Mortgage Term: How Long Should Your Mortgage Run?

The most important things at a glance

You can in theory choose your mortgage term yourself, but in practice the vast majority of mortgages are taken out with a term of 30 years.

1. What difference does the mortgage term make?

Many people take out a mortgage with a term of 30 years. That is a long time, but it does not mean you are tied to one property for the entire duration. There are plenty of reasons to move much sooner and remortgage or pay off your mortgage early: a growing family, a divorce, or an increase in income over the years, for example.

So why does the term still matter when taking out a mortgage?

The mortgage term largely determines how high your monthly payments will be. If you borrow €200,000 and repay it linearly over 30 years, your monthly repayment is €555. If you repay over 20 years, the monthly repayment rises to €833. On the other hand, a longer term means you keep paying interest on the outstanding mortgage balance for longer.

2. Is the mortgage term always 30 years?

In the Netherlands, it is standard practice to choose a 30-year term, and since 1 January 2013 you are required to repay the mortgage in full within that term (this only applies to new mortgages taken out from that date). A 30-year mortgage term makes sense for several reasons. It gives you enough time to repay the mortgage while keeping monthly payments manageable.

At the same time, the term is not unnecessarily long, so you have the opportunity to repay your mortgage before you retire, for example. Depending on when you take out your first mortgage, you will have paid it off somewhere between the age of 50 and 65. That means very affordable housing costs at a time when your income may be falling or you are receiving a state pension (AOW).

A 30-year term is not mandatory. There are options to choose a different term. For example, at ASR Bank, first-time buyers can take out a mortgage with a term of 40 years. The main advantage of a longer term is spreading the repayments, which lowers your monthly payments. But there are drawbacks too: it takes longer to repay the debt and you pay interest on it for longer. A shorter term is also possible, such as a 20-year mortgage. However, a shorter term reduces the maximum mortgage you can obtain, because your monthly payments increase.

3. Maximum 30 years of mortgage interest deduction

Keep in mind that you can use mortgage interest deduction (hypotheekrenteaftrek) for a maximum of 30 years. If you have had a mortgage before and take out a new one, you cannot simply claim another full 30 years of deduction. It is important to align your mortgage term with your tax options, so you choose a term that lets you keep your housing costs as low as possible.

4. Calculating your maximum mortgage with existing credit

You can calculate your maximum mortgage here based on your income. However, if you have existing credit, the situation is often tailor-made. If you want to know what your mortgage options are when you have credit, your best bet is to contact an independent mortgage adviser.