Define a suitable repay strategy to optimise your tax situation and, strengthen your pension fund at the same time.
Define your repayment strategy.
Planning your repayment strategy is important if you have taken out a mortgage. To do this, you can use direct or indirect amortisation.
Direct amortisation
Direct repayment involves regularly repaying a fixed amount of your debt, usually every quarter. This reduces both the amount of your debt and the interest burden. However, mortgage rates are tax-deductible, so your tax burden will increase if you repay directly.
Advantages and disadvantages of direct depreciation
Direct amortisation reduces your mortgage debt and mortgage rates. However, your taxes may increase over time.
All you need to know about depreciation
Advantages of direct depreciation:
- Regular reduction in mortgage debt
- Decrease in mortgage interest expense.
Disadvantages of direct depreciation:
- Higher tax burden due to lower mortgage debt
Indirect amortisation
Indirect amortisation means that the original mortgage debt remains, and you pay the amortisation amount into a private investment pillar, such as pillar 3a or 3b. This amount serves as a guarantee for the bank and, if 3a is linked to an investment fund, allows you to benefit from fluctuations in investment rates. The capital is paid out at the latest when you retire, and the mortgage is repaid up to this amount.
Advantages and disadvantages of indirect depreciation
Indirect amortisation does not reduce your mortgage debt but allows you to benefit from an attractive tax deduction.
Advantages of indirect depreciation:
- All or part of the indirect depreciation can be deducted from tax.
- Opportunity to benefit from fluctuations in private investment rates (3a linked to an investment fund)
Disadvantages of indirect depreciation:
- Mortgage debt not falling.
- The cost of mortgage rates remains the same.
- Risk of fluctuations in the price of private investments (3a linked to an investment fund)
Tips for a good depreciation strategy
Plan your mortgage repayment strategy considering your short- and long-term financial needs. You can repay your mortgage on an ongoing basis or through extraordinary repayments in agreement with your mortgage lender. A good mortgage strategy also involves good amortisation planning.