Phasing Out Mortgage Interest Deduction Is Still Manageable for Homeowners In the Netherlands

According to mortgage broker Van Bruggen, is the impact of abolishing the mortgage interest deduction still manageable.

As several political parties have included the abolition of the deduction in their election programs, Van Bruggen carried out a calculation to assess the consequences for homeowners. The firm notices a lot of public concern around the issue, but advises both consumers and policymakers to look at the effect objectively. If the tax benefit were phased out gradually over 15 years, the financial impact would remain within limits.

Unequal Advantage

“The mortgage interest deduction no longer serves its purpose,” says director Jan Thale Haandrikman. “It creates an unfair advantage for buyers compared to renters and pushes housing prices higher. That makes affordable homes — whether to rent or buy — increasingly out of reach for young people.”

Example Calculation

Take a standard annuity mortgage of €363,000, which is the average amount first-time buyers will borrow in 2025. Under the current rules, net monthly payments rise from €1,255 in the first year to €1,338 in year ten. If the mortgage interest deduction is phased out over 15 years, that year-ten payment would increase to €1,560 — an extra €222 over ten years. Put differently, the additional cost works out to around €20 per month each year compared to now.

Rising Incomes Soften the Impact

In practice, household incomes tend to rise faster. Between 2015 and 2025, the average income rose by 41%. As a result, the share of income spent on mortgage payments still declines over time. This means higher monthly expenses remain manageable for most people. How strongly homeowners feel the impact also depends on future government choices in taxation and income policy.

“At the moment, the government loses around €11.2 billion in tax revenue each year because of the mortgage interest deduction,” says Haandrikman. “If that amount is freed up, it could be redistributed. Using part of it, for instance, to lower income tax would significantly soften the blow for homeowners.”

First-Time Buyers Hit Harder

Not all groups are affected equally. First-time buyers would notice the loss of the deduction more than those who have had their mortgage for several years. “With an annuity mortgage, you pay more interest in the first years, so the tax relief has a bigger effect then,” Haandrikman explains. “The longer the mortgage runs, the smaller the effect. Interest rates also matter: many existing homeowners locked in rates of 1% to 2% before 2022, meaning the reduction in tax relief affects them less. But first-time buyers today often take on loans with rates between 3.5% and 4.0%, so the loss is felt much more strongly.”

No Solution to Housing Shortage

Haandrikman stresses that eliminating the deduction alone will not solve the housing shortage. Additional measures are necessary. “We urge politicians to use part of the freed-up funds to invest in new housing construction, so that more affordable homes for both buyers and tenants actually become available.”

Clarity and Transparency Are Key

Finally, Haandrikman points to the importance of clear communication. “We see a lot of anxiety among people when they hear about scrapping the deduction, and that response is understandable. At the same time, the actual consequences are less dramatic than many fear, provided the change is implemented gradually over at least 15 years. The task for the next government is to explain clearly what is changing and what it really means.”

Take Action and Get Expert Help for Your Mortgage Journey

Ready to take the next step? Let Financial Consultancy Holland guide you confidently through every stage of your Dutch homebuying journey. Contact us today for a free consultation and personalized mortgage checklist. With over 200 successful expat mortgage approvals in Amsterdam last year, we know exactly what it takes to help international buyers land a home in the Netherlands.