A mortgage loan is a loan granted under the condition of mortgaging one or more real estate properties that constitute the borrower’s assets.

The mortgage can be carried out on the real estate property for which a loan is requested, but also on an independent real estate property separate from the loan request.

In case of non-repayment of the loan, the bank has the option to seize and sell the mortgaged real estate property.

Following the contraction in the number of mortgage loans observed in 2012 as a consequence of the financial crisis, there is often talk of a “debt ratio”. This debt ratio is very important because it ultimately determines a person’s borrowing capacity.

By “debt ratio”, we mean a ratio between a person’s income and expenses.

What income is taken into account?

Professional income, of course, and meal vouchers. However, family allowances, financial product interests, financial products (stocks, bonds, etc.), alimony are not taken into account because these incomes are unseizable. Overall, only seizable incomes can be taken into account. Thus, your broker will need to examine your file as some social benefits are seizable and others are not, such as unemployment benefits and allowances granted by the CPAS, and therefore cannot be included in the calculation of income.

It should be noted that according to banking law, only provable income can be taken into account, and therefore the borrower will need to provide their tax return or their latest financial statement.

The expenses are mainly composed of the repayment of all debts (car financing, etc.) and the payment of any alimony.

To be able to borrow, the ratio between income and expenses should be between 35 to 40% for a person wishing to borrow alone. Of course, this ratio depends on the person’s income level. Thus, if a person has very high income, like a European official, this ratio can be adjusted upwards as long as the borrower is able to meet their monthly repayment.

What would be the best ratio in relation to income?

This ratio is between 40 to 55% for married couples.

Of course, your broker will evaluate each case individually and the borrowing capacity will depend on the duration of the loan and the amount borrowed.

It should be noted that these ratios result from an empirical analysis carried out by each bank and therefore vary from one bank to another. It is mainly the analysis of the bank’s disputes that determines its policy in this matter. The setting of these ratios is therefore not the result of the application of specific legislation.

By “consumer credit” we mean any credit used for something other than financing the purchase of a building: car, household appliances, travel, marriage, etc. Consequently, consumer credit does not require any particular justification. The borrower must therefore not provide a purchase invoice or a work estimate to request credit.

This can be: an installment loan (loan for a fixed period and fixed monthly payments), an installment sale (sale for which you pay the price in several payments), a financial lease (contract of rental of a property, accompanied by a purchase option on it), a credit opening (reserve of capital that you use according to your needs, often thanks to a card), a bridge credit (short-term credit used to advance funds pending receipt of a large sum repayable in one go).

Access to consumer credit is generally available from an amount of €2,500 and can go up to an amount of €75,000. The APR (Annual Total Effective Rate) is essentially the criterion of choice to which the consumer must pay particular attention.

APR and consumer loan

The APR is legal variable data which is updated every 6 months by the National Bank of Belgium. Please note, this does not mean that your APR varies every 6 months. Indeed, as soon as your consumer credit contract is signed, your APR (ultimately what determines your interest rate on the sums borrowed) remains completely fixed for the entire duration of your credit contract.

Currently, the APR defined by the National Bank of Belgium varies in a range from 11.5% to 15%. This means that the minimum and maximum APRs are defined by law and do not vary in any way from one broker to another. On the other hand, your broker can make a commercial gesture and grant you the minimum legal rate according to the criteria that he himself defines in the relationship he maintains with his customers.

It is essentially the duration of your credit and the amount borrowed which will vary the APR. Thus, the greater the amount, the closer the APR will be to the legal minimum. The shorter the duration of the credit, the closer your APR will also be to the legal minimum.

There are credit formulas which allow you to benefit from lower APRs but in this case, the borrower is no longer in a consumer loan formula but rather in a assigned loan such as: car financing, a works loan where the borrower must provide proof of their purchase (purchase invoice, estimate for the works, etc.)

Other important points

Once the contract is concluded, the law still grants you a reflection period of 14 calendar days during which you can renounce the credit by means of a registered letter sent to the lender or any other means of communication accepted by the lender and indicated in the contract.

Finally, it is useful to know that in the event of an anticipated balance of the loan, the borrower is reimbursed part of the interest which is in fact not due since the duration of the loan has been shortened.

Discover the National Bank of Belgium. The subscription of a personal credit contract, a consumer loan, an installment loan is part of a triangular relationship between on the one hand the client, the final consumer, and on the other hand, the credit intermediary, namely your broker and the bank providing the funds.

This triangular relationship is overseen by the prudential supervision of the National Bank of Belgium. This state institution has a fundamental role in consumer credit. It is, in a way, the guarantor of the good health of our economy and it ensures the proper execution of credit contracts. It is a formidable database which records all the details of the credit contracts concluded.

Obligations imposed on credit intermediaries and banks

Credit intermediaries and banks have the dual obligation to:

1. To register all signed credit contracts with the National Bank of Belgium.
2. They also have the obligation to denounce credit contracts when two monthly installments have not been paid: this is what we call filing.

