I want to get a mortgage

Verified 15 July 2022 - Directorate for Legal and Administrative Information (Prime Minister)

If you want to finance the purchase of your home or its construction (with or without the purchase of the land), you can apply for a real estate loan. If the bank accepts your request, it will send you a loan offer. Before accepting the offer, you will have to respect a cooling-off period. But you can choose to decline the offer. Here are the steps to follow.

A mortgage must finance the realization of a real estate project. This may include one of the following projects:

  • Purchase building land
  • Building a home
  • Buying a home
  • Purchase a home and carry out repair, improvement or maintenance
  • Buying shares of real estate businesses

Total amount to be financed

You must determine the total amount of the real estate transaction to be financed, adding the following costs:

Amount of your savings

To know the amount of your savings, you must add up the following amounts:

You can use all or part of this total amount to partially finance your real estate project.

This amount will then be called personal contribution.

Borrowing capacity

To determine your borrowing capacity, you need to consider the following:

  • Interest rate of mortgage credit
  • Cost of Borrower Insurance
  • Desired loan term
  • Monthly payments you want to repay

You can do this using a calculator:

Mortgage calculator (estimate borrowing capacity)

Please note

  • your borrowing capacity may be limited by your effort ratio which, in principle, must not exceed 35% of your income per month.
  • if you already have credits, it may also be useful to calculate your debt ratio. You can do this using this computer.

For the same real estate project, the proposal made by one bank may be different from that made by another bank (difference on the interest rate in particular). But each bank takes your income into account when deciding what to offer.

Duration

The duration of a mortgage is variable. It is usually negotiable with the banker.

In general, the term of a mortgage should not exceed 25 years.

Interest rate

The interest rate is defined by the bank. These may be:

  • Or a fixed rate (this rate does not change throughout the term of the loan, unless you commit to a renegotiation or repurchase of your credit during the repayment of your credit)
  • or a revisable rate (this rate varies according to the evolution of a reference rate, for example the euro area interbank rate).

For the same real estate project, a bank can offer you a mortgage with an interest rate different from the proposal of another bank. You are free to go to several banks to compare their proposal.

Warning  

you have to compare the annual percentage rate of charge (APR) of each proposal, not just the interest rate.

Warranty

The bank may require you to have a guarantee, which will allow you to pay your monthly credit payments if you have trouble doing so.

It can force you to:

Borrower Insurance

The bank may require you to take a borrower insurance. In that case, it shall also determine the risks to be covered by that insurance.

However, they can't force you to choose the insurer. You can choose yourself who will insure you under the conditions set by the bank.

The insurance of the loan may concern in particular death and disability or the loss of employment.

Domiciliation

The bank cannot require you to domesticate your business income (e.g. salaries) at the bank, nor can it penalize you if you choose another bank to domesticate your business income.

The bank can offer you the domiciliation of your income, in return for advantages (reduction of application fees for the loan, free bank card...).

There is the "classic" bank loan and regulated loans.

The regulated loans have advantages (reduced fees, without interest rate...), but they are granted only under certain conditions (maximum amount of income, nature of the real estate project to be financed...):

A "classic" mortgage or a regulated loan can be associated with a complementary loan.

One complementary loan is a loan that is granted only in addition to another loan or for a maximum amount. Supplementary loans shall be granted by Housing action (1% housing), pension funds, mutual funds...

Preliminary actions of the bank

Before making a loan offer, the bank must meet certain obligations:

  • Inform you about the consequences of taking out a loan, including risks of debt distress
  • See the Personal Credit Reimbursement Incident File (PPIF)
  • Assess your creditworthiness. To do this, it takes into account your financial situation (income, savings, expenses, debts). She should check that your debt ratio (the share of all your monthly credit and credit insurance payments in your monthly income) is not higher than 35%.

You can estimate your debt ratio using a calculator:

Debt calculator

Sending the offer

If the bank accepts your loan request, it must send you a loan offer free of charge, to you and to your eventual surety.

This offer must be accompanied by the European Standardized Information Sheet (ESIS).

