Mortgage types in The Netherlands

Which mortgage types are there?

If you take out a mortgage, you take out a loan with the house as collateral. There are different ways to repay this loan, in other words, different mortgage types. As of 2013, you are only eligible for mortgage interest deduction if you take out an annuity mortgage or a linear mortgage. These are the most common mortgage types nowadays.


Annuity mortgage

An annuity mortgage is a mortgage in which the monthly sum of interest plus repayment remains the same throughout the entire term. In the beginning of the term, you mainly pay a lot of interest and as the mortgage progresses, you will pay off more. The entire mortgage is repaid on the maturity date. An annuity mortgage has the following characteristics:

  • The mortgage has a fixed maturity date;
  • During the term you redeem periodically;
  • Your (gross) monthly costs are the same every month;
  • You have certainty that you will pay off the mortgage.

Linear mortgage

A linear mortgage is a mortgage in which you pay off the same amount every month during the term. The interest you pay is getting lower and your monthly expenses decrease. The characteristics of a linear mortgage are:

  • The mortgage has a fixed maturity date;
  • You repay the same amount every month during the term;
  • In the beginning you pay a lot of interest, in the end little;
  • You have certainty that you will pay off the mortgage.