Annuity mortgage

With an annuity mortgage you pay interest and repayment every month. With a fixed interest rate, the total gross amount of interest and repayment stays the same throughout the fixed-rate period.

What does change is how that monthly amount is made up:

• at the start you pay relatively a lot of interest and little repayment;
• later you pay less interest and more and more repayment;
• at the end of the term the loan has been repaid in full.

Mortgage interest deduction

For a new home loan taken out from 1 January 2013, the mortgage interest can be tax-deductible under conditions if the loan is repaid in full within at most 30 years, at least on an annuity or linear basis. The loan must also meet the other tax conditions for a home loan.

Because you keep repaying more, you pay less and less interest over the term. As a result, the possible tax benefit of the interest deduction also gradually decreases.

When can this mortgage type suit you?

An annuity mortgage can be interesting if you want relatively lower gross costs in the first years than with a comparable linear mortgage. Whether this suits you depends on your financial situation and plans for the future.