Bridge credit: principle and operation

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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Credit for “seniors”

Senior credit

It’s no secret that life expectancy has increased significantly thanks to advances in healthcare and it’s a trend that continues.

It is so true that in various European countries, governments are campaigning for the raising of the retirement age. The aging of the population certainly has a considerable impact in the world of credit and this is noticeable with the increase in credits intended for seniors. A quick overview

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The “Senior” mortgage loan: up to 90 years in arrears!

Something that was still impossible just 5 years ago: organizations allow seniors to borrow up to the age of 90 in arrears!

The duration of the mortgage loan must be one year at least and cover a sum of at least €30,000. This loan can thus allow seniors to do work on their house but above all… to help younger family members by taking out a mortgage on their house.

Liquidity credit

It’s obvious: you have to wait over the years to be able to treat yourself and the banks have understood this perfectly: financing a vacation, a trip, leaving a joint ownership, family debts, the death of a loved one, etc. .

Banks grant installment loans to increasingly older seniors. The conditions will be established on a case-by-case basis depending on the amounts borrowed, the duration of the loan requested and the guarantees offered.

What is revolving credit?

revolving credit

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.

How many signatures for a loan?

You are currently married and you would like to take out a consumer loan or a mortgage loan. Perhaps you would like to take out a loan alone or together. What are your rights and obligations when signing a credit contract?

Can I sign a consumer loan or mortgage loan alone or on the contrary am I obliged to sign with my husband or wife? An update on these important questions which essentially relate to the choice of your secondary matrimonial regime

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Some notions about matrimonial regimes

The matrimonial regime is a set of rights and obligations which will govern the personal and property relations of the spouses with each other and of the spouses with regard to third parties, particularly in terms of financial commitments.

The law distinguishes between the primary regime and the secondary regime:
The primary matrimonial regime

The primary matrimonial regime

This regime is provided for by law in the Civil Code and applies automatically and imperatively to all married couples in Belgium. It is therefore impossible to deviate from it. The primary regime essentially aims to define the rights and duties of spouses between themselves as well as to ensure the protection of the family’s main home.

The secondary matrimonial regime

This regime organizes the relationships between spouses and third parties, particularly from the point of view of financial commitments. We distinguish between the legal regime and the conventional regime.

The legal regime is the community regime. In this regime, the spouses remain the sole owners of the property and assets that they owned before their marriage. On the other hand, all property acquired during the marriage is presumed to be common unless the spouses declare otherwise. Likewise, goods received by inheritance remain owned as well as those made by declaration of re-employment following the sale of own property. In the absence of a secondary matrimonial regime chosen by the spouses during a marriage contract, it is this regime which will automatically apply to the spouses.

The spouses also have the possibility of deviating from this legal regime by adapting another form of secondary matrimonial regime during their marriage contract: example: the regime of separation of property or the regime of community reduced to acquets.

The application of matrimonial regimes to consumer credit

The primary regime

The primary regime defines some imperative principles:

  • Each of the spouses contributes to the expenses of the marriage according to their abilities;
  • Any debt contracted by a spouse for household needs and the education of children is common and jointly binds both spouses for all of their assets.

The legal secondary regime known as the “Legal Community”

In this regime, we distinguish three assets:

  • The husband’s own assets;
  • The wife’s own assets;
  • The joint assets of the spouses.

Each of the spouses manages their own assets alone except with regard to the own building assigned to the family’s main residence (the owner spouse must have the agreement of his or her spouse);
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Common property meets the principle of concurrent management, that is to say that each of the spouses can carry out an act alone and carry out all management acts. However, the debts contracted by each spouse in the interest of the family are common and they involve all three assets.

There are exceptions to the principle of concurrent management: certain particularly important management acts require the signature of both spouses:

  • Take out a consumer loan;
  • An installment purchase;
  • The purchase, sale, mortgage of a building;
  • The assignment, pledging, lifting, receipt of repayment of a mortgage debt

In summary regarding the legal regime

  • Each spouse can carry out daily activities alone for the needs of the household or the education of the children. thus, a spouse can take out a loan alone intended for household needs and the education of the children;
  • In practice, however, credit institutions and companies will require the signature of both spouses;
  • In any case, the debt is common and recoverable across all assets;
  • In terms of consumer credit, installment purchases, mortgage credit: joint signature is required with no exemption possible.

The conventional secondary regime for the separation of property

In principle, each spouse can act alone for the management of their own assets. On the other hand, all establishments and credit companies will require the signature of both spouses to avoid subsequent discussions regarding the nature of the debt intended or not for the needs of the household and the education of the children.

For more information, we invite you to contact our brokers.
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Financing a car with residual value

When considering car financing, you should ask yourself whether you want to finance all or part of the acquisition of your new vehicle. Le financement partiel voiture est mieux connu sous l’appellation financing with residual value at the end  of the contract. This choice will have incidents which we briefly analyze below.

