Annuity vs Linear Mortgage in the Netherlands: What Is the Difference?

If you are buying a home in the Netherlands, one of the most important choices you may have to make is whether to take out an annuity mortgage or a linear mortgage.

Both mortgage types allow you to repay your mortgage completely over time. Both can qualify for the Dutch mortgage interest deduction when the applicable conditions are met. The major difference is how quickly you repay the mortgage and how your monthly payments develop during the term.

With an annuity mortgage, your gross monthly payment remains approximately the same for as long as the interest rate remains unchanged. At the beginning, a relatively large part of that payment consists of interest and a smaller part is repayment.

With a linear mortgage, you repay the same amount of principal every month. Because the outstanding mortgage becomes smaller every month, the amount of interest also decreases. Your monthly payment therefore starts higher but gradually falls.

In simple terms, an annuity mortgage usually gives you lower monthly payments at the beginning, while a linear mortgage generally lets you repay faster and pay less total interest.

Which one is better depends on your income, monthly budget, future plans and how long you expect to own the property.

Annuity vs linear mortgage: quick comparison

The choice is therefore not simply about which mortgage is cheaper. You need to compare what you can comfortably afford now with what you want your financial situation to look like in ten, twenty or thirty years.

What is an annuity mortgage?

An annuity mortgage is a mortgage where your scheduled gross payment consists of interest and repayment.

When the interest rate remains the same, the combined amount remains approximately constant. What changes is the composition of that payment.

At the beginning of the mortgage, your outstanding debt is still high. You therefore pay relatively much interest and repay relatively little principal. As the mortgage balance becomes smaller, the interest portion decreases, and a larger part of the same monthly payment is used to repay the mortgage.

This means your mortgage balance goes down relatively slowly during the first years and increasingly quickly later in the term.

For a detailed explanation of this mortgage type, read our guide to the annuity mortgage in the Netherlands.

What is a linear mortgage?

A linear mortgage works differently.

You repay the same amount of principal every month. If you borrow €360,000 for 30 years, for example, the principal repayment is €1,000 per month because the €360,000 is divided over 360 monthly payments.

Interest is added to that repayment amount.

Because your remaining mortgage debt becomes smaller every month, the amount of interest you pay also falls. Your total monthly payment therefore becomes lower throughout the mortgage term.

The advantage is that your debt decreases faster and you normally pay less interest in total. The disadvantage is that you need to be able to afford the relatively high payments during the first years.

You can read more about the mechanics in our complete guide to the linear mortgage in the Netherlands.

What is the difference between an annuity and linear mortgage?

The fundamental difference is the speed at which you repay your mortgage.

With an annuity mortgage, principal repayment starts relatively slowly. Your payments are structured so that the combined scheduled interest and repayment amount remains approximately equal while the interest rate stays the same.

With a linear mortgage, you immediately start repaying the mortgage at a constant rate. This reduces the outstanding balance more quickly.

That faster reduction has an important consequence. Mortgage interest is calculated over your remaining mortgage debt. The faster that debt falls, the less interest you have to pay.

This is why a linear mortgage is generally cheaper when you compare total interest over the complete mortgage term.

An annuity mortgage provides a different advantage: lower initial monthly payments.

For many buyers, especially people buying their first Dutch property, that additional monthly breathing room can be more important than minimising the theoretical cost over thirty years.

Annuity vs linear mortgage example

A calculation makes the difference much easier to understand.

Suppose you borrow €350,000, the interest rate is 4%, and the mortgage runs for 30 years. For simplicity, assume the interest rate stays at 4% throughout the complete period.

Annuity mortgage

The gross scheduled payment would be approximately €1,671 per month.

During the first month:

Interest: approximately €1,167
Principal repayment: approximately €504
Total: approximately €1,671

After five years, approximately €316,566 of the original €350,000 mortgage would still be outstanding.

After ten years, approximately €275,744 would remain.

If the same 4% interest rate applied throughout all 30 years, the total interest paid would be approximately €251,543.

Linear mortgage

With a €350,000 linear mortgage over 30 years, you repay approximately €972 of principal every month.

During the first month:

Interest: approximately €1,167
Principal repayment: approximately €972
Total: approximately €2,139

The payment then decreases every month.

After approximately five years, the monthly payment would be around €1,948 and approximately €291,667 of the mortgage would remain.

After approximately ten years, the monthly payment would be around €1,753 and approximately €233,333 would remain.

