Getting a phone plan with a handset can have unexpected consequences for your financial future. Many people don't realize that this gives them a BKR registration that can last for years. Do you have plans to take out a mortgage or apply for another loan? Then a BKR registration due to your phone subscription can throw a spanner in the works. In this explanation, we take you through when you do or do not get a BKR registration with a phone subscription and what this means for your financial options.
BKR registration phone: when do you get it?
When do you get a BKR registration with a phone subscription?
Since May 1, 2017, phone subscriptions with a device above €250 have been registered with the Bureau Krediet Registratie (BKR). This is because the Supreme Court ruled in 2014 that a phone subscription with device financing is actually a form of consumer credit. The monthly repayment of your smartphone is considered a loan.
You get a BKR registration with a phone subscription if:
- You take out a subscription with a device whose value is €250 or more
- You pay off the phone in installments through your monthly subscription
- The subscription was taken out after May 1, 2017
What matters is the total value of the device, not the monthly cost. Suppose you buy an €800 iPhone and pay this amount off in 24 months through your subscription, you will get a positive BKR registration, even though you only pay €33.33 per month for the device.
"Many people are shocked to discover that their 'innocent' phone subscription is blocking their mortgage application. Therefore, always be alert before signing up for a new subscription, especially if you're looking to buy a house soon."
Deepak - Legal Specialist
Registration with the BKR is not in itself negative. It is called a "positive registration" because you are simply making your monthly payments as agreed. However, your loan information is visible to other lenders, and they can see that you already have a financial obligation.
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What are the consequences of a BKR registration due to a phone?
A BKR registration for your phone plan can have a big impact on your financial options, especially if you want to take out a mortgage. This is because banks and other lenders look at your total financial situation, including current loans.
The main consequence is that you can borrow less for a mortgage. When calculating your maximum mortgage amount, lenders subtract your monthly phone credit from your spending limit. This can save thousands of dollars in the maximum amount you can borrow.
Suppose you have a phone plan where you pay €35 a month for your device. On an annual basis, that's €420. Mortgage lenders often charge a factor of about 50 for revolving loans. This means your maximum mortgage amount could be as much as €21,000 lower just because of that one phone subscription.
For couples, this effect is doubled if both partners have a phone subscription with BKR registration. Then the difference in mortgage space can reach about €40,000. That's a significant amount that can make the difference between being able to buy your dream home or not.
Other consequences of a phone BKR registration are:
- Fewer opportunities to take out other loans
- Restrictions on taking out a personal loan or revolving credit
- Possible problems with leasing a car
It is important to know that a BKR registration for a phone subscription remains visible for 5 years, even after you have paid off the device in full. So this can affect your borrowing capacity for a long time.
Difference between a positive and negative BKR registration
Not every BKR registration is the same. There is an important distinction between a positive and a negative registration.
You automatically get a positive BKR registration as soon as you take out a phone subscription with a device over €250. This simply means that you have a loan pending. As long as you pay nicely on time, the registration remains positive. Most phone subscriptions fall into this category.
A negative BKR registration occurs only when you are in arrears with payments. For telephone subscriptions, this happens if you don't pay your bill for more than two months. Your provider will first send you a pre-notification letter stating that you are in arrears and that a negative BKR registration is imminent. If you don't catch up, an arrears code (code A) will be placed.
A negative registration has far greater consequences than a positive one. Lenders see this as a signal that you are not reliable in meeting your financial obligations. This can lead to:
- Your mortgage application is rejected
- You can no longer take out loans at all
- You can't apply for a credit card
A negative BKR registration also stays for five years, but is much more damaging to your financial options. So it is crucial to avoid late payments or resolve them as soon as possible if they do occur.
How do you avoid a BKR registration with a phone subscription?
Want a new phone but don't want a BKR registration? Fortunately, there are several ways to avoid it.
The first and most immediate option is to obtain a BKR registration by taking out a sim only subscription and purchasing your phone separately. With a sim only subscription, you only pay for your calling minutes, data and text messages, not a phone. Because of this, it falls outside the definition of a credit and you won't get a BKR registration.
A second option is to pay for your phone in one lump sum when you take out your subscription. If you pay the full amount of the phone immediately, there is no credit and therefore no BKR registration.
A third option is to make a down payment to keep the remaining credit amount under €250. Suppose you want a €500 phone, you can make a down payment of €251 and pay off the remaining amount of €249 in installments. Because you now stay under the €250 limit, you won't get a BKR registration.
You can also choose a cheaper phone under €250. There are many good smartphones available today for under €250, which automatically keeps you under the registration limit.
If you have already taken out a mortgage or are about to do so, it is smart to take out a phone plan with a device only after that. This is because the mortgage lender looks at your situation at the time of application. Once you have the mortgage, a new BKR registration does not affect that particular loan.
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Do you have a negative BKR registration due to payment problems with your phone subscription? Or would you like advice on how to have an existing BKR registration removed? Dynamite Netherlands specializes in removing negative BKR registrations. Please contact contact us for a free consultation with one of our advisors. They can assess your situation and help you regain financial freedom.
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