Risk of excessive mortgage expenses after retirement

2 October 2017


Many Dutch people do not know whether they will still be able to afford their mortgages after they retire. They see this as an issue for later, says online pension administrator BeFrank based on in-depth discussions with its own members.

The housing market in the Netherlands is currently breaking all records. There have never been so many high mortgages concluded as in the first half of 2017. On average, people borrowed € 281,000 to purchase their home in the first quarter of this year. Research by Kantar TNS on behalf of ING recently revealed that as many as 87 percent or people aged over 50 were comfortable with their mortgages. But are they right?

Changing your job
Not in all cases, apparently. “Whether you are able to afford to repay your loan with interest is calculated on the basis of your income when you conclude the mortgage,” explains Marianne de Boer, CEO of BeFrank. “Mortgage advisers do look at whether you can continue to pay your mortgage after you retire, however if you change your job or start working less later on there may be problems. Also, if you are out of work for a while this can have consequences for your financial situation later on. Very few people think about this.”

Financial room
BeFrank wants to make Dutch people more aware regarding their pensions and is therefore calling on anyone considering purchasing a house or taking out a new mortgage on the home they already own. “Make sure you have a proper understanding of your overall financial situation. How much money do I have to spend now, and how much will I have when I retire? What will the consequences be if I change my job? Understanding this is essential for a healthy financial future,” says De Boer. “So you need to work out whether you will have sufficient financial room after you retire, and the best way to spend your money, such as making additional repayments on your mortgage or saving for a supplementary pension. An adviser can be useful for this.”

People in control
Since its inception in 2011, BeFrank has been arguing for a more personalised pension system so that Dutch people will become more aware regarding the provision for their retirement. This is the only way to get them to devote more attention to the issue, says the online pension administrator. “It would also be a good thing if our pension system was made more flexible. If you have young children for instance, your cost of living is usually higher. This can be addressed with a premium holiday. This would allow people to pay a little less into their pensions for a couple of years and then make up the shortfall later when they have a bit more disposable income.”

Time for a new pension system
There are other possibilities for making the pension system more flexible, such as a lump sum payment of part of the accrued capital. “People could use this to pay off the remainder of their mortgage in one go,” suggests De Boer. “There would of course have to be restrictions on this option, since it is important that everyone ultimately has a good pension. It is high time for the new cabinet to address this issue.”

About BeFrank
BeFrank has been active in the group pensions market since 2011 and is the first premium pension institution (PPI) in the Netherlands. BeFrank offers a clear pension, straightforward communication and an online service at low cost. It is part of NN Group Bidco B.V.

For more information, contact Isabelle van Ast. E-mail:, Tel: +31 (0)20 5621118.