Save or repay your mortgage: how to make the comparison

9 Oct 2026 · 4 min read · Spaarradar editorial team

Extra repayment saves mortgage interest, saving keeps your money free. How to compare your mortgage rate after tax relief with today's savings rate, with a worked example and the points no sum can settle.

You have savings to spare and a mortgage. Then the question comes up by itself: do I leave it in the savings account, or do I use it to repay part of the mortgage? The answer is partly a sum and partly a matter of freedom. This article helps you with both. It is not advice: your mortgage, your income and your plans decide the outcome.

The sum in short

Repaying earns you the mortgage interest you no longer pay. Saving earns you savings interest. So you compare two percentages, but not the two that first come to mind.

• On the mortgage side what counts is the rate after tax relief. If you may deduct your mortgage interest, you get part of it back through your tax. If you repay, you pay less interest, but you also get less back. So your real saving is lower than your mortgage rate. Whether and for how long you are entitled to relief is explained by the Dutch Tax Administration (Belastingdienst) (in Dutch).
• On the savings side what counts is the rate you can really get, not that of the bank you happen to be with. The highest instant-access rate is now 3.03%, a one-year deposit pays up to 3.40%, and the big banks are stuck at 1.85%.

A worked example

Say you have €20,000 to spare. Your mortgage rate is 3.60% and you can save at 2.40%. We assume that through tax relief you get back 35% of the mortgage interest you pay.

At first sight repaying wins comfortably: 3.60% against 2.40%. After tax relief the difference has all but gone. Without tax relief, for example on a part of the loan for which you have no relief, repaying would in this example earn €240 a year more than saving.

All percentages in this example are made up, including the 35%. Which share you get back depends on your income and on that year's rules. Fill in your own figures. The savings rates of this moment are below.

What the sum does not show

Repaid money is locked in your house

This is the biggest difference. Savings you can withdraw tomorrow. Money you have repaid you only get back by selling your house or borrowing again, and the latter costs money and is not guaranteed. So never repay with money that is your buffer. How big that should be is covered in how much savings you need as a buffer.

The savings rate is variable, your mortgage rate usually is not

Your mortgage rate is often fixed for years. An instant-access savings rate can change any month. Today's comparison may look different a year from now. With a deposit you fix the savings side as well; the difference is explained in savings rate fixed or variable.

Tax in box 3

Savings count towards your assets in box 3. The debt on your own home does not fall under it. So if you repay with savings, you lower your box 3 assets. Whether that matters for you depends on your total assets and your situation. We do not work that out; check with the Belastingdienst.

Lower monthly payments or a shorter term

After an extra repayment your monthly payments go down, or you are done sooner. What exactly happens differs per type of mortgage and per lender. Sometimes your rate surcharge also drops, because your debt becomes smaller relative to the value of your house. Ask about it.

Mind the penalty-free allowance

You may not repay without limit. Most lenders allow a part per calendar year without a penalty, usually 10 to 20 per cent a year, depending on your lender. If you repay more, a charge may apply. How that charge works is explained by the AFM, the Dutch financial markets regulator (in Dutch). In a number of situations, such as when you sell your house or at the end of your fixed-rate period, repaying is usually penalty-free. The exact rules are in your mortgage terms.

An order that often works

1. The buffer first. Instant access, at the highest rate you can find under instant-access savings.
2. Then money you need within a few years. A renovation, a car, a degree. You do not repay with that. A deposit with a fitting term is possible.
3. What remains, you compare. Mortgage rate after relief against the savings rate you really get. What a percentage does over several years is shown by the interest calculator.
4. You do not have to choose. Repaying part and saving part is possible too. It may also weigh in that a lower debt gives you peace of mind.

This article is general information and not financial advice. A mortgage adviser can do the sum with your loan, your income and this year's tax rules.

Not advice. Rates are gross and can change; the tables in this article show the position at the moment you open the page. How we calculate and check is described in the methodology.