Under the same simplified 4% assumption, total interest over 30 years would be approximately €210,583.

In this example, choosing the linear structure would reduce gross interest by approximately €40,960 over the full term.

The price for that saving is obvious: the initial monthly payment is considerably higher.

These figures are illustrative. Your actual payments depend on the mortgage amount, interest rate, mortgage term, interest-rate period and lender conditions.

When does a linear mortgage become cheaper per month than an annuity mortgage?

Using the same €350,000 mortgage at 4%, the linear monthly payment starts at approximately €2,139 compared with approximately €1,671 for the annuity mortgage.

Because the linear payment falls every month, the two payments eventually meet.

In this simplified example, the linear gross payment falls below the annuity payment after approximately 12 years.

From that point onwards, the borrower with the linear mortgage has both a lower outstanding mortgage balance and a lower gross scheduled monthly payment.

This illustrates why your expected ownership period matters.

If you focus only on the first few years, the annuity mortgage appears considerably cheaper each month. If you look much further ahead, the advantages of the faster linear repayment become clearer.

Which is cheaper: annuity or linear mortgage?

If the mortgage amount, interest rate and term are identical, a linear mortgage will generally result in lower total interest costs.

The reason is simple. You reduce the outstanding debt faster, so there is less debt on which the lender can charge interest.

That does not automatically make a linear mortgage the best choice.

The cheapest mortgage on paper may not be the most appropriate mortgage for your household.

If choosing a linear mortgage leaves you with too little money for maintenance, moving costs, furniture, emergencies, childcare or other expenses, the financial advantage may not be worth the pressure it creates.

A good mortgage should be affordable not only according to the lender’s calculation but also within your actual monthly life.

Annuity vs linear mortgage and mortgage interest deduction

Mortgage interest deduction is an important part of the Dutch mortgage system.

For new owner-occupied-home debt taken out from 1 January 2013, you generally need to repay the qualifying mortgage debt at least according to an annuity or linear schedule within a maximum period of 30 years to qualify for mortgage interest deduction.

Both annuity and linear mortgages can therefore qualify.

The difference is how the potential tax benefit develops.

With an annuity mortgage, you pay relatively more interest during the early years. The deductible interest amount can therefore initially be higher.

With a linear mortgage, you reduce the mortgage balance faster. Your interest payments consequently fall faster as well, which means the amount of interest potentially available for deduction also decreases more quickly.

In 2026, the maximum rate at which mortgage interest can be deducted is 37.56%. Your actual tax benefit is personal and can differ depending on your income, tax position, existing mortgage history and whether the mortgage debt meets the relevant conditions.

Do not choose between an annuity and linear mortgage solely on the basis of the tax deduction. A tax deduction returns only part of qualifying interest. Paying less interest in the first place can still leave you financially better off.

For a complete explanation, read our guide to mortgage interest deduction in the Netherlands.

What happens to your net monthly costs?

Gross and net mortgage payments are not the same thing.

Your gross mortgage payment is the amount paid to your lender. Your estimated net housing cost takes the potential tax effect of deductible mortgage interest into account.

With an annuity mortgage, the gross scheduled mortgage payment can remain approximately stable while your interest rate remains unchanged. However, the interest portion of that payment falls over time. As a result, the potential mortgage interest deduction also becomes smaller.

Your net cost can therefore gradually increase even though the gross payment remains similar.

With a linear mortgage, both the interest amount and the gross monthly payment decrease. The potential tax benefit also falls, but this happens alongside a declining mortgage payment.

The exact net result should always be calculated for your personal tax situation.

Is an annuity or linear mortgage better for expats?

Being an expat does not automatically make one repayment structure better than the other.

The right choice depends on the same fundamental questions that apply to other homebuyers, but internationals often have additional factors to consider.

You may not yet know how long you will remain in the Netherlands. Your income could increase significantly as your career develops. Your employment contract may change. You may eventually return to your home country or relocate for another international role.

Those possibilities make flexibility and your expected ownership period particularly important.

An annuity mortgage may suit you if you want lower starting payments

An annuity mortgage can be attractive when your current monthly budget is more important than minimising total interest over thirty years.

This can apply when you have recently relocated and need savings for furnishing the property, establishing your life in the Netherlands or maintaining a larger financial buffer.

It can also make sense if you expect your income to increase in the coming years. The relatively lower starting payment gives you more room today while your career develops.

A linear mortgage may suit you if you can comfortably afford higher payments now

A linear mortgage becomes interesting if you have enough monthly income to handle the higher initial payments without compromising your financial buffer.

