Becoming an owner when you are young is far from easy… Since 2020, purchasing a home requires having financial reserves to pay additional costs, which cannot be financed by banks. But what to do when you don’t have enough savings?
Rising property prices, rising interest rates, limitations on mortgage loans… Many obstacles stand before young people who want to buy their first house (or apartment). Even more so when they do not have their own funds to invest… What solutions are available to them?
Borrowing is not enough
When you buy real estate, you don’t just pay for its value. The necessary budget includes additional costs of varying degrees according to the Regions. Added in particular are registration fees (12.5%) or VAT (21%), notary fees, mortgage registration, etc. And if you borrow, you will also have to pay credit costs, insurance fire or even outstanding balance insurance.
“In Brussels and Wallonia, these costs amount on average to 15% of the sale price,” calculates the Federation of Notaries. “Unless you benefit from a reduced rate or a reduction. ” Good news! All first-time buyers who want to buy real estate benefit from this tax reduction. In Brussels, this represents a tax advantage on the first €200,000. In Wallonia, the reduction goes up to 40,000 euros. Enough to improve access to property for these young people, but not to guarantee it…
And for good reason: since January 1, 2020, the National Bank of Belgium limits the borrowed portion to 90%. This means thatyou must finance 10% of the total amount of the acquisition and related costs yourself. Money that few young people have…
Alternatives to the mortgage loan
In certain cases, banks can agree to exceed this quota: 35% of a bank’s portfolio must normally include loans that can be repaid at more than 90%. These above-standard credits are granted only to first-time buyers. So, 5% of credits can even exceed a 100% quota. But how do you get the money when that’s not the case?
1. Walloon Social Credit Society (SWCS)
In Wallonia, young people can turn to SWCS. This offers a mortgage loan dedicated to them, for the purchase or construction of a property with a fixed rate adapted to their income. The formula, called “Young loan”, consists of a mortgage loan with a duration of 5 to 30 years, with an annual reduction of 0.40% on the rate applied. Rates vary from 2.7% to 4.25% depending on the age and income of the borrower.
There are a few conditions to be met to be able to benefit from this credit:
- the borrower (18 years minimum) must be domiciled in Belgium
- he cannot be the full owner or usufructuary of another property.
- household income cannot exceed 69,400 euros (net taxable), increased by 5,000 euros per dependent.
- the purchased property must be located in Wallonia
- its market value cannot exceed 277,000 euros (374,000 euros for properties located in a real estate pressure zone).
2. Brussels Housing Fund
The Housing Fund of the Brussels-Capital Region also grants, mortgage loans with reduced interest rates which can reach up to 120% of the value of the property. In addition to the purchase price or the cost of construction of the home, the Fund’s credit can also cover certain costs such as renovation work or deed costs.
In principle, the maximum duration of the mortgage loan is 30 years, compared to 25 years for traditional bank loans. Rates vary between 3.25% and 5%. These are fixed, but, for first-time buyers, it is possible to have progressive monthly payments. This means that the monthly payment (and not the rate!) increases each year by a specific percentage, for example 1%.
The conditions to obtain it:
- You must reside permanently in Belgium.
- The amount of taxable household income cannot exceed €69,721 for single people or single-parent households and €88,736 for other households, all increased by 5,000 euros per dependent.
- You must not own any other property in Belgium or abroad.
- You must provide all the necessary information to make a decision on your credit application.
- You must become full owner of your property and occupy it for the entire duration of the loan.
- You must undertake to make and maintain the accommodation in compliance with the requirements of habitability, safety and health.
3. Mortgage allocation
To finance the entirety of a property, costs included, you must provide a guarantee to the creditor so that he agrees to lend the necessary sum. To do this, it is possible to use existing real estate assets. But what to do when you are a first-time buyer? Mortgage allocation is a possible option. In this case, a third party – usually the parents – can give the mortgage of one of its real estate for the benefit of the borrower – her child.
If later, the child carries out work that increases the value of the house, he or she will then be able to refinance the property under better conditions and lift the parents’ mortgage.
4. Take out consumer credit
Some financial institutions offer parents the option of consumer credit to pay, for example, their children’s notary fees. In some cases, it would even be possible to finance up to 125% of the purchase price.
Same principle as for the mortgage allocation: if the child carries out work and thus increases the value of the property, he will be able to refinance it and reimburse his parents.
5. Call a friend
A friend can lend the missing sum, through a contract, or act as guarantor with the bank. It will then be included in the mortgage loan, with economic interest. And will become the owner of at least 25% of the property. Later, when the first-time buyer has enough money, he can then buy the share from his friend.
6. Obtain a good at a reduced price
In Wallonia, and more precisely in Walloon Brabant, the Walloon Brabant Real Estate Promotion Agency (APIBW) offers properties that can be up to 30% cheaper than current real estate market prices. To have access to it, the conditions are quite strict. Same principle in Brussels: in certain neighborhoods, the organization Cidydev caps the price at €1,500 per m² and subsidizes on average 30% of the value of the property.
2024-04-05 23:51:07
#Buying #property #equity #unattainable #dream