Does car financing with residual value apply to used vehicles ?

In principle no because the residual value is paid in terms of the contract after 4 or 5 years. This payment therefore excludes the possibility that it could be a used vehicle which has already lost its market value after a few years.

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What is residual value financing ?

Financing with residual value is therefore partial financing of the price of the car. Thus, the borrower only borrows 60% of the value of the car and at the end of the contract, he will have to pay the residual value, therefore the balance, in one go. In general, the residual value is set at 40% of the value of the purchase price of the car.

Which is the most interesting formula : borrow in full or borrow with residual value ?

This is a question that many people ask us, but in reality the question is not posed in these terms. It is quite obvious that someone who borrows the entire value of a vehicle of €45,000 to be repaid in 5 years will pay a higher monthly payment than someone who borrows €27,000 for the same vehicle with a residual value at the end of the contract. €18,000 (i.e. 40% of €45,000). The latter will have a lower monthly payment for 5 years but he will have to pay at the end of the contract in one go, the residual value of €18,000. However, not everyone is able to pay €18,000 in one go.

So who is interested in taking out car financing with residual value ?

The Car financing with residual value is ideal for borrowers who resell their vehicle at the end of their credit contract after 4 or 5 years, i.e. those who change vehicles every 4 or 5 years. Indeed, in this case, this borrower will only finance 60% of the value of the vehicle during the life of his credit contract and therefore his monthly payment will be lower than if he had borrowed the entire value of the vehicle and at the end, he resells the vehicle to a third party or to a garage and then reimburses the residual value of 40%. We therefore understand why this formula is perfectly suited to the acquisition of a new, quality vehicle which will retain a good residual resale value after 4 or 5 years.

Conversely, anyone who intends to keep their vehicle for more than 5 years has a much greater interest in financing the total price of the vehicle’s value.
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What are “conditions precedent”?

Principle of suspensive conditions

These are clauses indicated in the commitment of sale< which  condition the birth of the legal effects of the contract of loan / mortgage credit  on the fulfillment of one or more conditions stipulated concretely in the notarial deed. The condition in this case being obtaining the bank’s agreement. It is therefore above all a protection for the future buyer in the event that his credit request is refused by the banking organization.

Thus, when you sign your sales agreement, it will be subject to the  suspensive condition  that you obtain your loan / mortgage credit within the time limit set when signing the sales agreement before the notary or with the real estate agency.

Concretely this means that if you do not obtain your loan/mortgage credit within the agreed deadline, it is void (cancelled) unless you obtain an extension of the deadline to obtain your mortgage loan/credit.

In this case, things are returned to their original state and each party to the sales agreement is released from their obligations. The seller could thus agree to sell his property to another candidate buyer who would sign a new notarized sales agreement.

At the Crédit Populaire Européen, we are committed to giving you a quick response so that you can notify the seller as quickly as possible.

Mortgage credit: property foreclosure!

property foreclosure

Obviously, signing a mortgage loan to purchase a house is a happy event, synonymous with change and accomplishment. However, if you do not repay your monthly payments, the bank may have to seize your building. So be careful not to have to go to such extremes! Our lawyer will inform you about the different stages of a property foreclosure.

Prior warning

In the event of late or non-payment of a monthly payment, the bank must, within three months of the due date, send the borrower a warning sent by registered mail setting out the consequences of non-payment.

In the event of non-compliance with this obligation, the contractual increase in the interest rate for late payment cannot be applied to the said due date. In addition, for this deadline, a payment period of six months without additional fees or interest must be granted to the borrower. This period will begin on the day of the unpaid due date.

If the formality is respected, the bank may demand an increase in interest and resort to early repayment of capital. However, this total early repayment of the amount borrowed can never take place due to the actions of the lender.

Attention ! The lending organization is required to communicate any non-payment to the Central Individual Credit Office as soon as an amount has not been honored within three months after its due date or an amount has not been paid within the months following the sending of the warning.

Attempt at conciliation

The law provides, under penalty of nullity, that an attempt at conciliation must take place before the Foreclosure Judge at the initiative of the lender, at the latest within 15 days of notification of the prior order to pay.

This mandatory step will aim to allow the borrower in difficulty to request payment facilities and, if necessary, to plan again for the future.

Real estate seizure and execution

The seizure of real estate must be preceded by an order, served by bailiff’s writ. This order will be valid for 6 months and the seizure can only be made 15 days after the order. The law provides for a period of 15 days in the event that conciliation is successful between the parties. At the end of this 6-month period, the bailiff will be able to carry out the seizure which will be transmitted to the Mortgage Office. Within the month of the seizure being transcribed, the Judge will appoint a notary responsible for proceeding with the auction of the seized property, at the latest within 6 months of his appointment.

