What are the early repayment penalties?

In the 2026 financial landscape, the drive to be debt-free is greater than ever. Whether it's a windfall in the form of an inheritance, an annual bonus or simply a healthy savings discipline: many Dutch people are considering paying off their mortgage or personal loan faster than contractually agreed. However, those who want to pay back more quickly often encounter the “penalty interest” or the early repayment fee. This is because in their business model, lenders calculate based on the interest income they expect to receive over the entire term. When you shorten that term, the bank loses income, and that often comes at a price in 2026.

Understanding the rules surrounding these fines is essential to determine whether additional repayments are financially the smartest move. In this article, we analyse how these fines will be calculated in 2026 and under what circumstances you can repay without penalty.

The logic behind the penalty rate

The early repayment fee was strictly regulated in 2026 by the Financial Markets Authority (AFM) and European guidelines. A bank may not charge any amount; the penalty must never exceed the actual financial disadvantage suffered by the bank.

When you repay a loan with an interest of 4.5% early in 2026, the bank will lend that money again on the current market. If the current market interest rate for a comparable term is 3.5% at that time, the bank will miss 1% interest on the repaid amount for the remaining fixed-rate period. This difference forms the basis of the penalty calculation. In a climate where interest rates are relatively stable in 2026, the penalty can be significant if you have a contract with a historically high interest rate and the current market interest rate is lower.

The fine-free threshold: 10% to 20%

In 2026, almost every mortgage lender will use a standard percentage that you can repay per calendar year without any compensation. In most banks, this percentage is 10% of the original principal amount, but there are now more and more providers that allow 15% or even 20%.

This means that if you have a mortgage of €300,000, you can repay €30,000 (at 10%) annually without penalty. For many households, this is more than enough to invest extra savings in the home. In 2026, it is strategically smart to spread larger repayments over the turn of the year: by repaying part in December and part in January, you will use twice the annual exemption without paying a cent penalty.

When is repayment always free of penalty?

There are specific situations in which the legislator states in 2026 that a bank cannot charge a penalty, regardless of the amount or the current interest rate.

The most important exceptions are:

• End of the fixed-interest period: On the day that your fixed-rate term ends, you can repay or transfer the entire loan without penalty.
• Selling the house: When selling your home and paying off the associated mortgage, a bank in the Netherlands may not charge penalty interest in 2026 (unless you have a specific “take-home mortgage” with different conditions, but this is rare).
• Death: In the event of the borrower's death, the relatives can usually repay the loan without penalty from the estate or the payment of life insurance.
• Current interest rate is higher than contract interest: If the current market interest rate in 2026 is higher than the interest you pay for your loan, the bank will not incur a loss if you repay. In fact, the bank can then lend the money again at a higher interest rate. In this case, repayment is always penalty-free.

The calculation method: Present value

The calculation of the penalty in 2026 follows the “present value” method. This is a technical process where the bank looks at the total amount of interest it would have received until the end of the fixed-interest period, minus the interest it can currently receive in the market.

From this amount, you will first be deducted from your annual penalty-free space (e.g. 10%). The interest rate difference is calculated over the remainder. Because you now pay the penalty in one lump sum instead of spread over the coming years, this amount is “made in cash” (calculated back to today's value). In 2026, banks are obliged to provide you with a transparent sample calculation before you make the repayment permanently, so that you are not faced with surprises afterwards.

Penalties for personal loans and consumer credit

In 2026, personal loans often have more favourable rules than mortgages. Since the tightening up of consumer protection, the penalty for a personal loan may not exceed 1% of the amount repaid early if the remaining term is more than one year. If the term is less than one year, the maximum penalty is 0.5%.

In 2026, many online lenders even advertise completely penalty-free repayments at any time. This is an important point to compare when taking out a loan. For flexible credit (overdraft or credit card), in 2026, repayment is always penalty-free, as the interest rate here is variable and no fixed term has been agreed upon.

Fiscal consequences of the penalty interest

An important advantage in 2026 is that the penalty interest you pay for early repayment of a mortgage for your own home is tax deductible in Box 1, which significantly alleviates the pain of the penalty.

Because the penalty interest is seen as “costs of obtaining or maintaining your own home financing”, you can enter this amount when you file a tax return. Depending on your income bracket in 2026, you will receive a significant part of the penalty paid back via income tax. Please note: this only applies if the loan is intended for your own home. Penalties for repaying a loan for a holiday home or a consumer loan are not deductible.

In 2026, it is always advisable to first request a trial calculation from your lender. Sometimes the penalty is so low that the savings on your future monthly payments offset the costs within a few months, while in other cases, the penalty is a barrier that makes additional payments financially unattractive.