How does one discover the best loan without being confronted with hidden snakes?
Calculate how much I can borrow
A first important step is to find out what budget you have to finance the loan. As a family, both the own income and the income of the partner (and possibly adult family members) can be taken into account. In other words, as people live with more financially active family members, the spending budget and therefore the maximum amount of credit will increase. Do not forget to include other fixed income such as child allowances and incoming maintenance contributions during the calculation.
On the other side, you should list the number of fixed expenses you currently have. Do you already have a car loan or renovation loan ? Do you have children who do not live in the family, but for whom you pay maintenance contributions? Keep in mind that the lender will consult the Central Credit Register (CIC) to check whether they still have current credits or a past payment arrears. When all income and expenditure have been compared with each other, the amount of the net family income is obtained.
A second point of impact is the amount of own contribution (savings) . This amount refers to the amount that will be paid for the purchase itself and will therefore have no impact on the monthly costs that would be calculated. Certainly for making large investments such as a mortgage loan, creditors require that a borrower contributes part of the capital himself.
Due to the financial and economic crisis of 2007-2008, lenders have become more reluctant to borrow more money than the real value of the property. Without own contribution or apple for the thirst one will probably not receive a loan or only a loan at a higher interest rate. Read more about interest rates on loans here »
A third element concerns the term of the loan . In principle, the creditor and borrower can freely agree on the term of the loan, provided that the maximum amounts are respected for consumer credit and the mortgage loan. When comparing the mortgage interest rate, one should keep in mind that the maximum term of the mortgage has always been set at 30 years. As a borrower one can decide to repay the mortgage faster, such as 15, 20 or 25 years. A mortgage loan must, however, have at least a term of 10 years to be fiscally interesting.
As explained above, these restrictions do not apply to consumer credits. Borrowers interested in a personal loan simulation will have to take into account the maximum repayment term as stated in the personal loan . As the loan is spread over a long term, the amount of how much I can borrow will increase. By spreading a mortgage loan of 20 years over 30 years, the maximum credit amount can be increased by about 1 / 3rd. Remember, however, that as the loan is spread over a longer period, the total interest will also increase. The actual cost price of the loan will therefore rise.
Tips and recommendations for best loan
Shutting off by-products . Lenders will eagerly deal with additional discounts when a borrower decides to purchase certain by-products. In practice, one can think of a debt balance insurance or family insurance (family insurance). These insurance policies are not compulsory, but will in practice be offered in combination with a (mortgage) loan.
Creditors who wish to take out a loan from a bank will also be able to save on the cost of the loan by transferring financial products to the bank (savings accounts, investments, bonds, etc.). In any case, read the fine print before signing a credit agreement. For example, people may receive an interest discount of 0.50% if they also take out a debt balance insurance policy with the lender. The debt balance insurance with the lender may, however, be thousands of euros more expensive than a competitor’s debt balance insurance. Comparing mortgages is not easy and often requires some effort, but it certainly pays off.
Fixed or variable nature of the loan . In practice, it is noticed that certain creditors allow a higher amount of how much I can borrow if they subscribe to a loan with a variable character. An interest rate that remains the same throughout the term of the loan, or for a large part of it, is financially less interesting for the lender, since a change on the market will have no impact on the lender’s return.
The most common interest rates on mortgage loans are the 1/1/1 (the annual variable), the 3/3/3 (the interest rate is revised every 3 years), the 5/5/5 (the interest rate is changed every 5 years). year), the 10/5/5 (the interest rate is reviewed a first time after 10 years and then every 5 years) and the fixed interest rate.
Calculate additional costs for monthly costs
When calculating a mortgage with a lender, it is important to remember that borrowing money is often combined with additional costs. Certainly there are big differences between a personal loan and a mortgage loan, since people pay purchase and registration costs when buying a home.
1. (Personal) loan : in the case of a consumer credit, the lender is obliged to state the annual percentage rate or APR . The APR expresses, based on a percentage, how many additional costs are linked to the credit. In other words, in the case of a personal loan or car loan, the creditor can not impose additional costs if they are not included in the APR.
Attention: the limitation of additional costs applies exclusively to the credit costs. The creditor can always impose certain costs related to the credit agreement, such as non-compulsory insurance costs, default costs (eg interest), reinvestment fees (if the credit would be repaid early) and the fees of a notary. The costs associated with a personal guarantee can also increase the cost of a personal loan.
2. Mortgage loan : in the case of a private purchase of a house there are three major types of additional costs, being the registration fees (i), the fees of the notary (ii) and the deed costs (iii). For a home in the Flemish Region, when purchasing a home or land, you pay 10% registration fees. This percentage can be reduced to 5% if the house has a cadastral income (KI) of less than 745 EUR and is therefore eligible for the so-called “small description”.
When purchasing the home, you will always have to go to the notary for the necessary deeds. A notary will charge a fee (including 21% VAT) for these transactions. The fees of a civil-law notary are determined by the government, so there is no distinction between the fees of notary X to notary Y. Finally, there are the costs of the deed and additional costs, such as cadastral extracts, soil certificates, mortgage certificates, and fiscal and urban development searches. The amount of the deed costs usually fluctuates between 800 and 1,100 EUR.
Simulation additional costs fee notary
As explained above, the determination of the fees of the civil-law notary is according to government scales. Pay per disk with a fixed percentage. The percentage of fees of the notary decreases as the house has a higher purchase price. A logical principle, since the acts of the notary are in principle not different for a dwelling in the middle class against the highest price range.
The percentages of government are:
- 0 – 7,500 EUR: 4.56%
- 7,501 – 17,500 EUR: 2.85%
- 17.501 – 30.000 EUR: 2.28%
- 30,001 – 45,495 EUR: 1.71%
- 45.496 – 64.095 EUR: 1.14%
- 64,096 – 250,095 EUR: 0.57%
- > 250,096 EUR: 0.057%
To calculate a mortgage of 200,000 EUR this results in:
Example calculation fee notary when buying home
How much money to borrow?
In order to know how much money you can eventually borrow, you will have to take into account both (net) income and expenses. Managing a monthly budget or housekeeping book will certainly help you to get an overview of all your expenses. Expenses are also understood as other loans. An existing car loan or repayment of a money reserve is therefore also included. The bank or institutions to which you submit a loan application will also check this with the Central Bank for loans to private individuals, so it will automatically take this into account.
The amount that remains can be used to calculate your maximum loan capacity. Usually the tip is given to consider a third of this amount as the maximum repayment capacity you have. Certainly the monthly repayment for the repayment of your mortgage loan would not exceed this 1/3 rule. A single person needs an average of about 1,000 euros a month to get by.
The final amount that you will be able to borrow depends on the bank: they each use their own methods to make this calculation. Make sure that there is enough money left in the account after the monthly reimbursement to make ends meet with the remaining income.