Opposition to a real estate seizure and execution must be filed, under penalty of forfeiture, within fifteen days from the date of the order or the first act of seizure served by the creditor to the debtor.

When faced with a repayment problem, focus on dialogue in order to find an amicable solution with your lender, such as granting payment facilities or extending your loan.

Because as the saying goes: “A bad settlement is better than a good trial”.

Financing your university studies

student

The school and university holidays are in full swing and with it, some parents are already considering their child’s next registration at university from the beginning of September.

Financing a university education is the wish that many parents make for their children. This transition into family life will necessarily generate significant costs and for some parents, this means taking out a loan. What exactly does a university year cost? Let us take stock of this important question which will not fail to interest many parents faced with the first registration of their offspring in a faculty in Belgium

A university degree: a necessity?

It all depends on the professional career that the young person wants to pursue. Certain professions necessarily require a compulsory passage through university, while other choices can be achieved through training in higher education or technical training.

Currently, we are also seeing shortages for traditional professions (plumber, masons, baker, etc.) while university courses are sometimes congested by a large number of students.

It is therefore entirely possible to earn a good living by opting for traditional training. Ultimately, it is the attraction to a profession rather than any other criterion that should guide the young person.

What does a university year cost?

There are several studies in Belgium on this subject and it seems that there is a consensus on this subject between the different universities: the average cost of a university year for a person who lives alone is €10,000.00.

For example, the average cost of a room is €270 per month or €3,240 for a year. Some websites are rich in information on the ordinary cost of living at university. Some universities also provide you with very precise information on the cost of student living on their campus: consult it, this will allow you to have a good idea of the budget and pocket money that you should allocate to your children.

What are the factors that influence the cost of university living?

There are many parameters that can vary the cost of a year at university. Let’s cite a few that could guide you in your choices:

  • Renting a student room or continuing to live with parents during studies if the faculty is close to the family home;
  • Request the allocation of a scholarship when this right is possible;
  • Renting a room with shared amenities (community) or renting an individual apartment (the rent can then rise considerably);
  • Go to your campus by public transport, carpool or purchase a car by parents;
  • Investments in ancillary training (We immediately think of language laboratories);
  • Some students look for jobs to increase their pocket money;
  • Etc…

Financing children’s university studies

For many parents, this financing will necessarily involve taking out personal credit.

Example of personal credit to finance a child’s studies:

Amount APR Duration Prime mens. Total cost
10.000 € 9,95 % 24 months 459,25 € 11.022 €
15.000 € 9,95 % 24 months 688,88 € 16.533 €

How to invest in the stock market?

How to invest in the stock market You have surely noticed that the money that is deposited in your savings account no longer earns you almost any annual interest. The average interest rate of all banks in Belgium is close to 1%, including the annual loyalty bonus. Skinny all the same…

When we know that inflation is around 2 to 3% on average each year in Belgium, you will have understood that the money sitting in your savings account actually costs you more than it saves you. pays off to the extent that it depreciates more quickly than it earns you interest. A terrible observation!

Is there a way to get interest on your money? Contrary to what the banks tell you, there are many financial investment solutions. Follow the guide through this (too) succinct article.

Money that sleeps is money that depreciates

Only leave money in your checking and savings account that you absolutely need. In general, it is recommended to leave the equivalent of six months’ salary unless you know that you will have to face a major expense in the coming weeks or months.

You hate risk and are ready to lock in your savings for 3 to 10 years

So you might be tempted to block your savings in a term account. If you agree to block your savings for a period of 10 years, some banks will grant you interest of almost 4% gross.

The principle of the term account is that you cannot move your savings. It is however possible to do so under certain conditions but you will then in principle lose the benefit of your investment.

Invest in stocks

You can decide to buy shares of companies listed on the stock exchange. Only invest in the stock market if your knowledge allows you to do so and if you are certain that you can devote time each week to follow financial news in general and more specific financial news relating to your investments. There are some very good financial magazines that can help you familiarize yourself with the financial markets. Take the time to read reviews every week for at least 6 months before making your first investments.

We can recommend the magazine L’Investeur de Test Purchase and Initié de la Bourse

Do not take this advice as gospel. Make up your own mind and take the time to think carefully about your investments.

Equity investments in recent years have yielded more than 10% capital gains per year. Finally, we must not forget that certain companies distribute dividends which can sometimes reach more than 7% gross, such as Belgacom, Telenet, Bpost, etc.

This return adds well to the evolution of the stock price.

Investing in stocks always represents a significant risk and you must be sure to accept fluctuations in your investments. There will be years of regression or even crash and positive years. On average over the last 50 years, the equity investor has obtained a positive net return on investment of 5%.

Is it enough to counterbalance your stress? Up to you…

Investing in bonds

A bond is a loan issued by a company that earns you a fixed annual interest. Bond prices vary less than those of stocks but contrary to popular belief, prices also vary and bonds are not financial products devoid of all risk.

