Can a borrower add the family allowances they receive to their income to obtain a loan? In a more general sense, what income is considered when applying for a consumer loan or a mortgage?
Family allowances
Family allowances represent a significant financial aid for each family. Thus, in Belgium, parents receive a monthly allowance of €90.28 for the first child; an allowance of €167.05 for the second child, and an allowance of €249.41 per child from the third child onwards.
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Can these amounts be taken into account to assess your total income for obtaining a loan?
The answer is decidedly negative. You cannot rely on your family allowances to obtain a loan, regardless of the type of loan, the borrowed amounts, or the loan duration.
Why? It is the Belgian legislator who aimed to protect family allowances and reserve them for the purpose for which they were created. Similarly, your family allowances are not subject to seizure, which would prevent a financial institution from seizing them in case of default.
Aside from employment income, are there any other sources of income that can be considered for obtaining a loan?
Of course, the legislator allows you to include in your income for the purpose of obtaining a loan:
- Rental income, meaning the income you receive from renting a building, part of a building, and more generally from any real estate property of which you are the owner. However, the legislator limits this consideration to 80% of the amount of rental income.
- Income from movable assets generated by financial investments (securities account) or interest received on your savings account.
- Legal pensions, except pensions paid for disability benefits.
- Income received as replacement due to disability.
- The declared income from a supplementary professional activity.
- The allowances received from your health insurance fund.
What are the other incomes or allowances that are not taken into account?
Aside from family allowances, the following are not taken into account:
- Unemployment benefits because, like family allowances, these allowances cannot be seized and therefore cannot be considered as useful collateral for a financial institution.
- Income received in contravention of the tax obligations in force in Belgium (undeclared income). Indeed, any proceeds from a tax offense constitute, under Belgian tax criminal law, a criminal offense liable to be prosecuted before the criminal court. The banking institution that would agree to take into account the proceeds of such an offense would therefore become an accomplice and guilty of money laundering and concealment.