Content

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Fixed rate loan

The loan offer must contain, in particular, the following information:

  • Name of the bank, your identity and that of your possible surety
  • Nature of the loan (agreed loan, zero-interest loan or traditional bank lending, for example)
  • Purpose of the loan (purchase of a new or old apartment, construction of a house...)
  • Date when funds will be available
  • Amount of the loan, its interest rate and sound annual percentage rate of charge (APR)
  • Guarantees required
  • Conditions for transferring the loan to another person
  • Mention that you can to take out insurance with the insurer of your choice
  • Schedule (damping table) detailing, for each monthly payment, the part allocated to the repayment of the principal and the part devoted to the payment of interest

If the bank offers insurance, it must attach an information notice setting out the characteristics of the insurance. It may not change without your agreement the guaranteed risks, the insurance rate or its operating rules as set out in the contract.

Floating rate or revisable loan

The loan offer must contain, in particular, the following information:

  • Name of the bank, your identity and that of your possible surety
  • Nature of the loan (agreed loan, zero-interest loan or traditional bank lending, for example)
  • Purpose of the loan (purchase of a new or old apartment, construction of a house)
  • Date when funds will be available
  • Information document (indicative) containing a simulation of the impact of a change in this rate on monthly installments, the duration of the loan and the total cost of the loan
  • Amount of the loan, its interest rate and sound annual percentage rate of charge (APR)
  • Guarantees required
  • Conditions for transferring the loan to another person
  • Mention that you can to take out insurance with the insurer of his choice
  • Notice setting out the terms and conditions of the change in the interest rate

If the bank offers insurance, it must attach an information notice setting out the characteristics of the insurance. It may not change without your agreement the guaranteed risks, the insurance rate or the operating rules set out in the contract.

European Standardized Fact Sheet (ESIS)

The European Standardized Information Sheet (ESIS) is a document to be used by the bank offering a mortgage.

Each bank must give you its own, free of charge, in writing, at the latest when it issues its loan offer.

This document must contain the main characteristics of the mortgage offered, its repayment terms, its interest rate. This information must be given in a prescribed form.

As a result, this document facilitates the comparison of loan offers made by different banks and allows the analysis of the impact of each loan offer.

Reminder

For the same real estate project, a bank can offer you a real estate loan with a interest rate different from another bank's proposal. You are free to go to several banks to compare their proposal.

The annual percentage rate of charge (APR) allows you to compare multiple loan offers according to their total cost, provided the amount borrowed is the same (because APR is expressed as an annual percentage of the amount borrowed).

For each loan, the APR shall take into account in particular the following elements:

  • Interest rate
  • File Fees
  • Fees paid or due to intermediaries involved in any way in the granting of the loan
  • Cost of borrower insurance
  • Cost of guarantees (mortgage or surety charges)
  • The cost of valuing the property, excluding registration fees related to the transfer of ownership of the property
  • All other charges imposed on you to obtain the credit (opening a bank account, ...)

FYI  

for a loan financing the purchase of a dwelling under a sale in the future state of completion (Véfa), the intercalary interest shall not be taken into account in the calculation of the APR.

Credit institutions shall indicate the APRC in their advertisements, credit offers and loan agreements. The APRC for loans offered by credit institutions shall not exceed wear rate. It exists multiple wear rates, depending on the amount borrowed and the duration of the loan.

Reflection period

You must meet a minimum reflection period before accepting the loan offer, i.e. return it by post to the bank.

This period is 10 calendar days. It cannot be reduced. It starts the day after you receive the offer. You can return the offer to the lender as early as the 11the day by signed and dated mail.

Example :

Loan offer received on 1er February can only be accepted from 12 February.

Until acceptance of the offer, the buyer must not receive any payment from the bank.

FYI  

it is possible to provide a means other than postal mail to make the date of acceptance certain (e.g. mail).

Duration of validity of the offer

The bank must maintain the terms of its loan offer for a minimum of 30 years calendar days, from the moment you receive it.

No disbursement of funds may be made before the end of the reflection period.

When the operation takes place with the intervention of a notary, the funds are generally released on the day of the signature of the deed before the notary.

For the financing of works, the funds are released by the bank in one or several times according to the timetable provided in the offer.

To finance a construction or a purchase on a plan, a schedule can be negotiated with the builder. In this case, the funds are released according to this schedule.

FYI  

the release of funds in several installments creates intercalary interest.

Once set up, you must repay your credit according to the financing table established by the bank.

You can make a prepayment.

In the event of difficulties in repaying the loan, different approaches are possible.

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