In all the following examples, the calculations are based a loan of € 235,000 with a 30 year term, on the basis of annuity (the principal and interest).
Dutch banks structurally charge 2.5% more interest on mortgages than the interest they pay on savings held with the bank. By comparison: in Denmark the banks are only allowed, by law, to charge an interest margin of about half a percent per year. This difference of 2% interest per year, means that banks in the Netherlands, with a mortgage of € 235,000 in thirty years are € 100,000 (one hundred thousand euro’s ) more expensive!
Most people borrow for a fixed period of five years or longer and pay about 5% interest per year. This percentage consists of the interest given to savers and the costs charged by the provider of the loan. For a loan of € 235,000 in 30 years you will pay the total amount of € 460,000 of which € 225,000 interest.
At the JAK Bank, a Swedish initiative, people do not pay interest, but a 2.5% fixed margin per year to cover the cost of JAK. For a loan of € 235,000 you pay in a period of 30 years a total amount of € 337,000 of which € 102,000 for JAK. This is about the same as what Dutch banks currently overcharge. So far this alternative initiative seems to be sustainable.
In addition, the participants of the JAK mortgage are obliged to participate in a saving plan in which they have to save a similar amount to that which has been borrowed. Throughout the loan period they must continue to save. However, no interest or compensation for inflation in any form whatsoever is granted on these savings. When one adds up the lack of interest and compensation, during 30 years, you arrive at about the same amount of a regular mortgage. A JAK mortgage is just as expensive as a regular mortgage.
B of Joy (BOJ) people do not pay interest. However, they do pay a variable "wage and price compensation” to the people who have deposited savings, and a margin of 0.5% to cover the costs of the cooperative. The amount of our wage and price compensation is equal to the average wage increase in the Netherlands. In 2013, this would amount to about 2.5%. This means the total percentage cost of a property lease program at BOJ, in 2013, would come to 3%. At BOJ, a housing lease for a property of € 235,000 would cost € 360,000 euro in 30 years compared with € 460,000 euros with the regular and JAK mortgage. That’s a saving of € 100,000 over a period of 30 years. And yes, that also applies to mortgages with today’s so-called sustainable banks.
The amount of the margin of 0.5% expenses for the cooperative is based on the "Mortgage Bond System" which is used in Denmark. In Denmark the law defines how much margin the bank is allowed to charge. For two centuries this has proven in practice to be a sufficient margin. Participants of the housing lease program are expected to join the life-cycle saving scheme.
In order to be able to make use of the housing lease plan, it is necessary to join the life-cycle savings plan. BOJ is a “full reserve cooperative”, which means that money can only be lent out up to the amount for which savings have been deposited. The life-cycle saving plan plays an important role in the property lease program. It provides the backing for the property lease program. In addition, you save for supplementary pension when joining the life cycle saving plan. These savings are inflation proof.
The government is decreasing social security. That is why it’s becoming more interesting for employees to participate in this scheme. The Life-Cycle Savings Plan is based on the system which is used in Singapore and which has proven during the last 50 years to function properly. People who participate in the life cycle saving plan are awarded a "Wage and price compensation" on their savings.