Annuities
mortgage
Since 2013, you only receive the much-coveted mortgage interest deduction if you take out a linear or annuity mortgage.
Of these two mortgage types, the annuity mortgage is by far the most popular. But what exactly is an annuity mortgage? With an annuity mortgage, you repay a fixed amount each month during the term of the mortgage. The amount that you pay each month for the mortgage is called the 'annuity'. This consists partly of interest and partly of repayment. Within the annuity, the interest portion becomes smaller and smaller, because repayment causes the outstanding mortgage debt on which you pay interest to decrease. However, the monthly annuity remains unchanged. The repayment portion therefore becomes larger and larger during the term, because the interest portion shrinks.
Gross and net charges
In the case of an annuity mortgage, the gross costs remain the same for the entire term at a constant interest rate. However, the net costs increase during the term of your annuity mortgage, because the interest amount continues to decrease. The amount with which you benefit from mortgage interest deduction therefore becomes increasingly lower.
Calculation example annuity mortgage
To make it clearer, we will give you a quick calculation example. Do you want to take out an annuity mortgage of, for example, €300,000? Let us also assume a term of thirty years and a mortgage interest rate of 2%. The monthly annuity will then be €1,109. This is your gross monthly payment and consists of repayment (€609 in the first month) and interest (€500 in the first month). The following month, the amount you repay increases, but the interest portion decreases. Each month, the gross monthly payments amount to exactly the same amount.
Advantages of the annuity mortgage
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Disadvantages of the annuity mortgage
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