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What type of mortgages are common in the Netherlands?

A recent change of the fiscal law (2013) has changed the type of new mortgages that have been issued. Interest is now only tax deductible if the mortgage is paid off in a maximum of 30 years and if you have a level-payment or straight-line mortgage. A transition period has been agreed upon for existing mortgages such as the interest-only mortgages.

A mortgage is a loan. The form your repayments take dependents on the type of mortgage. You can choose from multiple mortgage types. The three most common are:

Level-Payment Mortgage (Annuïteiten Hypotheek)

  • Your monthly payment consists of interest and the repayment of the loan.
  • The gross monthly payment does not vary over time for as long as the interest rate is fixed.
  • But, the ratio between interest and repayment does. Each month the interest decreases smaller and the repayment rises.
  • Your net monthly expense rises as time passes.
  • Your tax benefit grows smaller as time passes.

Straight-Line Mortgage (Lineaire Hypotheek)

  • Your monthly payment consists of interest and the repayment of the loan.
  • The gross monthly payment varies over time.
  • Every month the interest grows smaller as the loan gets smaller due to your monthly payments.
  • Your monthly expense is higher at the start and falls as time passes.
  • Your tax benefit grows smaller as time passes.

Interest-only Mortgage (Aflossingsvrije Hypotheek)

  • Your monthly payment consists only of interest. You do not pay monthly repayments of the loan. With this so called bullet-loan, the entire debt has to be repaid in one final payment at the end of the loan, usually after 30 years.
  • Your gross monthly expense stays the same as time passes for as long as the interest rate is fixed