The crooked growth in loans arose because the maximum lending standards for mortgages and consumer loans are still not harmonized with each other. The financial sector and regulators have been discussing for years about a workable harmonization between borrowing standards. This should both help the consumer further and minimize the risk for the mortgage lenders.
Borrowing in addition to a mortgage: risky
If the government harmonises (aligns) the borrowing standards, this can prevent consumers from having to switch to consumer credit. Consumer loans usually have a higher interest rate than a mortgage loan. In addition, customers with consumer credit run a higher financial risk because the 100% loan norm is exceeded.
Also benefits consumer credit?
But there are also advantages associated with having to borrow extra through a consumer credit. People who want to renovate, renovate or make their home more sustainable (home improvement) are often better off with a Personal Loan than with an extra mortgage loan. Just think: who wants to put extra money into home improvement, wants to have it paid off in a maximum of 10 years (Personal Loan) ?!
In order to be able to save again for a new renovation or another spending purpose. However, homeowners are stuck for the full 30 years on an additional mortgage loan (with annuity or linear mortgage). If it is already possible. The duration is therefore 3 times as long, with all its impact. And often the renovation is outdated in the meantime, while you have to pay 30 years for it.
Intermediate loan repayment vs. mortgage repayment
Moreover, you may always repay a Personal Loan in the meantime without penalty . If you receive extra money (for example as a result of a wage increase, more work, financial windfall such as inheritance or lottery profit) you can always repay the Personal Loan more quickly. The same applies to people who already know that their income will increase, for example because their studies have just been completed and the career start has already been made.
Even then you are better off with a short-term Personal Loan that you can always repay in the meantime without penalty (extra). On the other hand, you may not always pay off a mortgage without penalty, depending on the conditions .
Responsible borrowing extra via loan is a good option
It is good that extra attention is paid to loans in addition to a mortgage, because the current situation is detrimental to consumers. But putting away Personal Loans as more expensive and risky misses the goal of duty of care and consumer protection. Consumers who are curtailed by a 100% borrowing standard must, after all, continue to be given the opportunity to borrow extra. Until the harmonization has taken place, a responsible and well thought-out Personal Loan is and remains a great option for additional loans in addition to the mortgage.