If your mortgage rate is higher than the currently offered rate, it may be worthwhile to change your mortgage rate before the end of your fixed-rate period. And when you want peace of mind for longer on how much interest you’ll be paying, changing the mortgage rate is also an option you could consider. If you have a bank savings mortgage or other kind of savings-based mortgage, a lower mortgage rate is not always better. Reducing the interest rate means that you will have to pay more into the linked savings account or pay more in premiums to reach the target capital you will need to pay off your mortgage. After all, you would also earn interest on your savings at a lower rate.
"},"textLinks":[{"url":"/en/personal/mortgage/current-mortgage-rates","text":"Check the current mortgage rates"}]},{"componentType":"sectionTitle","title":"Fees and charges"},{"componentType":"paragraph","richBody":{"value":"Changing your mortgage rate is subject to fees and charges. You may have to cover the bank’s potential loss of interest income. How we calculate these charges depends on how you prefer to pay them. Besides possible charges for breaking your current fixed-rate period, you will also be charged an admin fee. If you use the services of an adviser to have your mortgage rate changed, you will also be charged advisory fees.
"},"textLinks":[{"url":"/particulier/hypotheek/advieskosten/bestaande-hypotheek","text":"Read more about advisory and/or admin fees when changing your mortgage (Dutch)"}]},{"componentType":"sectionTitle","title":"Is changing my mortgage rate an option for me?"},{"componentType":"paragraph","richBody":{"value":"It is not always possible to change your mortgage rate before the end of the fixed-rate period. You will not be able to change your mortgage rate early if you:
Have a building fund account
Are already in the process of changing your mortgage, such as by switching to another type of mortgage
Have already requested a new mortgage offer
Submit a new interim mortgage rate adjustment with an interest rate mark-up within one year after the previous interim mortgage rate adjustment with an interest rate mark-up
Please contact ING if you are in arrears on your mortgage to discuss what’s possible in your situation.
"}},{"componentType":"sectionTitle","title":"Changing your mortgage rate with a one-off charge"},{"componentType":"paragraph","richBody":{"value":"The pros and cons compared to the interest rate mark-up option.:
"}},{"componentType":"accordion","accordionList":[{"title":"Pros","richBody":{"value":"You can get greater peace of mind. This is because you will have more fixed-rate periods to choose from, up to a maximum of 20 years. With the interest rate mark-up option, the maximum period is 12 years.
We calculate the one-off charge based on the loan for which you are changing the interest rate, whereby we will take into account the percentage of your loan you can pay off every year without incurring repayment charges. This may lead to you paying less than you would if you choose the interest rate mark-up option.
If the interest on your loan is tax deductible, you can also enter the combined one-off charge and admin fee as tax-deductible interest on your income tax return.
You will not have to pay a large sum in one go, because the loss of interest income is spread out over the new fixed-rate period as additional interest.
If the interest on your loan is tax deductible, the additional interest will be too.
If you move house during your new fixed-rate period, you will not have to pay part of the loss of interest income caused by the interim mortgage rate adjustment.
The new period over which you can fix your new mortgage rate is capped at 12 years. If you choose the ‘Changing your mortgage rate with a one-off charge’ option as outlined above, the fixed-rate period can be as long as 15 or even 20 years.
The interest rate mark-up does not take into account the part of your loan you can pay off every year without incurring repayment charges. As a result, the total amount you pay may be higher than when you choose the one-off charge option.
Situation
Let’s say your home is worth €250,000 and you have a €200,000 mortgage (without the Dutch National Mortgage Guarantee). This puts your loan-to-value ratio at ≤80%. To find out more about the loan-to-value ratio, seehere.
The mortgage rate for your current fixed-rate period is based on the loan-to-value ratio and is 4.5%. You now want to change the interest rate for this mortgage before the end of the fixed-rate period. You choose the interest rate mark-up option and you want a new fixed-rate period of 10 years with the same mortgage amount of €200,000.
Basic assumptions
The calculation will then be based on the following basic assumptions:
| Amount outstanding on existing mortgage | €200,000 |
| Remaining fixed-rate period | 62 months (5 years and 2 months) |
| Contracted mortgage rate | 4.5% (based on a loan-to-value ratio of 80%) |
| Currently offered 5-year rate | In this example: 1.6%. |
| Currently offered 6-year rate | In this example: 1.8%. |
| Currently offered 10-year rate | In this example: 2.0%. |
How we calculate the interest rate mark-up:
We calculate the interest rate mark-up in two steps. First, in Step 1, we calculate ING’s loss of interest income as a result of your early termination of the fixed-rate period. This gives us the ‘total loss of interest income.’ Next, in Step 2, we spread out this total loss of interest income over the new fixed-rate period, so that we know exactly how much you will have to pay extra every month.
