Calculating Your Mortgage Based on Net Income

The most important things at a glance

Want to calculate your mortgage based on your net income? Want to know what you actually pay and what you have left at the end of the month? With our handy calculation tools you can find out in a few simple steps how high your net monthly costs will be.

1. Calculating your mortgage using net income

You always pay the bank gross monthly costs, since they charge you the full interest and repayment. Mortgage interest deduction is then subtracted from the tax you pay, for example via your pay slip. If you want to know what the home will actually cost you each month, you can calculate the mortgage based on your net income. That way you know exactly what amount is left after your fixed costs are paid.

2. Gross income and tax

To calculate your maximum mortgage you need your gross income. Mortgage providers base your maximum mortgage on your gross income. Gross income is your net income plus the premiums and taxes paid by you or your employer. This amount determines how much you can borrow for your home.

3. Net monthly costs and your income

Do you want to calculate your mortgage based on your net income to see what will be left each month? Then use the net monthly cost figure, which you get by subtracting the mortgage interest deduction from the interest portion (provided you qualify for it).

Example

Your gross monthly mortgage cost is €700, made up of €500 interest and €200 repayment. With an income of €34,000 per year you fall into the middle tax bracket, meaning you pay 42% income tax. Mortgage interest deduction then gives you a 42% benefit on the €500 interest, which works out to €210. This means you pay €290 in interest, plus €200 in repayment. Your net monthly cost is therefore €490, which is €210 lower than the gross monthly cost.

4. Interest and repayment

Most new mortgages (taken out since 1 January 2013) almost always consist of a repayment portion and an interest portion, since you are required to repay the mortgage in full over its term in order to qualify for mortgage interest deduction. You can only apply the mortgage interest deduction to the interest you pay, not to the repayments you make. You can calculate the maximum mortgage based on your net income to find out how much you can borrow and what the monthly costs will be.