Roles of the National Bank of Belgium

On the one hand, all consumer credits and mortgage loans which fall within the scope of application of the law of August 10, 2001 relating to the Central Credit Center for Individuals, as well as their payment defaults are recorded in the “Personal credit center“.

The Centrale is also responsible for registering notices of collective debt settlements.

The retention periods for data relating to credit contracts are as follows:

• For non-regularized contracts or unextinguished debts, ten years from the date of the first communication;
• For contracts made due or late in payment, one year from the return to normal of the contract or the date of extinction of the debt
• For current contracts, 3 months and 8 days after the contract expiry date

On the other hand, the “File of non-regulated registrations” contains defaults incurred by consumers for certain consumer credits, mortgage loans and other financial commitments which do not fall within the scope of application of the aforementioned law.

While the European Central Bank (ECB) is the central bank of the European Union (EU) and the Eurozone, is responsible for European monetary policy.

Among the ECB’s main responsibilities are managing the euro area’s currency and foreign exchange reserves, setting interest rates, and regulating and supervising euro area banks and financial institutions. The ECB also plays an important role in the management of public debt and financial stability in general in the Eurozone.

Registration at the Belgian national bank

As a reminder, in the event of failure to pay two monthly premiums, your financial organization will file the consumer’s file.

The consequence is important because the consumer will no longer be able to borrow before a period of 15 months after the regularization of his credit, that is to say the full payment of the sums borrowed.

How to get rid of the Belgian national bank?

To declare your withdrawal from the Belgian National Bank, you must complete a withdrawal form and return it to the Belgian National Bank. You can find this form on the website of the Belgian National Bank or by requesting it from your bank branch.

Here are the steps to follow to declare your display:

1. Download and print the screening form available on the website of the Belgian National Bank.
2. Complete the form with your personal information, such as your name, account number and address.
3. Sign and date the form.
4. Send the form by post to the following address: National Bank of Belgium, Bad Debts Department, Montagne du Parc 3, B-1000 Brussels.

It is important to note that you may be required to provide additional documentation to support your request for defilement. For example, if you have outstanding debts, you may need to provide a copy of your credit agreement or invoice.

It’s also important to note that deforestation does not erase your debt. You will still have to repay your debt, even if you are destitute. If you are experiencing financial difficulties, it is recommended that you contact your bank or a credit counselor to discuss your repayment options.

The work credit allows you to make the necessary renovations to a house. Whether it is to beautify it, enlarge it, make it more comfortable or optimize its energy performance, it is important to prepare your work file well to hope to obtain financing.

The file creation stage deserves all the attention, whatever the nature of the loan requested. Even if the borrower has the choice between the different forms of work credit available, he must not forget that the ideal loan is the one that best corresponds to his profile and his financial situation.

The essential documents to obtain a work loan

A carefully established work credit file is already a big step towards obtaining the loan.

Among the documents that must make up this file are:

1. the authentic deed, intended to justify that the building being the subject of the work actually belongs to the borrower. Most of the time, this is a property title or, failing that, an extract from the property tax roll issued by the competent authorities.
2. Copies of the identity cards of the debtors or guarantors, if they exist, must be attached to this file for a work credit.
3. It is also important to request a quote from the professional responsible for carrying out the planned repairs and attach this document to the file.
4. To complete the file, proof of the borrower’s income, that is to say the last three salary slips accompanied by a bank account statement, must be provided to the bank so that it can define the repayment capacity.
5. Finally, if there are outstanding loans, it is imperative to inform the credit organization by means of supporting documentation.

Other tips and recommendations

To help the borrower properly prepare their work file and compare the different offers, there are free online simulators including the one we offer on each page of our site. It will allow you to obtain all the details about your credit, including fees.

If the work to be carried out is significant, it is wise to use the services of an architect. This can, in fact, bring together all the quotes from several service providers and offer the best choice. It can also harmonize the various projects to avoid any loss of time and money.

It is also recommended to be present on the construction site as often as possible so that you can react immediately in the event of a problem. You must also remain very vigilant when receiving the work and not hesitate to express reservations.

For more information :

• Consult this page to discover our “work credit” product
• Also consult our article on the Breyne law

Yes, it is entirely possible for a resident of Luxembourg to apply for a loan from a Belgian bank. Whether it is consumer credit, car credit or mortgage credit, there are no particular constraints preventing this approach from being carried out.

Which address ?

Luxembourgers can contact CPE to find the credit that best meets their expectations. CPE has an agency in the Grand Duchy and another representation in Arlon. This proximity helps to reduce your travel and allows you to take out a loan in harmony with your projects and your real financing needs.

More information on our products

Do not hesitate to contact one of our credit brokers. He will be able to advise you on a loan adapted to your needs and your situation:

1. Consumer credit
2. Real estate loan
3. Credit for your mobility

You are looking for a small amount of credit to facilitate the purchase of everyday consumer goods or you simply want to have a cash reserve available at any time.

