Mortgage types

There are two types of mortgages: 

• mortgages based on regular repayment during the term of the mortgage; 
• mortgages based on lump-sum repayment at the end of the term.

Examples of mortgages based on regular repayment are conventional or ‘straight-line’ mortgages and annuity mortgages. With these types of mortgages, the outstanding loan balance decreases each month. Measured over a 30-year period, net expenses on these mortgages are higher than those for mortgages based on lump-sum repayment at the end of the term.

In the case of mortgages based on lump-sum repayment, no payments are made during the term of the mortgage, thereby ensuring that you retain maximum tax benefits throughout the term. An interest-only mortgage is an example of such a mortgage. In order to ensure that you will be able to repay the mortgage or a portion of the mortgage at the end of the term, you can choose from a number of savings forms, which can divided into two basic types: 

• savings with a guaranteed return (e.g. banksparen [as described above] and savings mortgages); 
• savings forms where income depends on the return on investment (e.g. investment mortgages, endowment mortgages.