In the Netherlands, interest rates are published publicly, and they are the same for all clients, whether they got their mortgage via a bank or an independent mortgage broker. The lower the interest rate, the less you pay per month. Also, if you have a lower interest rate on an annuity mortgage, you will repay more of the principal sum of your mortgage.
Below you can find a comparison example for a mortgage with a principal sum of 330.000 euros. As you can see, with a 1,60% interest rate, the monthly amount you have to pay is lower than when you have a 1,80% interest rate. You’ll also repay more on your mortgage. As a result, with the interest rate of 1,60%, you would save an additional 2.166 euros in the form of repayments over 10 years, as well as having lower monthly costs:
| Mortgage amount |
Interest rate |
Monthly amount |
Total interest payments 1st year |
Total repayment amount 1st year |
Remaining mortgage amount after 10 years |
| €330.000 |
1,60% |
€1.225 |
€5.533 |
€9.164 |
€251.415 |
| €330.000 |
1,80% |
€1.259 |
€6.227 |
€8.880 |
€253.581 |
With a lower interest rate, you might also reach a better Loan-To-Value ratio (LTV) quicker. More and more mortgage providers automatically lower the interest rate when the LTV ratio becomes less risky for them!
Fixed or daily interest rate?
Another main consideration concerning mortgages - and this is important in this period, when the interest rates are dropping rapidly - do you want to have a fixed interest rate or a daily interest rate?
A daily interest rate means that you get the interest rate which applies on the date you go to the notary if that rate is lower than the rate you signed for earlier. Not a bad thing to think about if it is going to take six months before you get the keys to your new house.
Daily interest rates are normally 0,1% - 0,25% higher than fixed interest rates. In addition to the decreasing ECB (European Central Bank) interest rates, mortgage interest rates have dropped too. Looking at the few last months, it appears that people who’ve chosen a daily interest rate for their mortgage have come away with a good deal.
An independent mortgage broker compares all lenders in the market and knows the differences between fixed and daily interest rates. They can tell you more about your specific situation, as each situation is different. If you are interested in getting the best deal, feel free to contact the advisors at A&H Finance.
Contact AH Finance