Linear vs Annuity Mortgage: Which Should You Choose?
Two main mortgage structures exist in the Netherlands: linear and annuity. Here's how they differ.
Annuity Mortgage (Most Common)
You pay the same monthly amount for the entire loan term. Early payments are mostly interest, later payments are mostly principal. Total interest paid is higher than linear.
Linear Mortgage (Less Common)
Principal payment is fixed, interest decreases each month. Monthly payments start high and decrease over time. Total interest paid is lower than annuity.
Comparison Table
| Factor | Annuity | Linear |
|---|---|---|
| Starting payment | Moderate | High |
| Final payment | Same as starting | Low |
| Total interest | Higher | Lower |
| Predictability | High | Decreasing |
Which Is Right?
Choose Annuity if: You want predictable monthly payments, limited income flexibility, and prefer simplicity.
Choose Linear if: You have strong early income, expect income to increase later, want to minimize total interest.
Most Buyers Choose
Annuity is more popular because predictability appeals to most households. But linear can save money if your income allows the higher initial payments.
Frequently Asked Questions
What's the main difference between an annuity and a linear mortgage? With an annuity mortgage you pay the same amount every month for the full term; with a linear mortgage your principal payment stays fixed while interest decreases, so payments start high and decrease over time.
Which mortgage type costs less in total interest? A linear mortgage results in lower total interest paid over the loan term compared to an annuity mortgage.
Why do most Dutch buyers choose an annuity mortgage? Because predictable, consistent monthly payments appeal to most households, even though it means paying more total interest than a linear mortgage.
Who might benefit more from a linear mortgage? Buyers with strong early income or who expect their income to increase later, and who want to minimize total interest paid.