Is an annuity mortgage common in Aruba?

Yes. It is one of the most common structures offered by major lenders like Aruba Bank and RBC.

Do payments change over time?

The total monthly payment stays the same, but the interest portion decreases and principal increases over time.

Can non-residents get an annuity mortgage?

Yes, subject to higher down payment and documentation requirements.

What currencies are used?

USD and AWG are both commonly used. Check your lender’s terms.

Mortgages

What Is an Annuity Mortgage and How Does It Work in Aruba?

A clear explanation of how annuity mortgages work in Aruba, with pros & cons and a simple example.

1) What Is an Annuity Mortgage?

An annuity mortgage is a loan where you repay with a fixed total monthly payment. Early on, payments are mostly interest; over time, the principal share grows while interest shrinks. The total payment stays constant, making budgeting predictable.

2) How Do Payments Work in Aruba?

Fixed total monthly payment over the term (annuity structure).
Interest portion declines each month as the outstanding balance decreases.
Principal portion rises, accelerating equity build-up.
Typically offered in USD or AWG; terms up to 30 years for residents.

3) Pros and Cons

Pros

Predictable monthly payment simplifies budgeting.
Principal increases over time, building equity faster later.
Common product — easy to compare across banks.

Cons

You pay more interest in the early years.
Fixed payments can be higher than interest-only initially.
Prepayment penalties can apply — always confirm with your lender.

4) Who Is Eligible?

Banks in Aruba assess income, credit history, debt-to-income ratio (often ≤ 40%), down payment, and property appraisal. Non-residents can qualify with higher down payments (often 35–40%) and additional documentation.

5) Example: Simple Annuity Payment

Example with approximate numbers for illustration only:

Loan amount: USD 300,000
Rate: 6.0% fixed
Term: 25 years (300 months)

Monthly payment ≈ USD 1,933. Over time, the interest share falls and principal share rises while the total stays ~1,933.

6) FAQs

Can I make extra payments?

Usually yes, but prepayment terms vary by bank. Ask about penalties or annual free prepayment allowances.

Are rates fixed or variable?

Both exist. Many annuity mortgages are fixed for a period, then reset. Always confirm your product type.

Which banks offer annuity mortgages?

Major lenders like Aruba Bank and RBC Royal Bank offer them; terms differ for residents and non-residents.