Zita van Giessen-Booij and Bart van Giessen completed their law studies last year, found a job as a lawyer and started looking for their first home. That all went smoothly. The couple looked at a nice house in Gorinchem and then their offer was actually accepted.
“We both have a student debt, but we had already taken that into account in our conversations with the mortgage advisor,” says Van Giessen-Booij. “When we were actually working on getting financing, we suddenly encountered the DUO problem.”
Lower mortgage
This requires some explanation. DUO (Education Executive Agency) is the government organization that is responsible, among other things, for student finance, student loans and debts. Because the basic grant disappeared in 2015 and the loan system was introduced, many students were forced to borrow money from DUO and thus built up a student debt. They are also called the ‘unlucky generation’.
Anyone who started a study (with a basic grant) before July 2015 falls under the old system: the debt must be repaid in 15 years. People who started after July 2015 (without a grant, with a loan) have 35 years to repay. The latter is in many cases cheaper, because the monthly installment amount is lower and the mortgage amount that you can get is higher.
People like Zita van Giessen-Booij fall into an intermediate category, because they studied under the basic grant and loan system. They can choose which repayment term they want. Fine, right? “No, because you can only pass on that choice much later after you graduate,” says Van Giessen-Booij. “I graduated in February 2022. Then you get two interest-only years and the rule is that they start on January 1 of the year after you graduate, so 2023. Only when those two years have almost come to an end can you pass on your choice. Then I’m almost three years later.”
And that was a problem for many banks. They immediately want to know in black and white which term someone chooses. “Their preference is for 35 years, because your monthly costs are lower then.”
It turned out to be impossible to register the desired term with DUO right now. The body adhered to the existing term of at least two years. Van Giessen-Booij: “We even went to the DUO office to see if anything could be arranged, but no. You are really put under extra pressure. It is already so difficult to buy a house as a starter, especially if you have also built up a debt through the loan system.”
Saves 15,000 euros
Why is it not possible at DUO to pass on that repayment term much earlier? A spokesperson for DUO could not immediately answer this. “It is being examined internally whether it can be adjusted, but I do not know when that would be.”
Age Huitema, who works at mortgage consultancy firm Frits, regularly sees clients who run into this problem. He calculated that with an average student debt of 18,000 euros, it can already save 15,000 euros in mortgage if someone cannot immediately register those 35 years.
“Banks want to see official proof of this. If that is missing, they assume 15 years, which means that your monthly repayment amount is much higher.” And higher monthly payments lead to a lower mortgage.
breathing space
Huitema found out that this year 16,000 people will be faced with a choice: pay off in 15 or 35 years. In total, this intermediate group would even consist of 150,000 people. “Choosing to pay off in 35 years is actually a no-brainer. Your monthly amount is lower, which gives more breathing space anyway, and you can still pay off faster if you want,” he says.
Home or not
For Zita van Giessen-Booij and Bart van Giessen it remained exciting for a long time whether the purchase of their house would succeed. Their mortgage advisor has called almost thirty mortgage lenders and explained the story each time. In the end, three of them agreed to a letter of intent, in which Van Giessen-Booij writes that she will soon choose to pay off in 35 years.
“You suddenly have much less choice, which in turn affects the interest you will pay,” says her husband Bart van Giessen. He himself can automatically take 35 years to pay off his debt, because he started studying after 2015. “It really can mean the difference between having a home or not.”
