Different Types of Mortgages in the Netherlands

From 2013, as a first-time buyer, you are only eligible for mortgage interest relief if you take out an annuity mortgage or a linear mortgage. Consequently, these are the most common mortgage types today. There are also several other different types of mortgages. In this article, we explain the annuity mortgage, linear mortgage, and other mortgage options available in the Netherlands.

Before choosing a mortgage type, it's important to calculate your maximum mortgage and understand the mortgage application process.

Annuity Mortgage

An annuity mortgage is a type of mortgage where the monthly sum of interest plus repayment remains the same throughout the term. At the beginning of the term, you pay mainly a lot of interest and as the term progresses, you start paying off more. On the end date, the entire mortgage is repaid. An annuity mortgage has the following characteristics:

• The mortgage has a fixed end date
• During the term, you repay periodically
• Your (gross) monthly costs are the same every month
• You have certainty that you will repay the mortgage

A Linear Mortgage

A linear mortgage is a form of mortgage where you repay the same amount of capital each month over the term. The interest you pay gets lower and lower, reducing your total monthly expenses over time. The characteristics of a linear mortgage are:

• The mortgage has a fixed end date
• During the term, you repay the same amount of capital every month
• In the beginning, you pay a lot of interest and at the end little
• You have the certainty of paying off the mortgage
• Lower total interest costs compared to annuity mortgages

Sustainable Mortgages

An increasingly popular option is the sustainable mortgage, also known as a 'green mortgage'. This type of mortgage offers interest rate discounts to homeowners of energy-efficient homes, encouraging sustainable living while providing financial benefits.

Key benefits of sustainable mortgages:

• Interest rate discounts for energy-efficient homes
• Additional financing for sustainability improvements
• Available from major banks including ABN AMRO, Rabobank, and ASR
• Environmental and financial benefits combined

Learn more about sustainable mortgages and available subsidies for energy improvements.

Other Different Types of Mortgages

Until 2013, it was possible to get mortgage interest deductions for more mortgage types than annuity and linear mortgages. However, most mortgage types can no longer be taken out. Only if you took out the mortgage before 31 December 2013, you can continue the mortgage type for tax purposes.

Below is an overview of the different types of mortgages in 2023:

• Repayment-free mortgage
• Savings Mortgage
• Bank savings mortgage
• Life Mortgage

Choosing the Right Mortgage Type

Not sure which mortgage type is best for you? Consider these factors: