Mortgage types

The mortgage types from which you can choose are diverse. Since 2013, there is a so called repayment obligation for newly secured mortgages. Everyone who buys a house for the first time has the choice between two mortgage types, an annuity mortgage or linear mortgage. If you had a house before 2013, and have an ongoing mortgage, you can also opt for the interest only mortgage, savings mortgage (bankspaarhypotheek) and investment mortgage (beleggingshypotheek).

Our experts are very knowledgeable on the different mortgage types and will help you find the ideal mortgage that matches with your individual circumstances.

Annuity vs linear mortgage

Annuity mortgage

With an annuity mortgage, the gross monthly costs remain fixed during the lifetime of the mortgage. This is however only when the interest on the mortgage is fixed. The structure of the mortgage changes throughout the lifetime: at the start you pay more interest and less repayment on the principal and at the end this is reversed: you pay little interest but repay more on the principal. Because you pay less and less interest over the lifetime of the mortgage, and you can deduct mortgage interest from your income for tax purposes, this tax benefit you receive will decrease each month. This results in higher net monthly costs.

annuity mortgage types example

annuity mortgage type example

Linear mortgage

This mortgage type is similar to an annuity mortgage, but with one important difference: the monthly costs fall during the lifetime of the mortgage. Repayments on the principal will stay the same during the lifetime of the mortgage. Consequently, interest payments will decrease and as a result the tax benefit you receive falls as well. Monthly net costs decline gradually.

linear mortgage types example

linear mortgage type example

Interest only mortgage

With this type you do not repay the principal, but only pay interest which leads to lower monthly net costs when compared to the other types. Also, monthly payments stay on a fixed level. A disadvantage of an interest only mortgage is that the mortgage is not hedged with either repayment or insurance. This can however be an interesting mortgage type if for example the value of the house is more than adequately sufficient.