Linear
mortgage
What is a linear mortgage and why would you choose this type of mortgage?
In short: with a linear mortgage you pay off a fixed amount per month on your outstanding loan. This means that your loan decreases every month. This then has (positive) consequences for the interest to be paid. The amount that you pay off monthly remains the same for the entire term, but the interest amount that you pay monthly becomes lower and lower. That is also the biggest advantage of the linear mortgage: during the term both the gross and net costs decrease!
Lower interest costs
Since 2013, you only get the much-desired mortgage interest deduction if you take out a linear mortgage or an annuity mortgage. Although it is more advantageous in terms of total interest costs to take out a linear mortgage, many people still opt for an annuity mortgage. This mortgage type offers the possibility to borrow more as a starter. In the beginning, the net costs of this mortgage type are lower than with a linear mortgage. With an annuity mortgage, you also benefit more from tax advantages such as the mortgage interest deduction. If you want to benefit from paying less interest in the long term, then the linear mortgage is a better option for you.
Advantages of the linear mortgage:
A lot of wealth creation in a relatively short time;
During the term, the costs decrease, which is useful, for example, if you anticipate a drop in income;
Pay less interest in total than with other mortgage types.
Disadvantages of the linear mortgage:
Higher costs in the initial period, meaning that less can be borrowed than with other mortgage types;
Little inflation advantage because you pay off relatively much in the early years. As a result, you benefit less from the depreciation of the mortgage amount.
