Two ways to repay
To qualify for interest relief you must repay your mortgage within 30 years. There are two ways to do that: annuity and linear. Both repay everything by the end of the term, but the route there is different.
Annuity: an equal gross monthly payment
You pay the same amount every month (as long as the rate stays the same). At first it is mostly interest and you repay little. As the debt goes down, the interest part shrinks and the repayment part grows. Because you deduct less and less interest, your net monthly payment slowly rises.
Linear: an equal repayment
You repay the same amount every month, plus interest on what you still owe. The first months are therefore the most expensive; after that the payments drop every month. Because the debt shrinks faster, you pay less interest in total.
Compare them in one chart
Drag across the chart or use the slider to see what you pay in each year. Switch between monthly payment and remaining debt, and turn on net to include interest relief.
Annuity
- First month
- €1,671
- Last month
- €1,671
- Total interest
- €251,543
Linear
- First month
- €2,139
- Last month
- €975
- Total interest
- €210,583
With linear you pay €40,960 less interest in total, but €468 more in the first month.
Which suits you?
An annuity often suits:
- first-time buyers who expect their income to rise;
- people who want room in their budget in the early years;
- people who need the maximum mortgage.
Linear often suits:
- people who can comfortably afford higher payments at first;
- people who want to pay as little interest as possible overall;
- people who want lower payments towards retirement.
You do not have to choose all or nothing: a mortgage can consist of several loan parts, for example one annuity and one linear. That way you match the payments to your situation. Read also how mortgage interest relief works.
Frequently asked questions
Can I switch from annuity to linear later?
Often yes, for example at the end of the fixed-rate period. It depends on your lender. Extra repayments are usually possible with both types up to 10% a year without a penalty.
Can I borrow less with linear?
Most lenders calculate your maximum mortgage the same way. But linear payments are higher at the start, so they do need to fit your budget.
Do interest-only mortgages still exist?
Yes, but a part taken out after 2013 without repayment does not qualify for interest relief. It is sometimes used for a small part of the mortgage, for example when you bring in a lot of your own money.
This explanation is general and not personal advice. The calculators give an indication based on the main rules; no rights can be derived from the outcome.