The hybrid mortgages are also known as savings/investment mortgages. This mortgage form combines the flexibility of a modern life insurance mortgage with the security of a savings mortgage. This explains why this mortgage form is so popular nowadays.

Characteristics
• No compulsory amortization during lifetime of the mortgage;
• Maximum tax opportunities;
• Fixed monthly charges containing interest and a premium;
• At the end of the lifetime of the mortgage, the mortgage is in principle (partially) amortised with the capital insurance;
• The result of saved or invested premiums is tax-free under certain conditions;
• The end result is not, partially or totally guaranteed, depending on your choice;
• Premiums are invested in units with a great variety of investment opportunities, amongst which a mortgage interest fund;
• The construction is very flexible in terms of intermediate changes and it offers the possibility to switch from saving to investing and vice versa within the insurance.
• The combination mortgage provider/insurance company is a fixed link;
• Premiums are determined on the basis of a so-called “universal-life principle”.

The “universal-life principle”
You will pay a monthly charge which has been agreed upon beforehand. The ratio between the (risk) premium for death risk insurance and the premium for capital growth (savings premium) is determined every month. The height of the risk premium is depending on the age of the mortgagee and the height of the capital required by the time of decease. The higher the capital generated will be, the less insurance is needed in case of decease. Because of this, in general the risk premium can be kept low and the more of your premium can be invested. The premiums for insurances according to the “universal-life principle” are lower than the traditional ones and this makes this insurance form the more attractive.

Saving and/or investing
The hybrid mortgage unites the modern life insurance mortgage with the saving mortgage. As with the modern life insurance mortgage, the premium is invested in investment funds. This is called unit-linked investing. But, just as with the savings mortgage, (part of) the premium can be stored in a mortgage interest fund. This fund is being maintained by the mortgage provider. You get a guaranteed output which equals the mortgage percentage you pay. You have the freedom to redistribute the investments and savings any time you want.

Fixed combination
The combination mortgage provider/insurance company is fixed in this type of mortgage, because the interest earned over the amount deposited in the mortgage interest fund, is reimbursed by the mortgage provider. Would you move from location or shift to another mortgage provider, the insurance policy could be maintained, but the possibility to save in the mortgage interest fund no longer applies.

Additional possibilities
The hybrid mortgage form is an excellent choice for smart fiscal distributions. You may think of high-low constructions or of combinations with premium- or investments deposits. With this mortgage, you can for example pay-off extra between time, raise or reduce your premiums or you can vary with the duration of the mortgage. In case you want to know more about the possibilities, please visit our office. Our advisers are happy to tell you more!

Tax exemption
For mortgages combined with a life insurance, you can use a special tax exception: the so-called “tax exemption for capital insurances own house”. This exemption means that during 15 or 20 years, one can build a tax-free capital. You pay no taxes over the capital built (it falls under Box 1) and the end capital yielded is tax-free. For 2006 the exemptions are € 31.900 and € 108.600 respectively, in total
€ 140.500. The exemptions are once-only per insurant and apply also when the insurance yields in case of decease. Are you married or living together? In that case you may count with twice the amount: € 281.000.  The condition is that you must have paid the premium during 15 or 20 years without interruptions and that the highest annual premium cannot be more than ten times the lowest annual premium. Each year these amounts are being indexed.