Acting as guarantor for a mortgage loan to enable a loved one to obtain credit to buy the house of their dreams is a noble commitment, but the scope of it must be carefully measured beforehand.

Indeed, acting as guarantor means agreeing to honor the borrower’s debts to the credit organization in the event of inability to pay.

As guarantor of the total repayment of the loan, the one who acts as guarantor at the same time commits his property if the subscriber of the real estate loan obtained cannot, for any reason, pay off his loan.

How it works ?

The bond is governed by article 1123 of the Civil Code. It is, in principle, established by means of an act signed between the person acting as guarantor and the bank itself. It is important that the guarantor and his responsibilities appear clearly in the annex or in the loan contract.

In certain cases, using the services of a notary can be useful. This professional is able to draw up the guarantee document and is able to make the guarantor aware of the extent of his commitment. At the end of the transaction, each party receives a copy of the document carried out.

Becoming a guarantor for a mortgage loan is not a decision to take lightly. The consequences can be serious since, just like the borrower, the guarantor puts his own assets and income at stake.

Simple or joint deposit?

It is important to differentiate between a simple and joint guarantee before committing. The simple guarantee is characterized by the fact that the borrower remains primarily responsible in the event of non-repayment of his debts. In this case, the bank must contact the borrower before requesting the intervention of its guarantor.

When the guarantor is qualified as joint, this means that the guarantor has made a joint and several commitment to the loan and the bank can therefore approach both the borrower and his guarantor. Although the simple guarantee protects the person acting as guarantor from possible abuse, you should know that banks can require a joint guarantee when taking out a loan.

The commitments of the credit organization

As part of a mortgage loan guarantee, banks and other credit institutions also have legal obligations. The guarantor must specify his commitment through a handwritten note on the contract.

It is also up to the credit institution to keep the guarantor informed of all the important details concerning the credit and to inform him of the progress of the reimbursement or of any payment incident, if applicable.

Are you about to purchase real estate? Whether it is a purchase to establish the family’s main home or a real estate investment, you are making a good decision because real estate remains a sure value which is constantly evolving upwards and in any case which experienced only very rare temporary depreciations. In summary, by investing in “the brick”, you take very little risk and your capital grows year after year. The real estate market is full of players and parameters. What should you pay attention to when comparing different mortgage loan offers on the market? Here is the subject of our tip of the day.

Compare like with like!

Are you going to shop around at banks or credit brokers? This is quite normal. First of all, you need to compare like with like. Compare for a mortgage loan for the same amount of money and for the same duration.

Tip: lenders and credit intermediaries are required to provide you with a SECCI form before signing your mortgage loan contract containing the “standardized European consumer credit information”. This form contains all the information accurately and completely on the credit considered and will allow you to more easily compare the different offers.

Compare your credit intermediaries

Of course, you are looking for the best price on the market. But that’s not all. Also take into account the quality of the advice and the responsiveness of your bank or your credit intermediary. More and more solutions are available online and no longer guarantee you the service of an available broker and good advice. Many things can happen during the life of your mortgage and you will always need to have an advisor available. Don’t skimp on it!

What should you compare when it comes to a mortgage?

Financial conditions

First compare the interest rate and term of your mortgage. Tip: we provide you with credit simulators and fees for credit acts and notarial fees on our website.

Also compare the costs

You must also pay attention to application fees, notary fees and insurance costs. So, you need to compare the total cost of financing.

Tip: there is the possibility of obtaining a reduction in registration fees of 6% when acquiring modest real estate. More information on the modest housing reduction.

Other important elements

Don’t forget to pay attention to the flexibility of your credit, that is to say the possibilities of adjusting it or suspending the monthly loan payments.

Likewise, check the fees in the event of partial or total early repayment. You always have the right to repay your mortgage loan early, but the contract may have included significant fees. Be careful !

Example: Imagine you inherit a large sum of money. You may be tempted to repay your credit early. It would be an unpleasant surprise to find that to do this, you would have to pay compensation of a few percent.

Fixed rate or variable rate?

This question is unavoidable and the answer depends on the situation. At the time of writing this advice post, we recommend the fixed rate because fixed rates are still relatively low and they are about to gradually rise again.

Outstanding balance insurance?

Insurance represents a significant incidental cost. In principle, you are not obliged to take out outstanding balance insurance. You must discuss this with your bank or credit intermediary. In practice and unless they offer significant guarantees, few banks will agree to grant you a mortgage loan without insurance.

In your search for comparison, carefully check the guarantees that are offered in your insurance.

The Walloon housing fund grants mortgage loans to large families. The interest rates are advantageous and the conditions are studied and adapted to each situation.

