Since confinement, real estate has been hit by many shocks. Prices rose dramatically and today interest rates are starting to rise again after a long period of stability. All this leads families (especially young people) to no longer dare to embark on the adventure of buying real estate. However, it is a key sector, not only to ensure aging, but also to benefit from a nice added value after only a few years.
Hugues Vandenbosch explains that “the biggest obstacle to buying, before it is financial, is information.” Most people have no reaction to consulting a mortgage broker, but they go to their regular bank to apply for a loan. However, brokers take advantage of exceptional circumstances that banks do not have access to. It should also be noted that “premium” brokers, such as BHE, benefit from additional terms, such as more attractive interest rates, or 100% loan financing (or more) as long as another property (such as the parents) places the collateral.
First solution: “Hybrid” system
An interesting formula, which you will find with most brokers, is the “hybrid system”, which can be defined as two-tiered financing: part of the loan is then repaid in fixed (conventional) monthly installments, while the second part is repaid in point credit (the Pay the full amount at the latest at the end of the loan and interest is paid only in the meantime). Thus, the owners have 20 to 25 years, on average, to save, inherit, use pension insurance… There is also the potential to buy back credit in conventional credit, perhaps when rates are lower.
So it is a solution that offers tremendous flexibility. In addition, some potential buyers are forced to use this trick in order not to exceed the DTI (Expense / Income Ratio). “In the beginning, however, this allows the owners to reduce their monthly payments and maintain a good pocket income …”
A small practical example: Mr. and Mrs. Bernard want to take out a loan of €400,000, representing 90% of the total credit. They chose a period of 25 years (300 months). By contracting full credit in fixed monthly payments, they will pay 2074 euros per month, while with a mixed formula (70% credit in fixed monthly payments and 30% point credit), they will pay only 1835 euros per month.
The second solution: the gradual system
This “step-by-step” system, as its name suggests, consists of a gradual monthly payment, allowing you to start with a small amount at the beginning of the loan, which will escalate over the years. This allows young families to pay off their property while increasing their income. However, if the credit burden becomes too heavy after a few years, it will always be possible to find another formula along the way with our office. The world of credit is more flexible and resilient than people think. On the subject, note that the latest statistics on the duration of credits in Belgium are around seven or eight years. “Most people take out a loan for 20 or 25 years thinking things are fixed, but life is more changeable than that: divorce, moving abroad or just wanting to change, the numbers speak for themselves… and for this reason, it is essential to remain flexible. The way you look at credit.”
Third solution: property as collateral
For young people who do not have savings and need to borrow more than 100% of the purchase amount, BHE offers an exclusive solution. “If the parents, or someone else in the family, agrees to offer a home as security, it is possible to borrow the full purchase price + notary fee. An option that is extremely rare in the banking market, but offered by BHE on demand.
BBB. Somzée office. Rue de Tarcienne, 5b in Walcourt (Somzée). 41 41 21 071.
La Louvière office. rue Parmentier, 1 in La Louvière. 064 44 92 00. Information: www.bhe.be