Double mortgage: when do you have to deal with one?
TLDR: You have a double mortgage when you buy a new home while your old home has not been sold yet. The bank then checks whether you can temporarily pay both mortgages. You limit the risk by selling first or by aligning the transfer dates carefully.
A double mortgage means that you temporarily have two mortgages: one on your current home and one on your new home.
You have found your next home and do not want to wait until your current home is sold. Then you may have to deal with a double mortgage. That is not unusual when moving up the housing ladder, but it does require good preparation.
In this blog, you can read when you have a double mortgage, what the bank looks at and how to limit the risk.
When do you have a double mortgage?
You get a double mortgage when you buy first and sell afterwards. At the moment your new home is transferred, the mortgage on your old home is still running. Until your old home has been sold and transferred, you pay for both.
If you sell first and buy afterwards, you do not have a double mortgage. You can read more about that choice in our blog about the best order for buying and selling.
What does the bank check?
If you buy first, the bank wants to know whether you can bear the temporary double costs. You have to show the lender of your new mortgage that you can pay double monthly costs for at least 12 months. A mortgage adviser can calculate this for you.
What is the difference with a bridging loan?
A bridging loan is a temporary loan for the surplus value of your current home. You then already use that surplus value for your new home, before the old one is sold. After the sale, you pay off the loan.
A bridging loan and a double mortgage often go together. The loan makes the purchase possible, but it does not take away the costs of two homes.
Can you deduct the interest on both mortgages?
Yes, under conditions. For your old home, you can deduct the mortgage interest in the year you move and the three years after that, as long as the home is empty, for sale and not rented out. The interest on a bridging loan is deductible for the maximum term of that loan.
How do you limit the risk?
- Have the value of your current home determined in advance, so you know roughly what your surplus value is.
- Take the market into account. The market is currently slowing down: homes get fewer viewings than before. A sale may therefore take longer.
- Align the transfer dates of your sale and purchase as closely as possible.
- Have a mortgage adviser calculate how long you can bear two mortgages.
Sale and purchase in one process
The shorter the period with two mortgages, the lower the costs. Hier Makelaars guides the sale of your current home and the purchase of your new home in one process. That way both dates are considered together.
Frequently asked questions
How long do I need to be able to pay double costs?
The lender of your new mortgage wants to see that you can pay double monthly costs for at least 12 months.
Can I avoid a double mortgage?
Yes, by selling first and buying afterwards. You do run the risk of having to live somewhere else temporarily.
What happens to the bridging loan after the sale?
After selling your old home, you pay off the bridging loan with the proceeds. The interest deduction on that loan then ends as well.
Can I rent out my old home while it is not sold?
Then you no longer meet the condition for interest deduction that the home is empty and not rented out. Ask an adviser what that means for you.
Would you like to know what your current home is worth and how to align your sale and purchase? Read more about selling and buying with Hier Makelaars.
