Getting a mortgage loan in 6 steps

Are you planning to buy a house or apartment? Then a mortgage loan or home loan is essential. What is it? How do you prepare? How much can you borrow? How much does it cost? What is the process? Find here a lle what you need to know about the mortgage loan.

What is a mortgage loan?

A mortgage loan is a loan you use to finance your house or apartment. Characteristics of the mortgage loan:

You will receive the sum of money when the notarial deed is executed.
You pay back the loan amount and interest in installments or all at once.
Your house or apartment serves as collateral. This means that the company lending you money owns the property. The company will repossess your property if you don’t repay.

Step 1: Preparations

Buying a house or apartment is an exciting step in your life, but it may also be financially challenging. Fortunately, mortgage loans help you get your dream home.

Calculate the purchase cost of the property

The better you prepare yourself, the better banks and loan brokers will tailor their mortgage loans to your situation. Do you have a concrete property in mind? Then make sure you have an overview of all costs and hidden costs when buying a property and any future renovations. Read our article: What costs when buying a house or apartment? Want to know how much you can borrow before you start looking for a house or apartment? Simply make a no-obligation appointment for advice at a number of banks and/or loan brokers. You don’t even have to have your eye on a house yet. The banks and loan brokers will guide you in your search for the right property. Does buying a house or apartment seem unfeasible? Check if you meet the conditions for buying a social home or conditions for renting a social home.

Compare loans

Compare as many financial institutions as possible in advance. Each financial institution has different terms and services. This way you know which banks are interesting and where you want to make an appointment. Your own bank usually gives you slightly more benefits, but this is not the case in every situation.

Compare mortgage loans in terms of:

interest rates.
How much you are allowed to borrow.
How long the loan runs.
How you may and will pay off the loan:
- Fixed mensualities: you pay the same amount every month.
- Fixed capital repayments: you pay a decreasing amount each month.
- Fixed term: you pay back only interest each month. At maturity, you pay back the capital in one lump sum.
- Variable linear capital repayments: you pay a personally customized amount (the amount fluctuates).

Finding it overwhelming to compare this yourself? Then knock on the door of independent, licensed credit and insurance brokers and financial advisors recognized by FSMA. Examples are: Mortgage Store and Immotheker Finotheker.

How much can you borrow?

The amount of your mortgage loan depends on:

Your own monthly income and the income of your (future) cohabiting or married partner.
Your own deposit (from yourself and partner).
The appraisal report of your intended property.
Your desired loan amount, relative to the estimated value of the home.
your desired duration.
Your preferred method of repayment.
Your estimated costs for remodeling plans (if applicable).
whether you have a chance at subsidies or incentives, such as interest rate subsidies on renovation loans or free Insurance Guaranteed Living.

Follow these 2 pieces of advice:

Spend no more than 33% of your monthly net income on mortgage expenses. This ensures that you remain financially comfortable and have sufficient funds left over for other expenses.
Borrow enough money so that you can pay for all costs when you buy. Read our article: What costs when buying a house or condo?

Calculate your mortgage loan: calculator

Simply use a calculator on one of the websites below. Note: The results of these calculators are estimates and are non-binding.

How much does a mortgage loan cost?

All costs when taking out a mortgage loan:

Your loan amount: The amount you may borrow from the bank.
Your interest rate: The amount you owe the bank for providing the loan.
Administration fee: Cost of the bank processing your loan application and preparing the necessary documents.
Notary fees: Costs of the notary who drafts your mortgage deed and registers your mortgage deed with the land registry.
Appraisal or valuation fees: Cost of licensed appraiser who estimates the value of the house or apartment.
Registration fees: Cost of the notary who registers your mortgage with the Mortgage Registry.
Insurance premiums: Fire insurance and debt balance insurance.
File fees: Fees from the bank that creates and manages your file.
Advisory and brokerage fees: Possible costs of the mortgage advisor or broker. Although nowadays advice is often free.

Step 2: Make a no-obligation appointment

Ready to know exactly how much you can borrow, or klaar to take your search for a house or apartment more concrete? Make an appointment with the bank or licensed loan broker. You can find a lot of information online, but banks and loan brokers offer answers to your specific situation.

What do you bring?

Do you have your eye on a property or even have a property already under option? Then make an appointment with a bank or loan broker. In that case, bring these documents with you (if applicable):

Your identity card or passport
Your marriage contract or divorce certificate
Your 2 most recent pay slips (max. 3 months old) or proof of replacement income
Proof of sale: sales agreement or the online advertisement of your proposed property
Appraisal report of your proposed home prepared by a licensed appraiser (max. 1 year old)
Energy performance certificate (EPC) of your proposed home
Proof of (re)building (construction) plans: bids, invoices, building permit
Proof of other current loans (e.g., car loan)
Proof of own funds (max. 3 months old)
Certificate of gift/deed of leasehold

Request a pre-approval (optional)

Some banks or mortgage brokers give you the option to request a pre-approval. A pre-approval or pre-approval is an approval from the mortgage lender that you will be able to buy a home for a certain amount of money. The pre-approval is a non-binding and often temporary offer.

Advantages:

You compare mortgage lenders easily.
You prove your financial ability to take out a mortgage (to sellers).
You speed up the process of applying for a mortgage loan.

Step 3: Make a mortgage application

Make an appointment with the bank or mortgage broker with whom you want to apply for a loan.
The bank or mortgage broker will give you necessary advice on your chosen loan.
Provide them with all the necessary documents and information.
Fill out an application form as instructed by the bank or mortgage broker.

The bank or mortgage broker evaluates your questions and decides whether to grant you a mortgage. Among other things, it checks your credit history and financial situation. While checking, your bank or mortgage broker will ask you for additional information or documents if she needs them.

Step 4: Receive a credit proposal

Yes! You receive a credit proposal from the bank.

Step 5: Make the mortgage loan official

Make the loan official by making an appointment with the mortgage lender. During this penultimate step, you sign the official documents. This last step goes like this:

Sign the loan proposal and deliver it to your mortgage lender.
Provide the mortgage lender with additional financial documentation if she requests it.
A licensed appraiser estimates the value of the property.
The notary prepares the mortgage deed. This lays out the terms of the loan and the rights and obligations of both parties.
Sign the mortgage deed, along with all other parties involved.
The notary registers the mortgage deed with the authorized land registry.
The mortgage lender officially records the loan. You sign the official documents. In doing so, you pay any additional costs such as notary fees and administration fees.
The mortgage lender releases the loan amount.
Complete the purchase of your envisioned house or apartment.

Step 6: Pay back the loan

Finally, you repay the loan according to the agreed terms, interest and other charges.

Have you had a home loan yourself for a while and want to review the interest rate? Read our article: reviewing your home loan.

Sources: Argenta, Belgium, Dewaele, Hypotheekwinkel, Immotheker Finotheker, Flanders

Would you like to cite this article as a source? Then use:

Luyckx, S. (2024, Feb. 1). Mortgage loan: how to get started? Apartment.be. Consulted on (date XX/XX/202X), from https://www.appartement.be/hypothecaire-lening