantly lower mortgage.

Phone contract

Not everyone knows that since 2014, a phone contract is also taken into account in the mortgage calculation. This only applies to contracts where you are paying off the handset. In those cases, the cost of the new device is effectively advanced as a loan.

4. An extra loan alongside your mortgage

If you want to renovate or decide after buying your home to get a brand new kitchen, a personal loan can be a solution. A personal loan, also known as consumer credit, has a shorter term. You pay off the debt much faster than your mortgage.

Tax-deductible

A personal loan is not tax-deductible, unless you use it to purchase or renovate your home. The interest you pay is not deductible if you use the loan to buy new furniture, for example.

5. Paying off a personal loan with your mortgage

You can no longer simply roll an existing loan into a new mortgage. If you already have a home and a mortgage, it can be interesting to use the equity in your property to pay off an existing loan. The mortgage interest rate is generally much lower than the interest on a personal loan.

Combining a mortgage and a personal loan

Depending on your income, the property value, and your mortgage, you may be able to combine the mortgage and a personal loan. If your mortgage is already equal to the property value, you can't add the loan to the mortgage, since you have no equity relative to the mortgage debt.