You want to buy a house or an apartment or carry out work in your home. The ideal solution is obviously to take out a loan or a mortgage.

Would you like to know how many years it will take you to repay your mortgage?

This is, of course, an important parameter both for your banker who must assess the risk and for you who must determine the final cost of your investment.

Let’s take a look at this fundamental question that will influence your budget for a significant period of your life.

A mortgage? For what purpose?

In general, people assume that taking out a mortgage is only for buying a house or an apartment. On the contrary, with a mortgage, you can finance many other investments such as:

• renovating your house;
• furnishing your house;
• consolidating all your different loans;
• taking out a loan when you are in a difficult situation (self-employed or listed with the BNB).

What are the different possible durations?

You can repay your loan or mortgage over a period of 10 to 30 years. In the past, the duration was generally 15 to 20 years, but with the aging population, banks are increasingly accepting loans that can last up to 30 years.

The principle

When considering the duration of a mortgage, there are two parameters to take into account:

• The risk taken by the lending banker;
• The total amount of interest you will repay.

It is obvious that the longer the duration of your mortgage, the greater the risk of insolvency for your banker, and the higher the amount of interest paid at maturity.

Can the borrower negotiate a reduced interest rate for a longer loan duration?

It is obvious that if you borrow for a period of 30 years, your interest rate will be higher because you are asking your bank to take on additional risk.

However, if your solvency guarantees are solid, your bank may grant you a reduction in the interest rate if you make a motivated request.

Knowing the cost of your mortgage?

We invite you to use our loan simulator to know the different formulas applicable to your next mortgage.

Do not hesitate to contact our brokers. Mrs. Jacqueline LEGRAND is our mortgage specialist for over 20 years. She can find the product that meets your expectations and your budget.

Fixed rate or variable rate?

Currently, and in the long term, specialists and analysts expect interest rates to rise.

We therefore recommend a fixed rate. These rates range from 3 to 4%, which is very low.

Mortgage for seniors

Previously, after the age of 50, you could no longer find a bank willing to grant you a mortgage.

Currently, and due to increased life expectancy, you can still take out a mortgage up to the age of 60 for a period of 15 years.

It will, of course, depend on the amount borrowed and the guarantees offered.

If the loan is co-signed by future heirs, there is no obstacle to the mortgage duration being much longer.

You have recently taken out an installment loan or a mortgage, and the pertinent question of the tax deductions or benefits you may be entitled to arises.

In Belgium, given the significance of the tax burden, looking into tax benefits that could reduce your overall taxable income is essential.

First, it is important to make a fundamental distinction between loans taken out for private purposes and those taken out for professional purposes.

Here is the current state of affairs.

Loans for professional purposes

Under Belgian tax law, an expense can only be considered deductible by the administration if it is intended to facilitate the earning of professional income. For example, the car a doctor buys to visit patients will only be deductible because it allows him to earn income from his professional activity. Conversely, some mixed expenses, i.e., those serving both professional and private life, are only partially deductible.

Thus, a loan intended to be essential for earning taxable professional income will be 100% deductible, including interest. Deductibility is generally spread through an annual depreciation percentage. For example, a car is depreciable over a maximum of five years. This method aims to spread costs over different fiscal years to distribute the tax burden over several periods.

Deductibility of your mortgage loan

In the realm of expenses useful to your private life, the only loan that is deductible or provides tax benefits is the loan used to acquire your first home: your mortgage loan.

In short, the tax deduction works as follows: you can deduct the repaid capital as well as the interest and insurance premiums, but the total of these amounts is capped at a maximum annual amount of €2,120 per person who took out the mortgage. For the first ten years, this amount is increased by €710, totaling €2,830 per person. If you have at least three children, you can add an amount of €70.

These increases are only valid for the first ten years and are only applicable if you are the owner of a single residence.

Conditions for deducting your mortgage loan from your taxes:

• The loan must be for a single house intended to be the main residence of the family;
• The loan must be secured with a mortgage;
• The loan term must be at least ten years;
• The loan must be taken out with a credit institution established in the EEA (European Economic Area).

Are you considering acquiring real estate? You are going to take out a mortgage loan. Borrowing to acquire real estate is expensive in terms of interest, but you should not lose sight of the fact that the payment of these interests is tax-deductible. Therefore, even if in some cases the buyer can afford to buy real estate, it is often much more advantageous to take out a mortgage loan and deduct the interest from this loan from the property income that is included in your personal income tax return. Here’s an overview of this fundamental question.

Deduction of interest

Interest paid on any mortgage loan is 100% deductible from all property income included in your personal income tax return.

Property income is, for non-rented properties, the cadastral income (for land or the main residence of the borrower), or the cadastral income increased by 25% for other properties owned. For rented properties, it will be either the cadastral income or the actual rent received depending on the type of rental.

If the declared property income exceeds the interest, there will be a total deduction of the interest paid.

