Mortgage types

Annuity mortgage

You pay a fixed monthly amount, consisting of principal repayment and interest, known as an annuity. The ratio between interest and principal repayment changes over the term. At the beginning of the term, you pay more interest than principal repayment, and at the end of the term, you repay more principal and pay less interest. The consequence of this change in ratio is that your net expenses increase each year because you can deduct less interest.

Linear mortgage

Each month, you’ll pay a fixed amount for the repayment and a decreasing amount for interest. At the beginning of the term, the costs will be higher than at the end. Each repayment reduces the amount on which you have to pay interest. As the mortgage amount decreases each year, you can deduct less interest over the term.

Interest-only mortgage

With an interest-only mortgage, you do not repay any part of the loan during its term and do not build up capital for repayment at the end of its term. This results in a remaining debt at the end of the term. Monthly, you only pay the interest charged by the lender. The advantage of an interest-only mortgage is that you can make maximum use of mortgage interest relief.

Endowment mortgage

With a mortgage saving plan, you save or invest to repay the mortgage. You pay a fixed amount of interest each month. You also pay a fixed amount each month into a blocked savings account (Savings Account Own Home/SEW) or a blocked investment account (Investment Account Own Home/BEW). The savings account or investment account is linked to your mortgage. At the end of the term, you will use this to repay your loan. The interest you receive on the savings account is the same as the interest you pay on the mortgage. You do not have to pay tax on the accumulated capital in the savings account or investment account: it is exempt from tax in Box 3.

Savings mortgage

The savings mortgage consists of a loan combined with a life insurance policy. You pay a fixed monthly amount for interest plus the premium for the life insurance.
The premium for the life insurance policy is partly intended for saving and partly for insuring the risk of death. The savings interest rate is the same as the mortgage interest rate. As you are not making any repayments on the mortgage during the term, you are making maximum use of the mortgage interest relief. At the end of the term, or upon earlier death, the guaranteed capital will be paid out. This can then be used to repay the mortgage.

Investment mortgage

With an investment mortgage, you don't immediately pay off the mortgage. You invest to pay off the mortgage at the end of the term with the accumulated capital. Part of the money you pay monthly is intended as interest that the lender charges. The other part is periodically deposited into an investment account. Your lender uses these deposits to purchase shares, bonds and/or investment funds. You make maximum use of mortgage interest relief. The accumulated capital depends on the investments and is therefore not fixed. You may have a remaining debt at the end of the term.

Life insurance mortgage

A life insurance mortgage is a mortgage where you eventually repay with the payout of a life insurance policy. You pay a fixed amount of interest plus a premium for the life insurance policy each month. The final payout is not fixed. You may therefore have a residual debt at the end of the term.