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Loans

Finally! You have found that one property you have been looking for. Everything feels right: location, functionality, size, view, interior etc. The initial euphoria is mostly tempered when the issue of price and finance is discussed. Buying or building a home is extremely expensive, which changes the rest of your life. Where can I get a loan? Can I afford a loan? Am I not paying too much interest? What formulas exist? Vitrine.be guides you through the jungle of mortgages.

Where do I get a mortgage

For many of us, a mortgage is a necessary evil. Sometimes we can perhaps get a loan from family or parents, but most of us get one from their financial institution. Banks and insurance companies, they probably all can offer you a good mortgage. But make sure you compare! You will find small differences in all these mortgages, for example in pricing or interest rates.

It certainly pays off to compare different banks and formulas..

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Mortgage

Money that you lend, will have to be repaid sooner or later. Naturally, there is a limit to the amount of the mortgage if you don?t want to get yourself into trouble. This amount is determined based on the value of the property and the money you can invest directly. It is very important to ask yourself if you can handle the mortgage

A rule which is often used is never to use more than 1/3 of your income on a mortgage. For example : you and your partner earn 3.023 Euro each month. You have a loan for the car which costs you 395 Euro per month. So 2.628 Euro remains available. From this you should use no more than 1/3 (or 876 Euro) to a mortgage. At an interest rate of 6% and a term of 20 years, you can get a mortgage of 123.946,76 Euro.

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Risk management

Usually people take a mortgage when everything is going well. This can change however! What in case you lose your job, you get sick, divorced or die?

Take these things into account before taking on a heavy mortgage. In any case get a "debt redemption" insurance. This insurance makes sure you don't have to worry about your mortgage in case one of the partners dies. The bank will then take care of 50% of the loan. Are you responsible for 80% of the family income, then rather get an insurance with a 80/20 split.

In any case, get the opinion of an expert before deciding.

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What kind of mortgage

Fixed interest rate

When choosing for a mortgage with fixed interest rate, you choose for security. This type of mortgage is more expensive, but you exclude unpleasant surprises. You know upfront how much you will have to pay each month, and this for the total term of the loan. There is however a downside: if interest rates drop you will pay too much. If this should be the case, you can get a revision of your mortgage, but this procedure is rather complex and expensive.

Flexible interest rate

You can of course also choose for a flexible interest rate. Right from the beginning, the payments will be lower than with a fixed interest rate. And when they drop, you will even pay less. The interest rate will be revised on a frequent basis..

Semi-fixed/flexible

This is a combination of the formulas mentioned above. Rates are fixed for a certain period of time (for example 10 years). After this period they will be revised. Fluctuations are more limited (both upwards and downwards) than with a mortgage with flexible interest rate, and the minimum and maximum are usually fixed upfront.

Revision of the interest rate

With mortgages with a flexible interest rate, it is determined at the beginning of the mortgage when the rates will be revised. This can be each year, every two or three years. You can also choose for a formula where the first revision is only after five or ten years. However, don?t forget: the higher the flexibility of the rates (for example yearly), the lower the monthly payments are, but the higher the risk!

Fixed or degressive redemptions

With the above mentioned formulas (fixed, flexible, semi) you mostly pay interest in the first few years. It therefore usually takes a few years before you see any progress. A mortgage with degressive redemptions means that your redemptions are higher in the beginning, but these amounts get lower the further your mortgages progresses. This is because you start paying back the capital from the start, rather than only interest. Do not underestimate the first few years of such a mortgage!

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Costs of a mortgage

When concluding a mortgage you have to pay some costs. Keep the following amounts in mind:

  • One-off bank fees for concluding a mortgage
  • Notary fees
  • Estimation costs
  • Insurance cost (depending on the amount)
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