Types of mortgages

Find out all you need to know about arranging a mortgage in the Netherlands. Our trusted advice and personal approach makes buying a home exciting and hassle-free.

Mortgages in the Netherlands

Whether you’re looking to own your first home or are a seasoned property investor, you might find that mortgages in the Netherlands differ to those elsewhere in the world. Consult our knowledgeable advisors on which type is right for you.

Pay a lower interest rate with a government guarantee

The Netherlands offers government-guaranteed mortgages under the National Mortgage Guarantee (Nationale Hypotheek Garantie, NHG) scheme. This was introduced in 1993 to reduce the risk of taking out a mortgage and to make homes more affordable. With NHG, the risk is partly covered, enabling lenders to offer a lower interest rate. A drawback is that this only applies to mortgages under a certain threshold, which many properties in larger cities exceed. The other option is a conventional mortgage guaranteed by a banking institution.

Catch up on mortgage forms in the Netherlands.

The best type of mortgage for you

We like to say that different roads lead to the same castle. There are advantages and disadvantages of each type of mortgage, rather than one that is universally better. This is why we take the time to sit with our clients, get to know their goals and circumstances, and offer a variety of options with informed recommendations. Three types of mortgages are available—annuity and linear (which are eligible for the interest tax deduction, renteaftrek), and interest-only.

  • Monthly payments stay on the same level
  • Interest payments decline over time
  • Zero debt at the end of the duration

With an annuity mortgage, you primarily pay the interest at the beginning of the mortgage period, which is tax deductible, meaning your payments are usually lower. Later in the mortgage, the period when most of the interest is paid, you’ll mainly pay back the loan – meaning while your gross payment (before taxes) is level, your net payment (after taxes) increases. This type of mortgage is recommended if you expect your income to increase in the future.

  • Repayments stay on the same amount
  • Interest payments decline over time
  • Zero debt at the end of the duration

With this type, you pay off the mortgage in equal instalments with the monthly payment decreasing over time as the interest diminishes. You pay less interest with a linear than with an annuity mortgage. If you expect that your income may decrease in the future, or you’re interested in paying off the mortgage as quickly as possible, you may prefer a linear mortgage.

  • Monthly payments stay on the same level
  • You only pay interest during the duration
  • Repay your debt at the end of the duration

In an interest-only mortgage, you only repay the interest on the mortgage, leaving the full debt to be repaid at the end of the term. Monthly payments are fixed as the total value of the mortgage stays constant throughout. Interest-only mortgages are a good option if you expect that your assets will be sufficient for covering the total mortgage in the future. The maximum interest-only mortgage available is 50% of the property’s value.

Which type of interest rate is best?

We advise our clients to decide on is whether to opt for a fixed or a floating interest rate.

Fixed-rate mortgage

The interest rate on a fixed-rate mortgage does not change until the term of the fixed-rate period expires. This means your monthly mortgage payment will remain the same aside from some fluctuation due to taxes or homeowners’ association fees. If you’re settling into your career, have a growing family and are ready to set down some roots, a 20- or 30-year fixed-rate mortgage might be your best bet, as you’re protected against increasing interest rates in future.

Floating interest rates

Floating interest rates reset at specific intervals and are typically lower than a fixed rate. As a result, your monthly payment could increase or decrease depending on the capital market or other circumstances, such as if a mortgage lender wants to attract new clients or close their doors for a while. Floating interest rates are best if you expect that rates might decrease in the future.

Early repayment and overpayment charges

Early repayment charges may apply if you want to pay off your mortgage before the term. This is because your mortgage lender is losing out on expected interest. Similarly, if you would like to overpay on your mortgage—either monthly or with one-off payment—you may have to pay an overpayment charge (boeterente). However, a certain amount of overpayment is ‘free’, i.e. it doesn’t incur a charge. This is usually between 10 and 20%, depending on your lender.

Unique features of mortgages in the Netherlands

  • In most cases, interest payments are deductible from taxes.
  • Brokers are not allowed to receive commission from lenders to ensure fairness.
  • Pre-approval for mortgages doesn’t exist in the Netherlands. However, our detailed estimates will arm you with all the information you need to buy a home.

More than mortgages

Mister Mortgage offer a variety of financial services, including insurances like building insurance (opstalverzekering), which is a compulsory condition of all mortgages. When buying an apartment, it’s usually organized by the homeowners’ association (Vereniging van Eigenaren, VvE). We also strongly recommend household contents insurance (inboedelverzekering) and can arrange this for you.

Make an appointment to discuss which type of mortgage is best for you, and see our FAQ for more insight into the mortgage process.

Let us call you

Would you like to schedule a meeting? Please feel free to contact us and let us know when we should call you.

Prinsengracht 679
1017 JT Amsterdam
020 – 210 1074
hi@mistermortgage.nl

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