Interest-only mortgage (aflossingsvrije hypotheek)

Lower monthly costs, more financial flexibility

With an aflossingsvrije hypotheek (interest-only mortgage), you only pay interest on the outstanding loan amount and repay nothing during the term. That keeps your monthly costs lower than with an annuity mortgage (in Dutch) or linear mortgage (in Dutch). The trade-off is that the full loan is still outstanding at the end of the term and needs to be repaid in one go.

Several Dutch lenders have tightened their acceptance policy in recent years, so the maximum interest-only amount now varies more between banks than it used to. Below you'll find what that means for you, who this mortgage type suits, and how repayment works at the end of the term.

Calculate how much you can borrow interest-only

What is an interest-only mortgage?

You only pay interest on the amount you've borrowed. Nothing is repaid on the original loan, not even at the end of a fixed-rate period. Only at the end of the term, usually after 30 years, do you repay the full loan in one go.

That keeps monthly costs low, but it also means you don't build up equity through repayment. Any increase in your home's value, of course, still belongs to you. That's why an interest-only mortgage is often combined with another mortgage type (in Dutch).

Couple reviewing mortgage documents at the kitchen table

Lender acceptance policy: maximum interest-only amount varies by lender

For a long time, you could finance up to 50% of your home's value interest-only with almost any lender. Several banks have since adjusted their acceptance policy: with some lenders, you can now finance a maximum of 30% of the home's value interest-only, sometimes with a fixed maximum amount on top. This isn't a government measure, but the bank's own policy. As a result, what's still possible can differ quite a bit from one lender to the next.

Example

You buy a home worth € 500,000. With a 30% limit, you can finance a maximum of € 150,000 interest-only. The remaining € 350,000 would then, for example, need to be financed on an annuity or linear basis.

  • Mainly applies to new applications: refinancing, increasing, and switching lenders usually fall under the lender's current policy.
  • Existing mortgages often stay unchanged: if you don't make changes, the terms from when you took out the mortgage usually still apply.
  • Transition arrangements: with some banks, you may be able to keep a higher percentage when extending the term or in case of joint liability release.
  • Differs per bank: not every lender applies the same limit, we compare them for you.

Not sure whether your plans still fit within current lender policy? We're happy to calculate your options and find the bank that suits you best.

Who is an interest-only mortgage suitable for?

Often suits

  • Homeowners with substantial equity
  • People who want to keep their monthly costs low now
  • Higher incomes planning to repay from assets later
  • Anyone who wants to deliberately combine mortgage types

Less suitable for

  • First-time buyers without significant savings
  • People without a concrete repayment plan
  • Households with little financial room after retirement

Advantages and disadvantages of an interest-only mortgage

Advantages

  • Lower monthly costs than a repayment mortgage
  • More financial room in the early years
  • Often allows penalty-free extra repayments
  • Combines well with other mortgage types

Disadvantages and risks

  • You don't build up equity through repayment
  • The full loan still needs to be repaid at the end of the term
  • New interest-only loan parts usually don't qualify for mortgage interest tax relief
  • Risk of a residual debt if the home's value drops

Mortgage interest tax relief on an interest-only mortgage

If you take out a new interest-only loan part, this usually doesn't qualify for hypotheekrenteaftrek (mortgage interest tax relief). Since 2013, a new mortgage must be fully repaid on an annuity or linear basis within 30 years to qualify for interest deduction.

Did you already take out your mortgage before 1 January 2013? Then that part usually keeps its grandfathered rights, and the interest deduction still applies. If the interest isn't deductible, you can often offset the debt against your assets in Box 3 of the Dutch tax system. We're happy to calculate what this means for your situation.

Repaying an interest-only mortgage: how it works

  1. Using savings
    You use your own assets to repay the loan in one go at the end of the term.
  2. Selling and repaying
    You sell the home and repay the mortgage with the proceeds.
  3. Refinancing or extending
    You apply for a new mortgage, matched to your income and the home's value at that time. Read more about refinancing your mortgage (in Dutch).
  4. Investing or insuring
    You build up assets through an investment account or insurance policy to repay the loan later.

Discuss your maximum interest-only mortgage

Frequently asked questions about the interest-only mortgage

Is an interest-only mortgage a good idea?

That depends entirely on your situation. Do you have substantial equity, a stable income, and a concrete plan to repay at the end of the term? Then it can be a smart choice. With little financial buffer or no repayment plan, this mortgage type carries more risk. We're happy to look at which choice fits your situation.

How much can I borrow interest-only?

This varies by lender. Some banks set the limit at 30% of the home's value, sometimes with a fixed maximum amount on top. Other lenders still allow more room. We compare the options for you and calculate what's feasible.

Can I make extra repayments along the way?

Yes, most lenders allow you to repay a certain percentage penalty-free each year. If you want to repay more than that penalty-free percentage, a fee may apply. We calculate whether extra repayment makes sense in your situation.

Can I take my interest-only mortgage to a new home?

In many cases, you can take your mortgage with you, including the interest-only part and its terms. Whether this is possible depends on your lender and your income and the property value at the time of moving. We're happy to look into this together with you.

What happens to my interest-only mortgage after retirement?

Your income often drops after retirement, while you still pay interest every month. Lenders therefore assess whether you can keep affording the monthly costs later on too. It's wise to have this reviewed well in advance, especially if retirement is approaching.

Can I extend my interest-only mortgage?

Yes, this is often possible. Your lender will reassess whether the mortgage still fits your income and your home's value. Transition arrangements sometimes let you keep a higher interest-only percentage than you'd get with a new application.

What happens if my mortgage term ends and I can't repay?

You can sell the home, apply for a new mortgage, or extend the existing loan. The sooner you think this through, the more options you'll have. Feel free to get in touch so we can map this out together.

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