Interest on residual debt no longer deductible
Under certain conditions, the interest you paid for your residual debt was tax deductible. So you ended up paying less for the loan. One of the conditions is that the residual debt must have arisen between 10/28/2012 and 12/31/2017.
Interest deduction for residual debt financing has lapsed
As of January 1, 2018, the interest deduction for the residual debt has lapsed. In addition, there is an additional disadvantage. Mortgage lenders will likely assess residual debt in a different way. Namely as an ordinary consumer credit. As a result, the maximum borrowing capacity drops significantly.
More financial disadvantages for the mortgage in 2018?
Unfortunately, we are not there yet with the two points mentioned. As you may know, the amount you can borrow for the house has also been reduced further. In 2017, you were allowed to take out financing for 102% of the value of the home. This has changed in 2018. You can now still finance 100% of the value of the home. This means that you will have to pay the transfer tax of 2%, the costs for the mortgage advice and the notary and the like yourself. The costs for the purchase of the house add up to 3.5% of the purchase value of the house. Please take this into account before you visit, and especially before you buy of course.
Take out a loan for the residual debt or additional costs.
Would you like to take out a loan for the additional costs of purchasing the home? Then you will have to be straightforward about this in your mortgage conversation. A loan causes a decrease in your maximum borrowing capacity in your mortgage. If the mortgage lender only discovers the loan at the moment that the money has to be transferred to the notary, this can cause an unpleasant situation.
There will be another test whether the mortgage is affordable for you. Therefore always be open and honest about the way of financing.