Interest-only mortgage
Only pay the interest each month
Interest-only mortgages are common in the Netherlands. The main feature of this mortgage is that you don’t make any repayments and don’t accrue any capital, i.e. your mortgage debt remains the same. We’ve summarised the risks and things you need to watch out for. Read on to find out more about the interest-only mortgage.
Interest-only mortgages explained
With our interest-only mortgage, you pay only mortgage interest each month; you don’t make any repayments. At the end of the term, you must repay the mortgage in full. If you take out an interest-only mortgage now, you can borrow up to a maximum of 50% of your property’s market value.
Repay your mortgage at the end of the term
With an interest-only mortgage, you are responsible for raising the money needed to repay your mortgage in full on the maturity date. You can do this by saving up or investing during the mortgage term, or by selling your home. Read more about the risks of an interest-only mortgage or do the mortgage check to find out where you stand with your current mortgage.
Interest-only mortgage features
Fixed monthly payment
You pay only mortgage interest each month. If your mortgage interest stays the same, your monthly payment will stay the same. At the end of the term, you must repay the mortgage in full in one single payment. You can make additional repayments during the term.
Decreasing tax break
On certain conditions, you can deduct the mortgage interest you pay from your taxable income. On 1 January 2013, new rules governing the mortgage interest deduction came into force, which may change the scope of this tax break for you.
Repayment at end of term
At the end of the term, you will have only paid interest and will need to repay the entire mortgage in one single payment. You can also make additional repayments during the mortgage term.
Interest rates
Frequently Asked Questions
Interest-only mortgages explained
With our interest-only mortgage, you pay only mortgage interest each month. Until the end of the term, your monthly payments will not go towards paying off the mortgage loan, unless you decide to make repayments yourself. This means that your mortgage debt will remain the same. The mortgage interest you pay will also stay the same, provided the rate of interest does not change. At the end of the term, you must repay the mortgage in full, using your savings, for instance, or with the proceeds from the sale of your house. This involves risks, as you can’t be sure that the proceeds from the sale will be enough to pay off your mortgage.
Interest-only mortgage interest
With the interest-only mortgage, you have a choice between a fixed and a variable interest rate. Check the current mortgage interest rates.
Since 1 January 2013, new rules came into effect for the tax break that allows you to deduct the mortgage interest from your taxable income. These new rules may affect the scope of this tax break for you.
- If you took out the interest-only mortgage before 1 January 2013, you can deduct the interest you pay on your mortgage from your taxable income, provided you meet certain conditions. The interest-only mortgage will then continue to offer you a tax break.
- However, if you took out the interest-only mortgage after 1 January 2013 or are currently considering taking out an interest-only mortgage, you will not be able to deduct the mortgage interest from your taxable income.
Repaying an interest-only mortgage
If you want to repay all or part of your interest-only mortgage before the end of the term, you can read all about repayments here.
Interest-only mortgage term
With an interest-only mortgage, you pay off the mortgage loan in a single payment at the end of the term. During the term, you only pay interest and don’t make any repayments. You are responsible for ensuring that you have enough money to repay the mortgage in full at the end of the term, using your savings, for instance, or with the proceeds from the sale of your house. This involves risks, as you can’t be sure that the proceeds from the sale will be enough to pay off your mortgage.
Dutch National Mortgage Guarantee (NHG)
If the price of your home is below € 450,000, you can apply for the National Mortgage Guarantee.
Interest-only mortgage terms and conditions
The terms and conditions for your mortgage are very important. Always make sure you read the terms and conditions before you sign a mortgage offer.
- Product terms and conditions
- Mortgage Comparison Chart
Read what we can do for you if you plan to take out a mortgage. - Dutch Code of Conduct for Mortgage Loans (GHF)
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