In the Netherlands, it’s very common to hear that “making extra mortgage payments is always a good idea.” And while it makes sense in many cases, it’s not always the smartest decision. If you’re living in Holland and you have a mortgage (hypotheek), this article is for you.
Before making an extra payment to your bank, consider these 5 situations where it’s worth thinking twice.
1. When you don’t have sufficient financial cushion or emergency fund
In the Netherlands, it’s recommended to have between 3 and 6 months of fixed expenses saved as an emergency reserve. If you use all your savings to pay off your mortgage, that money becomes “trapped” in your house, and you can’t access it easily if an unexpected expense arises: a repair, a period without work, or a medical emergency.
First, build your financial cushion or emergency fund (financiële buffer), and then consider making extra payments.
2. When you will need that money in the coming years
Are you planning to renovate your house, study, or help a relative in the next 3 to 5 years? Then that money should be in a savings account, not in your mortgage.
Once you pay off, recovering that money is complicated and costly. In many cases, you would need to apply for a new mortgage loan, with the costs and paperwork that it implies. For short-term goals, a regular savings account is much more practical.
3. When you have a very favorable interest rate
Many people in the Netherlands closed their mortgages a few years ago with historically low interest rates, of 1% or even less. If that’s your case, making extra payments may not make much financial sense.
Why? Because that money invested in mutual funds or ETFs (beleggingsfondsen) or even in a savings account with an interest of 3-4% may yield more than what you save by paying off that cheap debt. Moreover, in the Netherlands mortgage interest is tax-deductible (hypotheekrenteaftrek), making it even more advantageous to keep the mortgage. If you’ve never invested, you can read the post on Investment Account for Beginners or The Banks with the Highest Interests in the Netherlands 2026 if saving is more your thing.
Tip for Latin Americans: If you come from countries where interest rates are high (Mexico, Colombia, Argentina, etc.), it can be difficult to get used to the idea that a low-interest debt doesn’t always have to be paid off quickly. Here, the financial logic is different.
4. When you plan to move or buy another house
This point is especially important and relates to a Dutch regulation called bijleenregeling. It may sound complicated, but we explain it simply:
When you sell your house and buy a new one, the Dutch government expects you to use the profit from the sale (the difference between what you received and what you owe) for the new mortgage. If you don’t, you will lose the mortgage interest deduction (hypotheekrenteaftrek) on that amount.
If you’ve made a lot of extra payments, you’ll have more “profit” when selling, which means you must put more money from your pocket into the new mortgage to continue enjoying the tax deduction. It’s a complex topic, so if you plan to move, consult first with a mortgage advisor (hypotheekadviseur).
5. When you have a savings or investment mortgage
In the Netherlands, there are different types of mortgages. The most common today are the linear mortgage (lineaire hypotheek) and the annuity mortgage (annuïteitenhypotheek). But some people, especially those who bought before 2013, have older products like the spaarhypotheek (savings mortgage) or the beleggingshypotheek (investment mortgage).
In these cases, making extra payments generally has no advantages because the product is already designed to function in a specific way. Doing so could even break the balance of the product and generate additional costs. If you have any of these types of mortgages, consult with your advisor before making any extra payments.
So, should I never make extra payments?
It’s not black or white. Making extra mortgage payments can be a good strategy when:
- You already have a good financial cushion
- Your interest rate is relatively high
- You don’t plan to move soon
- You have a standard mortgage (linear or annuity)
- You won’t need that money in the short term
The key is not to act on impulse. What works for your neighbor or your coworker may not be the best for your personal situation.
What should you do then?
Before making an extra payment to your mortgage, we recommend talking to an independent financial or mortgage advisor (onafhankelijk hypotheekadviseur). In the Netherlands, there are advisors who speak Spanish and understand the specific situation of Latin American immigrants. They can help you make the best decision according to your situation, your future plans, and Dutch tax rules.
Do you have questions about your mortgage in the Netherlands? Leave us your question in the comments and we will help guide you.
