In your search for the ideal mortgage, you make a choice in the type of mortgage that suits you. The savings mortgage and the annuity mortgage are two well-known mortgage types that many homeowners have opted for. But what is the difference between a savings mortgage and an annuity mortgage?
What is a savings mortgage?
To understand the difference properly, it is of course useful if you know what each mortgage type entails. A savings mortgage literally means that you save for the repayment of the mortgage. Instead of making a repayment every month, you put money into a special bank savings account every month. With the money that you save, you pay off the mortgage suddenly or partially at a later date. In addition to the amount that you save, you pay mortgage interest every month.
You receive interest on the balance in the bank savings account and you do not pay a capital gains tax if you meet the conditions. Consider the amount that you can save in a maximum tax-friendly manner. The bank savings account falls, just like every mortgage type, in box 1 of the tax. However, you are not entitled to the mortgage interest deduction if you took out the savings mortgage after 1 January 2013. Since that date, new mortgage rules apply, in which immediate repayment on the mortgage is a condition for mortgage interest deduction.
What is an annuity mortgage?
In contrast to the savings mortgage, with an annuity mortgage you immediately start paying off. You agree an amount with the bank that you pay each month. Part of this amount consists of repayment and part consists of interest. In the beginning you mainly pay interest. The amount that you still have to pay off is high and you pay a substantial amount of interest on this. But over time the outstanding loan falls due to the repayments and therefore also the interest. Within the monthly amount there is more room to pay repayments in addition to the interest.
Note: The monthly amount only changes if the mortgage interest rate changes, for example if you enter into a new fixed-rate period.
With an annuity mortgage you are entitled to the mortgage interest deduction, because you immediately start paying off. The condition is that you live in the home. The mortgage interest deduction does not apply to holiday homes.
Difference between annuity mortgage and savings mortgage
The table below shows the main differences between the savings mortgage and the annuity mortgage:
|Characteristic||Savings mortgage||Annuity mortgage|
|Method of repayment||When the money is saved||From taking out the mortgage you pay a fixed amount each month, partly interest and partly repayment|
|Right to mortgage interest deduction||No, unless closed before 2013||Yes|
|Mortgage interest to be paid monthly||Remains the same, but savings interest partially compensates for this||Is getting lower and lower|
|For which property interesting||If closed after 2013, for second home||For main residence and holiday home|
Tip! An annuity mortgage fits better than a savings mortgage for financing your main home because you benefit from the mortgage interest deduction.