Mortgage Belgium

Abstract:
Mortgage Belgium market has seen various changes taking place in the last couple of years. An individual opting for a mortgage loan should do so depending on his capacity of paying back the loan amount every month or within the stipulated time period assigned to him.
The article below enlightens us with some information about the mortgage market in Belgium. The capacity of repayment by an individual determines as to how much mortgage loan he may apply for. Repayment capacity depends on the individual’s income. It is ensured by the banks that the monthly repayment the borrower makes is not more than 40% to 50% of the borrower’s income.

In case of people with less income, this limit is restricted at 30% to 35%. In Belgium, majority of the banks are “conservative” and are therefore the amount of mortgage loan they can extend is restricted. Nevertheless, the banks do offer 100% of the property value.

In addition to income the parameters, which determine the bank’s willingness to lend include:

Occupation of the borrower
Status of employment, whether an employee or an employer
Age of the applicant(borrower)
Status of family.
Trends in mortgage Belgium market:
Advances in gross lending dropped to €32.5 billion from €35.5 billion in the year 2005. The decrease was by 8.4% in the year 2006. Despite the drop, growth in mortgage lending was sound between 2002 to 2006. The CAGR or the compound annual growth rate was 19.1%. During the same period(2002 to 2006). Growth in house prices increased significantly in the year 2005 achieving 17.4%. However, the growth was manifested in the urban areas. For instance, price of houses in Brussels in the year 2004 increased by 30% yearly.

All mortgage loans have a “*Conditions apply” clause:
A borrower applying for a loan ought to read between the lines, the reason being that low interest rates are not always desirable because interest rates may be low but there might be some hidden cost. The banks offering loans will always try to get their products sold. The other parameters, which an individual must pay attention to are:

Fee charged by the banks
Penalties for repayment
Lock in clauses.

Mortgage Belgium has the following two types of loans:

Bullet loans
Repayment loans

In case of the former, a borrower pays only the interest amount every month, the main amount or the capital amount is paid at the end of the loan tenure.

In case of the latter, along with a portion of the capital amount, the interest is also paid by the borrower every month. These are the most common types of loans in the mortgage market of Belgium.

Interest rates:
Fixed rates:
Under the fixed rate type of mortgage loan, the interest rate remains constant throughout the duration of the loan. The rate is usually decided by the bank. The maximum tenure of loan one may apply for is not more than 30 years.

Variable rate or semi variable rate:
The interest rate may hover around depending on the rates changing in the mortgage Belgium market.

Insurance:
The borrower should also be well aware of the insurance coverage pertaining to the mortgage loans applied for.

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Last Updated on : 24th August 2013