Splitting a loan can be done in different ways and quite common. We usually try to combine loans so we have to bear lower charges every month. Sometimes, however, it is necessary to split a loan, for example after a divorce.
But other situations can also occur where splitting a loan may be the desired solution.
Is mortgage loan split possible?
The refinancing of a loan – with or without another lender – offers opportunities for optimization. For example, it is possible to split the loan into different maturities. A part can then, for example, be repaid at 20 years, and the remaining part at 15 years.
By splitting up in the above way, after a certain period (15 years in our example) to part of the load will disappear, but you can still enjoy the living bonus.
Save notary costs by splitting loan?
Anyone who lends money to buy a house will attach great importance to the tax deduction that can be enjoyed. In the first instance, it becomes important to borrow sufficiently so that no deductions are lost.
Establishing a mortgage will always require the intervention of a notary. A possibility to save costs – if the fiscal basket is full – can be partly financed by the loan of a mortgage mandate instead of a mortgage. That way you can save enrollment costs.
Keep in mind that the lender may try to charge a higher rate for the loan with a mortgage mandate. In that case, you will have to negotiate to try to level the interest rates. Many banks are willing to do this. Also with file costs, you will have to take this into account in order to calculate the total benefit.
Attention: a loan that merely serves to purchase land is not eligible for the home bonus. You can possibly finance a stand-alone loan for the purchase of a building plot by means of a loan with a mortgage mandate, in order to subsequently take out a new loan with mortgage registration for the construction works.
Split loan as a risk reduction?
The motivation to split up the loan was in the past often spreading the risk. For one loan, the variable interest rate could then be opted for, while the other loan would retain a fixed interest rate. By combining various interest rates and maturities, the company tried to achieve benefits and, above all, to spread risks.
In times of low interest this is not so much the case anymore, but spreading to loan over two loans with different maturities can still be useful depending on your plans for the future.
Split loan after divorce
After a divorce, there are many questions. One of those pressing questions is what happens to the house and what needs to be done with existing loans. In any event, agreements must be made about this and arrangements have to be made.
One of the decisions that can be taken is to sell the property, repay the loan and then distribute the surplus. Another possibility, however, is that one of the partners takes over the ownership share of the other partner.
The intention is that the partner is relieved as a borrower and that the acquiring partner takes on the remaining debt of the loan. However, permission from the bank is required for this.
After all, the bank wants to be able to state with certainty that the acquiring partner is solvent enough and can also effectively repay the debt. This means that the bank does not provide this stool. The consequence of this is that the defunct partner remains jointly liable and, in the absence of payment, can end up on the blacklist of the Central Credit Register (CKP).
In case of a divorce, let yourself be assisted by a mediator and divorce consultant to make everything run smoothly. This person can also assist you in practical and administrative matters.
A split loan between business and private?
If a part of the building is to be used professionally by a sole proprietorship, it may be opportune to split up the loan and to finance the professional part via the sole proprietorship. The interest can then be deducted as a professional cost (at the marginal rate) which is quite interesting for tax purposes.
When you splitting up, you have to make sure the tax basket is completely filled. Your bank or lender can certainly help you determine the correct amount.
This is also interesting for companies. Anyone who works from a company often has a financial reserve within that company. In this case, the loan may also be split up if the company becomes co-owner of the property, part of which is used professionally. The company then finances as it were.
It goes without saying that this may have additional consequences and that proper consultation with the bank and the bookkeeper is necessary to anticipate this. Possible alternatives can, therefore, be discussed. For example, it may be more interesting to still buy the property completely privately and subsequently rent the professional part to the company.
Splitting a loan is possible and in some cases can bring benefits. Try to ensure that the division provides for a fiscal part (maximum home bonus deduction) and a remainder.
Splitting the amount into different loans can be useful to reduce the monthly burden over time. This can be useful if, for example, you have children who are going to study. For example, around this time the monthly burden falls away and you have more financial breathing space to financially support your children.
Always compare different banks if you are looking for a new loan, or want to refinance or split an existing loan.