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The finance companies take a number of factors into account when determining the maximum amount you can borrow.
Firstly, your ability to repay: in general for a couple having a joint net income of between €40,000.00 and €60,000.00 per annum, the finance companies consider that the repayment cannot exceed 33% of income.
Before requesting a loan, it is therefore in your interest to properly prepare your application and provide details of all items that contribute to your total income, such as bonuses, holiday pay, family and travel allowances.
If your income exceeds €50,000.00, you will be more easily able to secure a loan that exceeds 33% of income in repayments. The finance companies also carry out a valuation of the property to be constructed.
In other words, they determine value of the land plus the estimated value of the building in the event of a forced sale. This value being the bank’s guarantee, it will be difficult to borrow more than the evaluation value without providing additional guarantees. The the bigger the down payment you can afford, the easier it will be to secure a loan.
If the amount awarded by the finance company is insufficient to cover your budget, you have the option of providing additional guarantees, either in the form of real estate property belonging to you, or the signature of a creditworthy guarantee.
A final solution would be to obtain an second mortgage (the interest rates are 1% to 2% higher than those on a first mortgage, and the signature of a guarantee will often also be required). See also the additional loans from the Walloon region in the following pages.
A word of advice:
If you are buying a plot of land on which you intend to build, don’t request a mortgage loan just to cover the purchase of the land.
First determine your construction budget and request a mortgage loan to cover the entire project, in other words, the land, the legal costs and the total construction cost minus your down payment.
To whom should you apply for a mortgage loan?
Our agents receive continuous training and will be able to advise you on the best deals currently available on the market. Don’t hesitate to contact them. The first step will be to determine your budget, then to look for the most advantageous loan.
Your own bank will make a no-obligation proposal which will give you an initial idea.
Don’t hesitate to request terms from a number of companies before committing yourself. These companies will provide you a repayment plan free of charge.
You might also be able to obtain a loan from the Region, (see “Loans from the Walloon Region and Flemish Region”). The procedure for obtaining these loans is often long and fastidious, and you must meet all the required conditions.
Most finance companies charge between €125.00 and €250.00 in application and evaluation fees at the time of the official application.
Average repayments on a constant annuity loan of €100,000.00. Loans are currently available at interest rates between 3,00% and 3,60%.
You wish to borrow a sum of €335,000.00 over 20 years. You can obtain a loan at a rate of 3.30%. You can see from above the table that the monthly repayment for a loan of €100,000.00 over 20 years at an interest rate of 3.30 is €567.25.
To calculate the monthly repayment for your loan, simply apply the following formula:
|567,25 X 335.000,00||= 1.900,28 €|
In order to protect your family in the event of an accident, and to guarantee the repayment of the loan, most finance companies will request that the borrower covers the loan with an “outstanding balance” insurance.
In the event of death, this insurance will pay off all or part of the outstanding amount owed.
This insurance is a wise precaution and can be deducted from your taxable income, making it relatively cheap.
Loans from the Housing Fund for large Families
These loans are reserved for large families. The family must have at least three dependent children. In general, these loans are more advantageous than standard loans and are at a fixed rate of interest.
The interest rates vary between according to income and the number of children between 1% and 4.25% (for a family with 3 or 4 children).
A full copy of the regulations can be obtained from: Fonds du Logement des Familles Nombreuses de Wallonie
Registered head office:
6, Place Léopold – 5000 Namur
Principal administrative head office:
123, rue du Trône – 1050 Bruxelles
Tél. : 02/510.08.11
Fax : 02/510.08.56
Loans from the Housing Fund for large Families
The family must have at least one dependent child.
In general, these loans are more advantageous than standard loans and are at a fixed rate of interest. The interest rates vary between according to income and the number of children between 1.50% and 3.60% (for a family with 2 or 3 children).
A full copy of the regulations can be obtained from: Vlaams Woningsonds van de Grote Gezinnen
26-27, De Meeûssquare
Tél : 0800-16287