ABN AMRO to help over-56s to cash out their home equity

Press release -

Many people find themselves in a difficult position once they turn 56. They might not earn enough to buy a new home, for example, or they could have a large amount of equity tied up in their property. Starting this week, ABN AMRO will make it easier for them to take out a mortgage for a new home or to cash out their home equity. They can use that equity in a variety of ways: to supplement their income, for example, or to gift it to their children or grandchildren or refurbish their current home. The relaxed policy rules also extend to mortgage loans provided by ABN AMRO’s subsidiary Florius.

Moving house

More and more homeowners over the age of 56 want to move to a different home. At present, many of them are finding it impossible to take out a new mortgage, even if they want to move to a cheaper property. ABN AMRO has decided to look at these clients’ actual housing costs, to make it easier for them to take out a new mortgage on sensible terms. This could mean borrowing a smaller or larger amount. This step will help to improve residential mobility, releasing more homes and providing buyers with more options, which will potentially also allow other groups of buyers to benefit.

Cashing out home equity

The new rules also accommodate homeowners over the age of 56 who do not want to move, but instead release their home equity. They can use the equity to improve their home or make it more sustainable, make a gift or supplement their income. ABN AMRO will offer clients new types of mortgage with longer maturities. Rental income from a second home will now also be treated as a full income component for purposes of calculating how much the mortgage client can borrow, allowing them to increase their mortgage and release the equity.

Individualised services a key requirement for the mortgage market in the future

According to the predictions of Statistics Netherlands (CBS), the number of people in the Netherlands aged 65 or over will rise, making up 26% of the population by 2040. ABN AMRO believes that lending standards should adapt as the population continues to age. “We’re pleased that we can now better accommodate the specific wishes of people aged 56 and up. As the population ages, this group of clients will continue to grow, and they need more financial flexibility,” explains Kitty de Heiden, Mortgages Manager at ABN AMRO. “This can be achieved by adjusting their mortgages, making it easier for them to remortgage their property, for example, or to buy a new home or increase the mortgage and gift money to their children or grandchildren.”

1 See numerical example at the end of this item.

Numerical example

A couple (ages 65 and 58) with a combined income of €30,000 want to use some of the equity in their home to refurbish. They are looking for an interest-only loan with the interest rate fixed at 3% for 15 years. Under the old rules, at 3% they could borrow €124,500. With the new rules, at the same rate of 3% they can now borrow €215,000.

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