The best mortgage for an expat depend on lifestyle and personal circumstances. With some Dutch mortgages, you have to start paying off the loan immediately along with the interest, whereas other mortgage types allow you to postpone repayments and only pay the interest instead.
Since the changes in 2013, the only kinds of mortgages that are eligible for the interest tax deduction (renteaftrek) are annuities and linear mortgage models, whereby the loan is repaid within 30 years via monthly repayments.
Annuities mortgage (annuïteitenhypotheek)
In the early years of an annuities mortgage, your monthly payments are largely made up of interest and a small part loan repayment. Over time, as you gradually decrease your debt, the amount of interest you pay also decreases. Towards the end of the mortgage period, the balance reverses meaning you pay lower interest payments and higher loan repayments.
In the early years of the mortgage period, the annuities mortgage usually has lower monthly payments than a linear mortgage.
Linear mortgage (lineaire hypotheek)
With a linear mortgage you repay a fixed amount every month, plus the interest. Your debt is reduced every month, which also reduces the interest. A linear mortgage is useful when you want to pay off your mortgage as quickly as possible, although initial repayments are relatively high.
Other Dutch mortgage models
Alternative Dutch mortgage models are mainly variations on annuities and linear mortgages. However, if you take out one of these mortgage forms, you may no longer be entitled to mortgage tax relief.
Interest-only mortgage (aflossingsvrije hypotheek)
With an interest-only mortgage you make no repayments on the loan, instead you just pay interest on a monthly basis. Banks only permit this kind of mortgage under certain circumstances, and you will need to repay the capital at a later date from savings or investment accounts.
Credit mortgage (krediethypotheek)
A credit mortgage loan is a flexible mortgage. Similar to a normal bank account you can withdraw and deposit money. You pay monthly interest on the amount you borrow, which depends on the value of your house.
Investment mortgage (beleggingshypotheek)
With an investment account mortgage, you invest a certain amount into an investment or stock market account. This amount can be a lump sum or a monthly or annual premium.
Life insurance mortgage (levenhypotheek)
This mortgage combines a loan with a life insurance policy. You pay a monthly or an annual premium for life insurance plus interest on the loan. Over the mortgage term, you do not pay off your debt but it is redeemed at the end of the term via the life insurance. There is also a guaranteed version of this mortgage with a guaranteed return that enables you to repay the loan at the end of the term.
Savings mortgage (spaarhypotheek)
This type of mortgage offers a high level of security by linking a savings account to your mortgage. You pay interest monthly and, instead of repayments, you deposit money into the linked savings account with a fixed interest rate that is equal to your mortgage interest rate. At the end of the mortgage term, you repay the mortgage from the savings account.
Hybrid mortgage (hybride hypotheek)
A combination of interest-only, savings and investment mortgages. You make interest payments but you have flexibility in how you generate the capital to repay the loan. During the course of the mortgage term, you can switch between saving and investing, taking advantage of low-interest rates and investment opportunities, or seeking less risk in a savings account.
Are you looking to renovate your home in the Netherlands? A bouwdepot (construction fund) is a loan alongside your mortgage, specifically intended to help you renovate your house. You can apply for a bouwdepot when you apply for a mortgage.