On March 21, 2011 Finance Minister De Jager informed the Lower House of the tightening up of the Code of Conduct for mortgage financing agreed by the bank sector. These are the main tax consequences:
- a mortgage loan may not exceed 104% of the market value of the home, plus the real estate transfer tax due (the maximum mortgage loan would then amount to 110%);
- an interest-only loan may not exceed 50% of the market value of the home.
Exceptions to these guidelines only apply under strict conditions. Both measures will have an indirect effect on the level of the deductible interest. The Code is to be effective as of August 1, 2011. New mortgage loans issued after this date will be subject to these restrictions, whereas existing mortgages will remain untouched.