Annuity mortgage: the mortgage type with a fixed monthly payment

How does an annuity mortgage work?

With an annuity mortgage, you pay the same gross amount every month for as long as your interest rate is fixed. That payment is a combination of interest and repayment, and the balance between the two shifts gradually. In the early years you pay mostly interest and repay very little, simply because almost the entire loan is still outstanding. As you repay more, the remaining debt shrinks, and with it the interest portion. The repayment portion grows to match, so your total monthly payment stays the same.

The result: your net monthly costs (what you pay after mortgage interest deduction, the Dutch tax break on mortgage interest) actually creep up over the years, because there is less and less interest left to deduct. Gross, you keep paying the same amount; net, you pay more in year 25 than in year 1.

Why is this the most popular mortgage type?

Most people taking out a new mortgage opt for annuity repayment, and that's no coincidence. The monthly amount is predictable and easy to budget for, which is welcome when you're a first-time buyer just getting your household finances in order. You also start with a lower monthly payment than you would with a linear mortgage. That gives you a little extra breathing room if you're buying your first terraced house in Tilburg-Noord or the Reeshof and still have a kitchen to pay for.

The tax rule: repay within 30 years to keep your interest deduction

To qualify for mortgage interest deduction, the Dutch tax authority (Belastingdienst) sets one condition: you must repay the loan within a maximum of 30 years, at least on an annuity schedule, following a repayment plan that is fixed and recorded in advance. Repaying faster is allowed, so a linear schedule qualifies too, but annuity repayment is the minimum that still entitles you to the deduction. Repay more slowly, and you lose the deduction on that part of the loan. This rule applies to mortgages taken out since 2013.

Annuity mortgage versus linear mortgage

With a linear mortgage, you repay the same amount every month. Your interest portion falls faster as a result, and your gross monthly costs decrease as the term progresses. The advantages of an annuity mortgage: a lower, predictable payment at the start and level gross monthly costs. The downsides: you build equity more slowly in the early years because you repay less, and your net costs rise towards the end. A linear mortgage is heavier going at the start, but saves you some interest over the full term because the outstanding debt falls faster.

A worked example

Suppose you borrow €250,000 at 4% interest (fixed for 10 years; an indicative rate for 2026) with a 30-year term. Your gross monthly payment then comes to roughly €1,194, the same amount every month.

• In month 1, around €833 of that payment is interest and €361 is repayment.
• Around year 15 the balance tips: from then on, more of your payment goes to repayment than to interest.
• In the final months, your payment consists almost entirely of repayment, with hardly any interest left.

Curious what an annuity mortgage would mean for you?

Whether you're buying your first home in Tilburg or ready for your next step, we're happy to work out what an annuity mortgage would mean for your monthly costs and your interest deduction. Schedule a no-obligation consultation: call 06 52 69 88 22 or email Martin@belderbrandt.nl and we'll find a moment that suits you.