Advisors saddle clients with huge mortgages: survey
Potential buyers are often advised to take out higher mortgages, often on the grounds of their career advancement and predicted income increment.The Netherlands – More than 50 percent Dutch mortgage advisors recommend their clients to take out a mortgage way beyond their means, shows a recent survey.
People intending to buy a home are often advised to take out higher mortgages, often on the grounds of their career perspectives and predicted rises in income.
This is against the code of conduct for mortgage advisors, said a group which lobbies for regulation of the mortgage market. The code of conduct stipulates mortgage loans should be smaller than 4.5 times the annual income of the debtor.
However, the advisors' group said that the economic crisis has made it unlikely that oversize mortgages will continue to be recommended.
Recent changes in the law limit the possibilities of taking outsize mortgages to finance other purchases such as luxury yachts or rebuilding work.
Mortgages used to be more popular than regular loans as mortgage instalments are tax-deductible as "necessary expenses" compared to loan repayments which are not.
Defaulting on mortgage payments for a house will not make its residents homeless immediately. However, ownership of the house will revert to the bank which will then attempt to sell the property in order to recover the money due.
Radio Netherlands / Expatica