The principle of a bond is to earn you annual interest and to repay your capital at the maturity of the bond except in the event of bankruptcy of the company.

The bonds benefit from a rating on which the interest rates will essentially depend. Ratings range from AAA to D.

Again, depending on the risks that the investor is willing to take, interest rates are higher or lower. Thus an AAA bond will yield around 1.5% net while a BB- bond can carry annual interest of nearly 6 to 7% gross.

These financial products can be very interesting investment instruments. For more information on bond products, we recommend the website of the stockbroking company Goldwasser Exchange.

Three essential basic principles

Do you want to enter the financial markets? Very good, but never lose sight of these three essential fundamental principles:

  1. Don’t invest money you don’t need right away;
  2. Have an investment horizon of at least 3 to 5 years;
  3. Diversify your investments: diversification is essential so as not to centralize all the risks in a few financial products.

Discretionary or personal management?

All major banks will provide you with a personal banker. They will offer you discretionary management, meaning that an investment specialist will manage your investments while respecting your prerogatives.

We personally believe that if you are able to manage and know the products you purchase, you will have more satisfaction in assuming your risks yourself. Of course this last solution requires knowledge, time and…endurance to stress.

More information on www.cpe-credit.com

How to invest in the stock market You have surely noticed that the money that is deposited in your savings account no longer earns you almost any annual interest. The average interest rate of all banks in Belgium is close to 1%, including the annual loyalty bonus. Skinny all the same…

When we know that inflation is around 2 to 3% on average each year in Belgium, you will have understood that the money sitting in your savings account actually costs you more than it saves you. pays off to the extent that it depreciates more quickly than it earns you interest. A terrible observation!

Is there a way to get interest on your money? Contrary to what the banks tell you, there are many financial investment solutions. Follow the guide through this (too) succinct article.

Money that sleeps is money that depreciates

Only leave money in your checking and savings account that you absolutely need. In general, it is recommended to leave the equivalent of six months’ salary unless you know that you will have to face a major expense in the coming weeks or months.

You hate risk and are ready to lock in your savings for 3 to 10 years

So you might be tempted to block your savings in a term account. If you agree to block your savings for a period of 10 years, some banks will grant you interest of almost 4% gross.

The principle of the term account is that you cannot move your savings. It is however possible to do so under certain conditions but you will then in principle lose the benefit of your investment.

Invest in stocks

You can decide to buy shares of companies listed on the stock exchange. Only invest in the stock market if your knowledge allows you to do so and if you are certain that you can devote time each week to follow financial news in general and more specific financial news relating to your investments. There are some very good financial magazines that can help you familiarize yourself with the financial markets. Take the time to read reviews every week for at least 6 months before making your first investments.

We can recommend the magazine L’Investeur de Test Purchase and Initié de la Bourse

Do not take this advice as gospel. Make up your own mind and take the time to think carefully about your investments.

Equity investments in recent years have yielded more than 10% capital gains per year. Finally, we must not forget that certain companies distribute dividends which can sometimes reach more than 7% gross, such as Belgacom, Telenet, Bpost, etc.

This return adds well to the evolution of the stock price.

Investing in stocks always represents a significant risk and you must be sure to accept fluctuations in your investments. There will be years of regression or even crash and positive years. On average over the last 50 years, the equity investor has obtained a positive net return on investment of 5%.

Is it enough to counterbalance your stress? Up to you…

Investing in bonds

A bond is a loan issued by a company that earns you a fixed annual interest. Bond prices vary less than those of stocks but contrary to popular belief, prices also vary and bonds are not financial products devoid of all risk.

The principle of a bond is to earn you annual interest and to repay your capital at the maturity of the bond except in the event of bankruptcy of the company.

The bonds benefit from a rating on which the interest rates will essentially depend. Ratings range from AAA to D.

Again, depending on the risks that the investor is willing to take, interest rates are higher or lower. Thus an AAA bond will yield around 1.5% net while a BB- bond can carry annual interest of nearly 6 to 7% gross.

These financial products can be very interesting investment instruments. For more information on bond products, we recommend the website of the stockbroking company Goldwasser Exchange.

Three essential basic principles

Do you want to enter the financial markets? Very good, but never lose sight of these three essential fundamental principles:

  1. Don’t invest money you don’t need right away;
  2. Have an investment horizon of at least 3 to 5 years;
  3. Diversify your investments: diversification is essential so as not to centralize all the risks in a few financial products.

Discretionary or personal management?

All major banks will provide you with a personal banker. They will offer you discretionary management, meaning that an investment specialist will manage your investments while respecting your prerogatives.

We personally believe that if you are able to manage and know the products you purchase, you will have more satisfaction in assuming your risks yourself. Of course this last solution requires knowledge, time and…endurance to stress.

More information on www.cpe-credit.com