A mortgage is usually taken out at a bank for the purchase of a home. Of course, many banks also offer the possibility to make a consumer withdrawal, for example. The maximum duration of a mortgage is thirty years. You pay a monthly repayment amount to the bank for thirty years. This consists of two parts: interest and repayment. The variation between these two may differ per mortgage form.
Annuity mortgage
With an annuity mortgage, the total interest and repayment that you pay is the same every year. This gives you the advantage that you have lost a fixed monthly amount for a longer period of time. Usually, a fixed interest period is concluded for, for example, 10, 20 or 30 years. During this fixed interest period, your monthly mortgage charge does not change. With this form of mortgage, you initially pay a lot of interest and little repayment. At the beginning of the term, the remaining debt is therefore high. At the end of the mortgage term, this composition is the other way around. You then pay little interest compared to a high repayment.
Linear mortgage
With a linear mortgage, the repayment you pay is stable while the interest amount you pay changes. With a linear mortgage, you pay a higher mortgage charge at the beginning and this monthly charge decreases during the term of the mortgage. If you trade this form of mortgage against an annuity mortgage, the charges of the linear mortgage are lower than with an annuity mortgage. Nevertheless, many consumers choose the annuity mortgage because it offers them more security for the longer term.
Interest-free mortgage
With an interest-free mortgage, you only pay the interest. Repayment is not necessary during the term. The advantage of this is that the monthly amount is therefore lower. You have no obligation to repay, but it is possible and possible. Interest deduction is often not possible with this type of mortgage.
Interest deduction
Interest deduction on your mortgage means that the mortgage interest you pay brings a reduction on your gross income, so that you ultimately pay less income tax. The interest you pay for your mortgage is tax deductible for a maximum of 30%.