You reduce your mortgage debt more quickly and therefore build equity faster.

The decreasing monthly payment can also be valuable if you expect your income to become lower later in life, for example because you want to work fewer hours, start a family or approach retirement.

Your planned length of stay matters

Expats should also consider what happens if they sell the property earlier than expected.

After the first years of an annuity mortgage, your outstanding debt will generally be higher than it would have been with a comparable linear mortgage.

A linear structure therefore builds equity through repayment more quickly.

That does not mean it guarantees a larger profit when you sell. The eventual proceeds also depend on the property’s market value, selling costs and other factors.

It does mean that, all else being equal, you will have repaid more of the original mortgage.

Does an annuity or linear mortgage affect how much you can borrow?

Your maximum Dutch mortgage depends on factors such as your qualifying income, partner income, existing debts, mortgage interest rate, interest-rate period, age, energy label and the applicable lending standards.

The mortgage repayment structure also affects the actual monthly payment profile.

You should not simply assume that selecting an annuity mortgage automatically means you will be approved for a higher mortgage. Lender calculations and affordability rules are more complicated than comparing the first monthly payment.

For expats, the situation can be even more specific because the lender may also need to assess your employment contract, residence status, foreign income or income paid in another currency.

Use our mortgage calculator for the Netherlands for an initial estimate and then have both repayment structures calculated personally before choosing.

Can you combine an annuity and linear mortgage?

Yes.

Your mortgage does not necessarily have to consist entirely of one repayment type.

You can divide the mortgage into different loan parts. One part could be an annuity mortgage and another part could be linear.

For example, a €400,000 mortgage could theoretically be divided into €200,000 annuity and €200,000 linear.

The annuity portion helps reduce the initial monthly burden compared with a fully linear mortgage, while the linear portion allows you to repay part of your debt more quickly.

The exact split can be adjusted to your financial situation.

A combination can be particularly interesting when you like the long-term advantages of a linear mortgage but consider a completely linear mortgage too expensive during the first years.

Can you change from annuity to linear later?

Changing your mortgage structure can be possible in some situations, but you should not assume you can simply switch at any moment without consequences.

Changing repayment methods may require approval from your lender and can involve a new affordability assessment, administration costs or changes to the loan agreement.

Tax consequences can also depend on your existing mortgage history.

If you are considering changing an existing mortgage from annuity to linear, or the other way around, have the complete mortgage checked before making changes.

What happens when the fixed-interest period ends?

An annuity mortgage is often described as having a fixed monthly payment, but there is an important qualification.

The payment remains predictable based on the applicable interest rate. If your fixed-interest period ends and the new interest rate is different, the mortgage payment can change.

The same principle applies to a linear mortgage. Your principal repayment follows the agreed schedule, but the interest charged on the remaining debt depends on the applicable mortgage rate.

You should therefore compare both the repayment structure and the period for which you want to fix your interest rate.

Annuity vs linear mortgage with NHG

Both an annuity mortgage and a linear mortgage can be compatible with the Nationale Hypotheek Garantie, provided your mortgage and property meet the relevant NHG conditions.

In 2026, the regular NHG limit is €470,000. A higher limit can apply when qualifying energy-saving measures are included.

NHG is separate from the question of whether annuity or linear repayment is better for you. It can influence factors such as the mortgage conditions and interest rate available to you, but you still need to select an appropriate repayment structure.

What is better: annuity or linear?

There is no universal answer.

A linear mortgage is usually better if your main objective is to repay your debt quickly and minimise the amount of interest paid over the full mortgage term.

An annuity mortgage is usually more attractive if you value lower starting payments and want to keep more room in your monthly budget during the first years.

Think about the choice in terms of priorities.

If paying €400 or €500 more each month during the first years would significantly limit your lifestyle or reduce your emergency savings, the long-term savings of a linear mortgage may not justify the additional pressure.

If you have substantial monthly financial room and would otherwise simply leave that money unused, faster linear repayment can be financially attractive.

The best answer comes from comparing both structures using your actual mortgage amount, available interest rate, income and expected plans.

How to choose between an annuity and linear mortgage

Start with your monthly budget rather than with the maximum amount a lender is prepared to offer.

Determine how much you would comfortably want to spend each month while still keeping enough room for maintenance, insurance, municipal taxes, VvE contributions if applicable, savings and normal living expenses.