Additional interest deduction

However, if the income is lower than the interest paid, there is an additional interest deduction, but under certain limiting conditions:

• It only applies to the construction of your home, its acquisition in new condition, or its renovation (if the home is more than 15 years old). This reduction does not apply to buildings that do not constitute the borrower’s residence.
• In addition, the loan must have a term of more than 10 years.

Reduction on the repayment or reconstruction of the capital

There is also a tax reduction on the amounts paid by the borrower to amortize or reconstruct the borrowed capital.

A certain complexity

Each case must be analyzed individually to calculate the tax advantage and thus better determine the amount you could borrow under a mortgage loan.

Did you know that you can deduct your mortgage loan from your taxes? Here’s how to do it in a few steps…

1. New rules in effect since January 1, 2005

Since January 1, 2005, the legislator has introduced a new system for deducting your mortgage loan, known as the basket system. In the same box of your tax return, you will be able to deduct the amount of the borrowed capital, the paid interest, and all the premiums related to the mortgage loan (mainly life insurance).

2. What does this deduction cover?

You can deduct the repaid capital, the interest, and the insurance premiums, but the total of these amounts is capped at a maximum annual amount of €2,120 per person who took out the mortgage loan. For the first ten years, this amount is increased by €710, for a total of €2,830 per person. If you have at least three children, you can add an amount of €70.

These increases are only valid for the first ten years and only if you are the owner of a single residence.

3. Conditions for deducting your mortgage loan from your taxes:

– The loan must be for a single house intended to be the main residence of the family;

– The loan must be secured with a mortgage;

– The loan term must be at least 10 years;

– The loan must be taken out with a credit institution established in the EEA (European Economic Area).

4. What happens to loans taken out before January 1, 2005?

They remain subject to the old legal system. However, you have the option to switch to the new system, but this choice is irrevocable.

For several decades, residential real estate prices have been steadily increasing in Europe and Belgium. In the 1980s-2000s, this growth was very strong, with an annual rate of around 10%. Furthermore, this growth was coupled with inflation, which was around 7 to 8% per year. Since 2005, we have observed a significant flattening of the real estate price curve and even a drop in prices in the first quarter of 2014.

Moreover, inflation remains very low in Europe, around 2% per year, and interest rates are also very low. All the conditions are therefore in place to consider that we are experiencing a favorable moment to consider a real estate purchase and a credit in Belgium.

All the technical explanations summarized in a few key ideas in our article.

The housing price index is falling in Europe and Belgium

The housing price index measures inflation in the private property market. This index tracks price changes of new or existing residential properties bought by households, regardless of the purpose (rental or personal occupancy).

The Belgian housing price index fell by 1.6% in the first quarter of 2014 compared to the previous quarter. The annual inflation rate stands at -1.1%. The average inflation was 1.2% in 2013.

The housing price index for the eurozone and the European Union for the first quarter of 2014 will be published by Eurostat on July 10, 2014. In 2013, the average annual inflation rate reached -1.9% in the eurozone and -0.9% in the European Union. More information on the housing price index

Evolution of real estate prices in Belgium

By analyzing the evolution of price curves of houses, apartments, and villas in Belgium, we observe a significant flattening of the curve since 2010.

It seems that the era of constant real estate price increases is behind us.

This is good news for prospective buyers and borrowers.

However, investors may need to start reviewing their strategy if they want to keep in mind that the cost evolution curves continue to rise. Real estate remains an investment that generates net gains but much less significant than in the past.

Evolution of interest rates

The level of mortgage rates is actually linked to the bond rates in the financial markets, which vary daily. When bond rates fall, mortgage rates also fall, as credit institutions simply follow the market.

In simple terms, bond rates generally move in the same direction as stock markets.

In recent years, and following financial crises, investors have opted for safer financial products such as bonds. As a result, their returns have significantly decreased along with interest rates.

We are going through a period where interest rates are historically low: at Crédit Populaire, we can guarantee you a rate of 3.5% over a period of 20 years (fixed rate).

Use our fee calculators

When you make a real estate purchase, you should not overlook the ancillary costs that are added to the purchase price. These costs are essentially of two types.

• Credit act fees: everything you need to know and our fee calculation simulator
• Sale act fees: everything you need to know and our sale fee calculation simulator

Our simulators allow you to have a very precise overview of the fees that will affect your purchase: it’s a very practical tool.

Our mortgage loan specialist

Ms. Jacqueline Legrand will be your personal advisor for your purchase: Jacqueline has been managing mortgage loans for over 30 years, she is a key player in this market and guarantees to find the interest rate and loan formula that best suits your needs.

Contact: Ms. Jacqueline Legrand: phone: 04/387.73.78 – Mobile: 0486/77.66.97

Visit our website: www.cpe-credit.com

Your most frequently asked questions about mortgage loans: all our answers here