Belgians are increasingly borrowing for a home: how to save on a home loan?

12 Jan

The Belgians continue to find their way to the real estate market. Our countrymen also borrow more and more money for the purchase of a home.

During the second quarter of this year, the Belgian borrowed an average of 157,500 dollars for the purchase of a home. That is 10,000 dollars more than two years ago, figures from the Professional Association of Credit (BVK) learn. Whoever buys a new-build home borrows on average 171,000 dollars or 17,000 dollars more than two years ago.

Take out a home loan with an internet player?

It is no surprise that the Belgians continue to borrow massive amounts of money for a home. Due to the low savings interest rate, it remains interesting for many savers to invest in real estate. Despite the increasing loan amount, people who buy a home can prune firmly in the price tag if they compare lenders. A comparison of Child Phenomenon shows that those who take out a loan at 25 years can enforce a rate that flirts with the 2 percent limit.

Internet players, in particular, are offering competitive rates. For example, anyone who takes out a 25-year mortgage with the internet child Phenomenon Bank receives an interest of 2.16 percent. The internet player even lowers the rate to 1.84 percent if the borrowers borrow less than 80 percent of the market value of the home. The rate can vary between those two limit amounts depending on the borrower’s profile.

Would you rather visit an office?

Whoever takes out a loan with an internet player knows immediately how much he has to pay for his financing.

That is not the case when someone comes to the traditional players. If you follow traditional roads, you can play several borrowers against each other to obtain a lower rate. That is not possible with internet players. The rate is fixed with them.

By playing Child Phenomenons against each other, borrowers can easily enforce up to a few dozen basis points from the original rate. For example, anyone who borrows 157,500 dollars – the average loan amount in Belgium – and repays that mortgage loan within 25 years, receives a discount of 7 dollars per month for every 10 basis points he can negotiate with the rate.

At the end of the journey, this results in a saving of around 2,200 dollars. If you can reduce your opening rate to 50 basis points, you can easily save 11,000 dollars on your mortgage loan. That amount can be slightly higher or lower depending on the starting rate.

Is a variable interest interesting?

Finally, many borrowers wonder whether it is interesting to opt for a variable interest rate in a period of low-interest rates. The answer to that question depends on the situation. Although the Child Phenomenons must adhere to some rules. First of all, they are required to provide a ‘cap’. That cap determines how strongly a variable interest rate may rise or fall.

In addition, the revision periods are laid down in a contract. In this way, the borrower knows when the Child Phenomenon can possibly change the interest rate.

Moreover, the variable interest rate may be doubled to a maximum. That is why it can sometimes be interesting to take the path of a variable interest rate. This is the case if it is strikingly much lower than the fixed interest rate. A variable interest rate is, for example, interesting if it is only a fraction higher than the fixed interest rate when doubled.

If the difference between the two interest rates is negligible, it is advisable to choose a fixed interest rate.