A "lineaire hypotheek" is a type of mortgage commonly used in the Netherlands.
What is a linear mortgage?
With a linear mortgage, you repay the same amount every month. You pay interest on the mortgage amount you have to repay. Since your mortgage debt is at its highest at the beginning of the term, this is when you have the highest costs. However, this is offset by your mortgage debt decreasing a little each month. So your gross and net mortgage payments will be slightly lower each month. At the end of the term, the mortgage is completely paid off.
Advantages of the linear mortgage
- The linear mortgage is an easy-to-understand type of mortgage.
- You pay the same amount every month to repay your mortgage debt; it decreases each month, the mortgage interest you pay decreases over the term.
- And with this mortgage form, you are eligible for a mortgage interest deduction.
Disadvantages of the linear mortgage
The monthly costs of a linear mortgage are high at first. In addition, mortgage interest relief decreases over the term because of the decreasing interest amount. So you get less and fewer tax benefits. Furthermore, the repayment creates a surplus value in the home. This makes the tax deduction more limited (for the additional loan scheme) should you move house.
Linear mortgage or annuity mortgage?
Repayments can be handled in two ways: linear and annuity. The best of the two depends on your situation. A linear mortgage will give you higher monthly expenses in the beginning. The advantage is that you pay off faster, and your monthly costs decrease over time. An annuity mortgage has lower monthly fees than a linear mortgage in the beginning. Over time, your net monthly costs increase. You can combine a linear mortgage with an annuity mortgage. With a combination, you can keep your monthly expenses reasonably similar. The best form of the two depends on your situation.
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