You have undoubtedly noticed it. Homes are becoming more and more expensive in Belgium. That is why families are taking out increasingly large mortgage loans. In principle this is perfectly possible with the low interest rates. However, you should be careful not to get into financial difficulties. Which rules do you consider best? A few tips.
Mortgage in Belgium
In the space of two years, the amount borrowed for the purchase of a home in Belgium has risen by 10,000 euros. In the same period, the average amount borrowed for building a house increased by more than 15,000 euros. Clear numbers that speak for themselves. As families borrow more and more in proportion to their income, the risk of being unable to pay off the mortgage loans increases.
Some tips if you take out a mortgage
You can also easily prevent yourself from getting into a difficult position with the repayment of your mortgage credit.
Do not borrow the full purchase price
In Flanders, on top of the purchase price, you usually pay 10 percent registration fees. In addition, notary fees and costs associated with the credit deed and the purchase deed are added. All this therefore assumes that you already have a substantial savings sum or that you can count on the support of, for example, your parents?
Realistically estimate your repayment capacity
According to the classic rule of thumb you can derive 30% to 40% of your net monthly family income. On top of that you have to keep 1,250 euros to pay the running costs. Furthermore, it is best to create a buffer of three to six months net wage, in the event that you are faced with unexpected expenses or your income suddenly falls away.
Take out a Guaranteed Income insurance policy with the Flemish government
Anyone taking out a loan for buying, building or renovating a house can take out insurance with the Flemish government free of charge against loss of income due to sudden unemployment or disability. This insurance runs for 10 years and is limited to an allowance of a maximum of 600 euros per month for a maximum of 36 months. You do not have to pay a premium but there are some conditions.
- You have borrowed at least 50,000 euros for the purchase of a home in the Flemish Region,
- You have no other houses,
- You must submit the application within the year after the first drawdown of your credit,
- The estimated value of your home may not exceed 320,000 euros.
Do not put your head in the sand in the event of payment difficulties
If you follow these basic principles, you can enter into the desired home loan with confidence. If there are payment difficulties, contact your lender as soon as possible. After all, a solution can usually be found.
For example, you can extend the duration of the loan so that your monthly amount is reduced. In this case you did pay more interest at the end of the trip.
Moreover, with quite a few lenders you can get a suspension of capital repayments for a maximum of six months. You then only pay interest for six months and not the capital. That makes a big difference. If the financial service provider allows such a suspension, you must repay the capital repayments still due after the original end date of the home loan has expired.