These mortgage loans are also called “social loans” and are granted by social organizations or accredited by the Walloon Region.
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Loans are granted for:

• the purchase, construction, renovation or transformation of housing;
• carrying out energy-saving work;
• the repayment of an expensive loan already taken out for a home;
• the creation of local housing intended to accommodate elderly parent(s);
• the purchase of building land.

The Walloon Large Families Housing Fund is a cooperative society which grants social loans to large families with dependent children at decreasing rates. Created in 1929, the foundation’s main missions are article 179 of the Walloon housing and sustainable housing code.

These include social mortgage loans, ecopacks and renopacks (for Walloon families who wish to buy a house or renovate their home), rental assistance (to finance the renovation and repair of housing which will be rented mainly to large families).

And the management of social housing organizations (OFS). The foundation’s website details all the conditions under which this aid is available. Our credit brokers are at your disposal to help you with your large family credit file Walloon Region.

Conditions for granting a large family loan

The borrower has a family with at least three dependent children. He resides in Belgium and is not the full owner or usufructuary of another home. Their taxable income cannot exceed certain ceilings.

The building must be located in the Walloon Region. Its market value and volume do not exceed regulatory limits.

The interest rate is calculated based on taxable income, the number of dependent children of the borrower and the geographical location of the property.

The loan amount depends on the market value of the building.

The loan is repaid monthly, over a period set according to the household budget and the age of the borrower.

Guarantees

The Housing Fund requires a double guarantee:

• coverage of the loan by means of death insurance of the outstanding balance type with a single premium, which can be advanced by the Fund
• taking out a mortgage registration on the accommodation.

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Whether you are self-employed looking for personal credit, or a professional with a temporary lack of cash following the default or delay of one of your important clients or even locked up following non-payment of several monthly payments of your installment loan, the owner’s loan can prove to be the ideal solution to escape from a temporary situation of financial asphyxiation. Owner’s credit can also be a preferred tool if you wish to take out an installment loan at an attractive rate which is likely to improve a property that you own. A few words of explanation.

What is owner credit?

There are essentially two forms of owner credit which serve two different purposes:

• Owner’s credit to improve the comfort of a property you currently own. In this scenario, you decide, for example, to buy a beautiful fitted kitchen or to do work at home to change the frames in order to better insulate your property. In both cases, you increase the value of your home. From then on you will be able to take out a landlord loan and benefit from an attractive APR. This is a sort of classic installment loan but comes with an attractive APR because you are the owner of the house which will accommodate the improvements for which you are taking out a loan;
• Landlord credit to help you get out of a temporarily depressed financial situation. In this case, it is more of a classic mortgage loan through which you finance obtaining your liquidity by putting your home as security.

Who is a homeowner loan intended for?

• In the first case, that is to say the owner’s loan which is similar to an installment loan: any person who owns real estate who wants to improve its comfort can take out a owner’s loan and benefit from interest rates. attractive.
• The self-employed person, the liberal profession holder or the person listed can, under certain conditions, obtain a proprietary loan with a view to receiving liquidity aimed at getting them out of a temporary debt situation.

What are the conditions to benefit from a landlord loan:

1. Be domiciled in Belgium or Luxembourg;
2. Be the owner of a house located in Belgium or Luxembourg;
3. When the owner’s loan is similar to the mortgage loan, it is desirable to borrow a minimum of €25,000 to cover the costs of setting up the mortgage (notarial certificate);
4. The property must be free of encumbrances or at the very least, the repayment of monthly payments must be regular.

From January 1, 2020, the quotas will in principle be limited to 90%. In other words, you will have to finance the remaining 10%, as well as the registration fees for the purchase and for the loan.

However, numerous exceptions to this 90% mark have been provided:

For young households buying a home for the first time: 35% of the credits granted by a lending organization may exceed the 90% ratio and 5% the 100% ratio.

For those purchasing a property for the second time: 20% of the credits granted may exceed the 90% quota, but this can never be greater than 100%.

For rental investments: the maximum percentage is set at 80%, but it can go up to 90% in 10% of the loans granted.

You own a property and would like to buy a new one. Unfortunately, you need to sell your first acquisition to finance the second. The bridge loan is for you. Update on this usual question.

What is bridge credit?

The bridge loan is an ordinary mortgage loan which allows you to compensate for the expected income from the sale of a first property in order to finance the acquisition of a second.
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Cas d’école

You own a house and your family is growing, or you have found a new job in another area and you need to move and buy a new house.

