A telephone subscription with a ‘free’ smartphone becomes a loan with BKR registration. This has consequences for your mortgage, including what you can borrow to the maximum.
In the Netherlands, a telephone subscription where the telephone is paid off during the subscription period is popular. Young people in particular often do not have enough money to pay for the latest iPhone or Samsung at once. With this ‘free telephone’ there is a loan.
According to research by the Netherlands Authority for the Financial Markets (AFM), 60% of young adults between 25 and 34 years old receive an installment phone. This is even 85% between the ages of 18 and 24. This is no longer without consequences.
From 2017, providers of an ‘installment phone’ must meet the same requirements as borrowing money. In addition to the message ‘borrowing money costs money’, providers must state the costs for the telephone and the subscription separately on the site. It must also be clear what both cost the entire duration of the subscription.
This should make the choice for a subscription including a smartphone or a sim-only subscription with a separate telephone easier.
Telephone subscription becomes a loan
New subscriptions with a telephone of more than € 250 are also reported to the Credit Registration Office (BKR). This means that a BKR check is used to test whether you can pay for the ‘telephone loan’. In addition, other lenders can view your credit history when you take out a loan or mortgage. The BKR registration does not apply to current contracts. Read more about the consequences of borrowing money with BKR.
To test creditworthiness, you must complete income and expense tests from 1 May at the telecom provider. You must also provide information about your family composition, income and housing costs. A slip or bank statement is not required if the device is under € 1000.
Consequences for mortgage subscription
A telephone subscription with BKR registration also has consequences for your (future) mortgage. The telephone loan is seen as an obligation. Just like, for example, a revolving credit or credit card, these obligations are deducted from your maximum mortgage.
A telephone subscription can therefore have serious consequences for how much mortgage you can get. With an average income of € 35,000 per year you can borrow around € 7,000 less with a telephone credit of € 25 per month.
Prevent BKR registration by telephone
You can prevent a BKR registration through a telephone subscription. We give a number of tips:
- Pay your phone in cash and opt for a sim-only subscription.
- Take out a private loan for your telephone.
- Take out a business subscription to your own BV.
- Choose a credit under € 250 combined with a one-off payment.
By treating the telephone subscription as a loan, the Netherlands is again in line with the European rules on consumer loans. This measure also fits in with the government’s policy to protect consumers against over-credit (too much borrowing). The examples below show that this has far-reaching consequences for the maximum mortgage.
- Suppose you are a student. You have a phone subscription with ‘free smartphone’ and perhaps a credit card with which you can do internet purchases. You also have to deal with a student loan. All these obligations reduce your options for taking out a mortgage in the future.
- The same applies to a family. If the telephone subscriptions of the children (with a free smartphone) are paid by the parents, you can check the consequences for the maximum mortgage.
Previously, a red balance on your checking account has already been registered with BKR, with the necessary consequences for the mortgage.