Stap 1: Calculating the loss of interest income
You were expected to pay 4.5% interest for another five years and two months. We compare this rate with the current interest rate (comparison rate) for equivalent mortgages. Next, we look at the mortgage rates for the nearest shorter and longer fixed-rate periods that we offer at that time. We then take the higher of those two rates. This works out in your favour. We make this comparison using the loan-to-value ratio on which your current mortgage rate (the contractual rate for your existing mortgage) is based.
| Your current mortgage rate | 4.5% |
| The currently offered rate (comparison rate) | 1.8% - |
| ING’s loss of interest income is (4.5% - 1.8%) per year | 2.7% |
| Loss of interest income per month (€200,000 x 2.7%): 12 = | € 450 |
| Your remaining fixed-rate period is five years and two months = | 62 months |
| The total loss of interest income up until the end date would be 62 x €450 = | € 27,900 |
In this example, the currently offered mortgage rate (comparison rate) is 1.8%. This puts ING’s loss of interest income at (4.5% - 1.8%) = 2.7% per year. The loss of interest per month is (€200,000 x 2.7%): 12 = €450.
Your fixed-rate period expires in five years and two months, i.e. in 62 months. The total (nominal) loss of interest up until the end date is therefore 62 x €450 = €27,900.
Calculating the present value
However, this is too simple, because you would normally have paid this amount in 62 monthly instalments of €450. This is why, for each separate interest payment ING misses out on, we calculate how much you would now have to pay in one single payment to cover the total loss of interest income. This is called ‘calculating the present value’. A present value calculation takes account of the effects of time and the compound interest effect. The present value is calculated using the currently offered mortgage rate (comparison rate), which in this example is 1.8%. The total sum of all interest payments that ING will now not receive over the remaining fixed-rate period of 62 months and of which the present value has been calculated is €26,622.90.
Stap 2: Calculating the interest rate mark-up
You will pay the €26,622.90 in lost interest income over the new fixed-rate period. This means that you will be paying a little extra in interest every month. The rate of additional interest, i.e. the interest rate mark-up, is added to the mortgage rate for the new fixed-rate period, which is 10 years in this example. We calculate this mark-up in such a way that the present value of all future additional interest payments adds up exactly to the interest income lost, as calculated above. This present value is calculated at the current mortgage rate for the new fixed-rate period selected, i.e. 2.0% in this example. With a new fixed-rate period of 10 years, this means a mark-up of 1.47% in this example. This mark-up is added to the mortgage rate for your new fixed-rate period. Your new mortgage rate, i.e. including the mark-up, will then be 3.47%. (2% + 1.47%).
"}}]},{"componentType":"sectionTitle","title":"How to arrange a rate adjustment"},{"componentType":"paragraph","richBody":{"value":"Since 18 July, you can check the possibilities for an interim mortgage rate adjustment online. Simply log in to My ING and select ‘Adjust mortgage rate’ on the mortgage overview page. You can see all the options there. If you don’t need any further information, you can implement the interim rate adjustment yourself at the end of the process. If you have any questions in the meantime, call +31 (0)20 22 888 88 or contact us or your broker. We’ll be happy to help.
If you have any questions about the possibilities and consequences for your personal situation, or you want to go over other options for your mortgage with someone, Review your Mortgage with us.
"}},{"componentType":"linkList","iconTitle":{"title":"More about"},"textLinks":[{"url":"/en/personal/mortgage/mortgage-refinancing/lowering-mortgage-rate","text":"I have an ING mortgage. How do I get my mortgage rate down?"}]}]},"legalZone":{"flexComponents":[{"componentType":"paragraph","title":"Good to know","richBody":{"value":"The English text of the website is a translation of the Dutch original version. This translation is intended for the customers convenience only. In case of any discrepancies between the two versions, the original Dutch version shall prevail. The mortgage offer and contract will be signed in Dutch. Also, all further communication after signing the mortgage contract will be in Dutch. You acknowledge and accept this. If any assistance or clarification is needed, we recommend contacting your mortgage advisor or to call our customer service via the ING app.
"}}]}}}