Next, compare an annuity and linear calculation using the same mortgage amount, interest rate and term.

Look beyond the first monthly payment. Compare the outstanding mortgage after five years, ten years and twenty years. Also compare the total interest under both structures.

Finally, consider what you expect your life to look like later.

A mortgage is not only a calculation for today. It should still suit you if your career, family situation, or plans in the Netherlands change.

Compare annuity and linear mortgages with an expat mortgage advisor

Online examples are useful for understanding the difference, but your mortgage should be based on your actual situation.

At Expat Mortgage Platform, we specialise in helping expats and international homebuyers arrange mortgages in the Netherlands.

We can calculate what an annuity mortgage and linear mortgage would mean for your income, purchase price and monthly budget and compare suitable mortgage providers.

Because we are independent, we are not restricted to the mortgage products of one bank.

During your consultation, we can compare:

Your realistic borrowing capacity, the monthly payment under different mortgage structures, suitable interest-rate periods, the speed at which your mortgage debt decreases, potential NHG eligibility, lender conditions and the effect of your employment or international income situation.

Your first consultation is free and without obligation.

Schedule a free mortgage consultation

Frequently asked questions about annuity vs linear mortgages

What is the main difference between an annuity and linear mortgage?

With an annuity mortgage, your scheduled gross payment remains approximately stable while the interest rate stays the same, but the balance between interest and principal changes. With a linear mortgage, you repay the same amount of principal each month, causing the total monthly payment to decrease over time.

Which is cheaper, an annuity or linear mortgage?

A linear mortgage generally results in less total interest when the mortgage amount, interest rate, and term are identical. This is because you reduce your outstanding mortgage balance more quickly.

Which has the lowest monthly payment at the beginning?

An annuity mortgage normally starts with a lower monthly payment than a comparable linear mortgage. A linear mortgage requires faster principal repayment from the beginning.

Does a linear mortgage become cheaper over time?

Yes. The scheduled principal repayment stays the same while the interest charged becomes lower as your outstanding debt decreases. The total monthly payment therefore falls throughout the mortgage term.

Can expats choose an annuity or linear mortgage in the Netherlands?

Yes. Expats can use both mortgage structures, provided they meet the lender’s mortgage requirements. The available lenders and conditions may depend on factors such as your income, employment contract, and residence situation.

Which mortgage builds equity faster?

A linear mortgage builds equity through repayment faster during the early years because you repay more principal from the beginning.

Can I combine an annuity and linear mortgage?

Yes. A mortgage can consist of multiple loan parts. You can therefore have one annuity loan part and one linear loan part if this structure fits your financial situation and is accepted by the lender.

Is mortgage interest deductible for both annuity and linear mortgages?

Both structures can qualify for the Dutch mortgage interest deduction. For new qualifying owner-occupied home debt taken out from 1 January 2013, the mortgage generally needs to be repaid at least according to an annuity or linear schedule within 30 years. Your actual deduction depends on your personal tax situation.

Is an annuity mortgage the same as an interest-only mortgage?

No. With an annuity mortgage, you repay the mortgage throughout the term. With an interest-only mortgage, scheduled payments generally consist primarily of interest and the interest-only principal remains outstanding unless you repay it separately.

Is an annuity mortgage better for first-time buyers?

It can be. The lower starting payment often makes an annuity mortgage attractive to first-time buyers who want more room in their monthly budget. Whether it is actually better depends on your income, savings and long-term plans.

Is a linear mortgage better if I expect my income to fall?

It can be useful because the scheduled monthly mortgage payment decreases over time. This may suit someone who has a high income today but expects to earn less later. Your complete financial situation should still be assessed before making the choice.

Should I choose annuity or linear if I plan to sell within ten years?

A linear mortgage reduces the outstanding principal faster, so you will generally owe less after ten years than with a comparable annuity mortgage. However, you also need to consider the higher payments you made during those years and your other financial priorities.

Can I calculate an annuity vs linear mortgage online?

You can use calculations to compare the two structures, but the result should be treated as an indication. Your actual mortgage depends on the available interest rate, lender, income assessment and personal circumstances. Use our Dutch mortgage calculator for an initial indication and ask an advisor to calculate the two repayment options side by side.

Which mortgage is best for me as an expat?

The best mortgage is the one that balances affordability today with your long-term plans. An annuity mortgage can provide lower starting payments, while a linear mortgage repays your debt faster and normally reduces total interest. A personal comparison will show which structure fits your income and expected time in the Netherlands.