Problem: you absolutely need to sell your first real estate acquisition to finance the second. However, selling your current home can take time to find an interested buyer. However, you do not always have the option of waiting and you do not want to miss the opportunity to buy that second property that meets all your criteria.

In this case, your bank can grant you a bridge loan until you have completed the sale of your first real estate acquisition.

Ordinary mortgage loan

The bridge loan is a mortgage loan that meets the ordinary conditions applicable to all mortgage loans.

A period of two years

An important note however, from usual banking practice, you have a period of two years to complete the sale of your current real estate property.

Feasibility and consistency

By taking out a bridge loan, you find yourself facing the repayment of two properties, it is therefore essential to ensure the feasibility of this loan with regard to your financial capacity.

An example is better than a long speech: you are currently the owner of a house whose current market value has been estimated at €200,000. You still have a balance of €100,000 left to repay on this first mortgage loan. You want to buy a new house worth €250,000. You will therefore take out a loan worth €350,000. €250,000 corresponding to the value of the second acquisition and €100,000 corresponding to the balance of your first mortgage loan. As the combined market value of the two buildings is €450,000, this bridge loan is feasible.

When you have sold your first house, you will be able to deduct the sale price, i.e. €200,000, from the new mortgage loan which was granted to you to purchase your second acquisition.
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You want to borrow a sum of money to buy a kitchen, or finance the acquisition of your veranda for example, to buy a house or to carry out renovations.

In addition to the usual acceptance conditions, your broker will check your solvency and require guarantees.

When the amount borrowed is significant – beyond €25,000 – it may happen that your broker requires the creation of a mortgage on a property of which you are the owner free of charges. This is almost always the case when purchasing real estate. Of course, there are costs associated with setting up a mortgage.

Are there any alternativesem , to taking out a mortgage on one of your real estate?  This is what we are talking about today.

What is a mortgage?

The mortgage is a real property right which is often granted by the borrower in order to guarantee the repayment of a sum of money that he has borrowed. This is a comfortable guarantee for the creditor insofar as real estate is property which maintains a stable value and which even tends to appreciate over time – barring extraordinary situations.

Are there alternatives to taking out a mortgage?

Of course, the borrower can always offer other guarantees. We immediately think about the guarantee or the addition of a guarantee. Other more original alternatives are sometimes proposed, such as the redemption of pension savings or life insurance.

Note that for these latter cases, the beneficiary of a pension savings or life insurance which buys back its rights before the end of the contract is rarely a good deal. In general, the early surrender value is very unfavorable.

In certain cases, guarantees are taken on movable assets (securities accounts or savings accounts).

Effectiveness of these alternatives ?

The success of these alternatives is very average because generally the resulting solvency is problematic and when the sums borrowed are very large, the bank will not be satisfied with random guarantees.

Mortgage rates are starting to rise again after several years of decline. Although this increase still targets long-term loans and remains quite low, now might be the best time to renegotiate your mortgage rate before it’s too late. Renegotiate your mortgage loan now.

However, thoroughly researching and comparing multiple offers is crucial. Don’t just rely on an attractive rate from a credit institution; also consider the additional costs associated with the new credit and the repayment of the old one.

The advantages of renegotiating your mortgage

Several advantages can be gained from renegotiating a mortgage loan. The first is seeking a more attractive interest rate, taking advantage of the current low level of rates. This option allows for the reduction of future monthly payments. It is also an opportunity to shorten the loan term if repayment capacity or obtained reductions permit. Be careful, obtaining the lowest interest rate does not always mean you are winning in the transaction.

Indeed, various additional costs are to be expected when you take out a mortgage to repay another. This includes, in particular, the prepayment penalty to be paid to the lending bank, which generally amounts to three months of interest, calculated on the total remaining capital.

You must also bear the costs of releasing the old mortgage, and possibly even the closing costs for some institutions. Additionally, there are opening and appraisal fees to consider if you take out a mortgage with another bank, apart from the costs of the new mortgage deed.

Why renegotiate your mortgage loan now?

Mortgage interest rates in Belgium remain historically quite low, despite an increase recorded since July 2013. This rate increase is slow and mainly affects long-term loans. Therefore, 2013 seems to be a good year to renegotiate real estate loans, especially short-term loans of less than 25 to 30 years, to take advantage of these still low rates.

How to renegotiate a mortgage loan?

The mortgage loan can be renegotiated, either with the bank that granted the loan, or with other credit institutions. Before making any decision, it is wise to gather as many offers as possible from industry players.

You can then contact your banker to ask them to lower your rate. This negotiation can be difficult, as the bank loses money if it agrees to reduce its rate. On the other hand, it risks losing you if you do not get satisfaction. According to specialists, a 1% difference between the current rate and the new rate is necessary to come out ahead.