Revolving credit might interest you. A quick update on this common credit practice.

What is revolving credit?

Revolving credit is a credit facility that can be granted to you by a bank or by certain intermediaries such as supermarkets and who act – in a way – as a credit intermediary would do.

For what purpose?

Revolving credit is widely used for everyday consumer purchases such as high-tech purchases (computers, tablets, television, etc.) as well as for everyday consumer products (washing machine, etc.). This is why it is not uncommon for this type of credit opening to be offered in supermarkets.

What interest rate?

These credit openings generally concern fairly small amounts ranging from €1,500 to €5,000. It is in fact about financing everyday consumer goods. Under these conditions, the interest rates charged are generally quite high, that is to say exceeding 10%. In fact, the lower the amount borrowed, the higher the interest rate associated with the credit.

How does it work?

With a revolving credit, you have a credit opening for a specific amount that you can use each month. Let’s say you have a credit opening of €3,000 per month. This means that you will be able to withdraw €3,000 from this opening over one month.

Of course, you will have to repay each month, an amount which will be calculated in proportion to the amounts withdrawn plus interest. So, if you only spend €750 per month, your repayments will be calculated on this amount plus interest. Your credit opening is replenished every month.

You have several outstanding loans: a personal loan of €12,000, new car financing of €22,000 and a credit opening of €5,500.  What could be obstacles to your credit recovery?

You would like to group these 3 credits together in order to see your single monthly payment lower than the sum of the 3 separate premiums.

What could be the main obstacles to carrying out these credit redemptions ? 

What is credit redemption ?

The credit repurchase aims – in a way – to carry out a credit consolidation. In the example given below, you have three separate monthly payments to pay. By repurchasing the three current credit balances, you will only have one credit whose monthly payment will be much lower.

For what advantages ?

Firstly, from an administrative point of view, you no longer have to think about paying your three premiums each month to different people. By refinancing your loan, you only have one current loan and one contact.

Then, it is quite obvious that the accumulation of three separate premiums resulted in much higher repayments than if you only had one current credit, even if the amount of this credit is greater.

The main causes of refusal by a bank to repurchase credit ?

• You will undoubtedly experience difficulty obtaining a loan refinancing if you are already in a dispute situation, that is to say if you have not repaid your monthly payments on time. In this case, you will be registered with the National Bank of Belgium; 
• Your banker will analyze your debt ratio, which should never exceed 35 to 40% of your monthly income ;
• Your banker will take into account your credit repayment history ;
• Your banker will analyze the quality of the guarantees offered to protect yourself in the event of payment default.
• If you are married, both spouses must consent and sign the credit agreements.

You intend to take out a loan : consumer loan or mortgage loan. You would like to know the exact cost of your credit. The monthly premium that you will have to pay as well as the total amount of interest paid until maturity. Online credit simulation explained.

Our company provides you with a credit simulator which will allow you to know the exact amount of your premium depending on the type of credit you choose. Likewise, you will know precisely your APR as well as the total interest paid. You will therefore be able to know the total cost of your credit.

Credit transparency is the key element in the way we work.

Some explanations…

Our credit simulator

Visit our complete website and use our free credit simulator accessible on all our pages including the home page. You will also find an explanatory video which will allow you to optimize its use which is, moreover, very simple.

Thanks to these tools, you will be able to choose the credit that suits you, know the amount of your premium, the APR applied to your file, as well as the total amount of interest paid until maturity. You therefore know what you are committing to before subsequently signing your credit contract.

How does it work ?

Using our credit simulator is very simple. First, you choose your project : you borrow to buy a new car, to do renovation work, to buy a building or to obtain cash quickly. It is obvious that the interest rate is different depending on the nature of the use of the borrowed funds. Why?  Because your banker will have different guarantees depending on whether you are buying a building or whether you want cash to pay late bills, or to go on vacation.

Then you choose the amount you want to borrow. You then ask the simulator to calculate your monthly premium. You then have the possibility of modifying your request according to the amounts of your premium or the duration of your loan. In summary, you choose your credit card according to your wishes depending on whether the determining criterion for you is either the amount of your premium or the duration of repayments.

The advantages of express credit

Thanks to our simulator, you know precisely the total cost of your credit. Our simulator informs you about the APR, the amount of your monthly premium, the total amount of interest paid until maturity and therefore the total amount of the cost of your credit.

This information is also required by the law of June 12, 1991 on consumer credit. You will find this information on the website of the SPF Economy in terms of consumer credit.

The conditions

If you consider that the calculated premium is too high or too low, you can vary the amount of the premium to pay or the duration of your repayments. So you really choose the product that suits you and best fits your budget.

Submit your request online

You have found the credit that suits you. You can submit your request online by clicking on the “ send my request ”. Don’t worry, this is a simulation and you will not be hired until you have physically met our employees at our offices to sign your credit contract. On this occasion, you will ask useful questions to resolve any remaining concerns that you may still have.

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.

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