Linear and annuity are the two repayment types available for a new Dutch mortgage, and choosing between them decides when you pay rather than whether. A linear mortgage repays a fixed slice of principal each month, so payments start high and fall steadily. An annuity keeps the total monthly payment constant, repaying little principal early and more later. On €350,000 over 30 years at 4%, linear starts at about €2,139 a month against the annuity's constant €1,671, but costs roughly €41,000 less in total interest because it reduces the balance faster. Mortgage interest relief, capped at 37.56% in 2026, narrows that gap to nearer €26,000 net, because annuity front-loads interest and so attracts more relief early. Both types qualify for the deduction; interest-only does not for loans taken out since 2013. Lenders assess affordability on the actual payment, so linear's higher opening payment can reduce how much you are allowed to borrow.
Linear and annuity are the two repayment types available for a new Dutch mortgage, and the choice between them is a choice about when you pay, not whether. A linear mortgage repays a fixed slice of principal every month, so payments start high and fall steadily. An annuity keeps the total monthly payment constant, repaying little principal early and more later. Linear costs less in total interest; annuity costs less in the early years, when most buyers are stretched. Both qualify for mortgage-interest deduction; interest-only does not, for loans taken out since 2013.
Illustration: €350,000 over 30 years at 4.0% nominal, before tax relief. Figures are computed from the standard amortisation formulas, not quoted.
How each one behaves
Linear: fixed principal, falling payment
You repay the same amount of principal every month — with a 30-year term, that is 1/360 of the loan each month. Interest is charged on whatever is left, and since the balance falls steadily, so does the interest. The payment therefore drops a little every single month, and keeps dropping for thirty years.
Annuity: fixed payment, shifting composition
The total payment is calculated so it stays constant across the whole term. Early on, most of it is interest and little is principal; over time the proportions invert. The amount leaving your account does not change, but what it buys does.
The two paths, side by side
| Point in the term | Linear payment | Annuity payment | Difference |
|---|---|---|---|
| Month 1 | €2,139 | €1,671 | +€468 |
| Year 5 | €1,948 | €1,671 | +€277 |
| Year 10 | €1,753 | €1,671 | +€82 |
| Year 20 | €1,364 | €1,671 | €-307 |
| Year 30 | €975 | €1,671 | €-695 |
Gross monthly payments before tax relief. Linear starts about €468 higher and ends materially lower; the crossover falls in the middle of the term.
Total cost: linear wins, by a known amount
Over the full term, linear costs €210,583 in interest against €251,543 for annuity — a difference of €40,960 on this example. The reason is simple: linear reduces the balance faster, and interest is charged on the balance.
That gap is the price of the smoother early payments. Whether it is worth paying is a question about your circumstances rather than about the mortgages.
Tax relief narrows the gap
Only the interest is deductible, at a maximum of 37.56% in 2026. Annuity front-loads interest, so it attracts more relief in the early years — which partly offsets its higher total cost.
On the €40,960 of extra interest above, relief at 37.56% returns roughly €15,385, leaving a net difference nearer €25,575. Real, but smaller than the headline.
Which suits which buyer
Annuity tends to suit
- First-time buyers borrowing near their maximum, where the early payment decides affordability.
- Anyone who values a predictable monthly figure for budgeting.
- Buyers expecting income to rise slowly, or households planning a period on one salary.
Linear tends to suit
- Buyers with headroom now who want the lowest total cost.
- Anyone borrowing well within their capacity, where the higher early payment is comfortable.
- Older buyers who want the balance down before retirement reduces their income.
- Buyers who want equity to build quickly — useful if you may move again, or want to refinance out of a higher risk band.
Points that decide it in practice
Borrowing capacity.Lenders assess affordability on the actual payment, so a linear mortgage’s higher opening payment can reduce the amount you are allowed to borrow. In a competitive market that can matter more than the interest saving.
Equity build-up. Linear repays principal faster throughout, which lowers your loan-to-value sooner. Since Dutch lenders price by risk band, that can bring a rate reduction earlier.
You can usually overpay.Most Dutch mortgages permit penalty-free overpayment up to a percentage of the original loan each year. An annuity mortgage with disciplined overpayments can approximate linear’s outcome while keeping the lower contractual payment as a floor — flexibility linear does not give you in reverse.
The figures here are one illustration at one rate and term. Run your own numbers at the rate you are actually offered before deciding — and remember that the choice is reversible only by refinancing, which has costs of its own.