It is rare for banks to agree to such a percentage decrease. The best compromise would be for the bank to offer a new loan without having to release the old mortgage, or to repay the old loan without requiring the payment of a prepayment penalty.

You can also look at the offers from competing banks and other credit institutions. However, beware, as these institutions may offer lower rates but require the subscription of other products in return. These mainly include fire insurance, insurance on the remaining balance, salary domiciliation, or various financial products.

Therefore, you need to calculate what you will gain with the new bank and the costs inherent to the repurchase of your mortgage to know which solution is the most interesting.

Do you frequently use credit? Perhaps you have taken out a mortgage for the purchase of your house, apartment, or for carrying out works, renovations, or improvements. Refinancing your mortgage is probably suitable for your situation.

Simulate your mortgage refinancing

The European Central Bank maintains a constant policy of lowering interest rates. Today, the cost of money has never been so low.

Did you take out a mortgage 5 years ago or more? Did you know that the current market interest rates are probably lower than those you obtained at that time?

A recent study by Immotheker estimates that one in four Belgians can refinance their mortgage and thus save an average of €13,000 per year through this refinancing.

It might be worth considering…

Why is the ECB lowering interest rates?

Since the 2008 crisis and the austerity policies implemented in the Union countries, growth has been sluggish. Europeans consume less and save more. This slowdown in growth and consumption has slowed inflation to the point of causing near deflation (price decline from year to year).

Europeans save and consume less to the extent that considerable sums lie dormant in bank accounts.

One of the means used by the ECB to try to revive the economy is to lower the cost of money to encourage savers to invest in the real economy, that is, to buy shares or bonds of companies or states, or even directly invest in the capital of local companies.

The consequence is that interbank interest rates decrease, and the interest rates on mortgages follow this trend.

Current interest rate levels

Interest rates have never been so low. It must be said that the ECB’s interest rates are negative!

Today, it is possible to find an interest rate of 2.8% on the market for a mortgage, depending on the amount to be borrowed.

What is a mortgage refinancing?

Refinancing consists of obtaining a better mortgage rate, which allows you to reduce your monthly payments.

There are two ways to get it: contact the bank that granted this mortgage or go to another bank.

Not all mortgages are refinancable: the loan term must still be sufficiently long, and the repayment must concern not only the principal but also the interest.

Let’s say the best time to refinance your mortgage is probably after 5 years, and the refinancing should cover 80% of the initial value.

CPE Mortgage Loan

Our company has been active in the mortgage market since 1996. Our experience allows us to find credit solutions for files or profiles that might sometimes be declined by large traditional banks.

Currently, our interest rate for a mortgage is around 3-3.5% fixed over 20 years, which is already a very attractive rate.

Take advantage of the opportunity

You should know that this low-interest-rate situation is not going to last forever. Moreover, no one knows when interest rates will rise, but it is certain that they will rise soon. Why?

When growth returns to Europe, and consumption resumes, prices will rise again, and consumers will automatically turn to the markets. At that time, banks will have an interest in raising their rates to keep their customers. Mortgage rates will naturally follow.

That’s why you should take advantage of it while it’s still possible and consider refinancing your mortgage.

Getting information costs nothing… Get in contact

Call our mortgage service and ask to speak to Mrs. Jacqueline Legrand.

We study your file for free and see with you if your mortgage is refinancable.

If so, you could make a great deal and save up to €10,000 per year!

What are you waiting for?

Let’s study a textbook case today: three years ago, you took out a mortgage of €200,000 to buy your house. The execution of your contract is going smoothly, and you are repaying your monthly premium without any delay. Today, you are considering doing new work on your house and need to borrow an additional sum of €50,000.

Of course, you cannot offer any other guarantees than your house, which is already mortgaged by the first loan.

What is the most interesting solution for you: constituting a second mortgage or buying back your first loan and adding an additional sum of €50,000 guaranteed by the first mortgage?

Let’s examine this recurring question.

Constituting a mortgage involves costs

When you buy real estate, you will often be asked to agree to a mortgage. Often, this guarantee will be a sine qua non condition for obtaining your loan.

Constituting a mortgage involves significant costs that will be added to the purchase price of your house.

Buying back a mortgage is the most advantageous solution

If during the life of your mortgage, you need to borrow new sums of money, for example, to carry out work on your house, it will always be more advantageous to buy back your mortgage, increase it by the new desired amounts, and keep the existing mortgage rather than agreeing to the constitution of a new mortgage, which would incur new costs.

In such a situation, consult your usual broker who will analyze your situation and advise you in the best possible way.