Looking for real estate? 10 questions to ask yourself before buying...

From January 1, 2022, banks will have to have the property appraised before granting a mortgage loan. The amount loaned will be calculated according to the appraisal value and no longer the purchase price. A new obstacle stands in the way of acquiring real estate. How do you best prepare to travel this path of the fighter?

Do you think you have found the apartment or house of your dreams? From notary fees to your ability to repay and the outstanding balance, there are many things to consider before committing to buying a property. We take stock in 10 questions:

What is your repayment capacity?

"It's difficult to establish a list of criteria applicable to everyone, since each situation is different. But, in short, everything depends on the risk profile of the buyer or buyers", summarizes Kristien Viaene, administrator of the real estate agency Dewaele Brussels Zuid.

To establish this risk profile, banks take several criteria into account: a stable job is always a plus. A permanent contract with a comfortable salary, for example, tends to reassure bankers. But, it is not because you work as a temporary worker that you will not be able to obtain a loan. The banker looks above all at the sustainability of your income.

Buying alone or with your partner changes the situation: you will not be able to borrow the same amount if you have only one source of income or two, unless your income is quite substantial.

The main criterion for granting or not granting a mortgage remains the borrower's ability to repay the mortgage loan at the end of an agreed period. This applies to both singles and households. So if you are single, it is better to have strong backs if you plan to buy.

What is your equity?

Your equity will have a significant impact on the amount you can borrow and the rate you will be granted. It is therefore advisable to have at least a small savings. The larger it is, the more flexible your banker will be in offering you attractive credit. Real estate, savings in your savings account, long-term insurance… learn about “everything” you own.

Since January 2020, the National Bank of Belgium has been calling on banking institutions to be more careful when it comes to loans to individuals. Banks are supposed to ask for an individual contribution of at least 10% of the value of the property, not including notary fees.

In reality, each banking institution applies its own policy: "A bank may have chosen to limit itself to 100 loans per year. If you are the 99th, the bankers may be much more strict since 'they've reached their quota," says Kristien Viaene.

Are you already an owner?

The 10% contribution becomes 20% if you buy a property as an investment. “It is a protective measure for buyers: there may be a rental void and other costs, hence the additional caution,” explains Rodolphe de Pierpont, spokesperson for Febelfin, which represents the financial sector in Belgium. .

If you are already an owner, the building you (partially) own is considered as an additional guarantee for the banks, which can work in your favor to obtain a better rate. Depending on the situation, you can also ask to reassess the conditions of your first loan to possibly reduce the borrowing rate or the repayment period.

Have you taken into account the notary fees and the abatement?

Before committing to an offer, it is always important to find out whether you can actually finance the acquisition and the associated costs, such as registration fees and notary fees. "We must not forget that the additional costs vary between 10 and 15% depending on the region", warns Rodolphe de Pierpont.

Want to know how much the deed of purchase costs will be? To get an estimate, consult the notaire.be platform tool.

If you are buying your first property, you could benefit from an allowance. In other words, a reduction in the tax base granted by the tax administration. But beware, there are conditions to be met: none of the buyers can own another building intended (partially) for living in Belgium or abroad and the buyers must keep their main residence in the building acquired for a five-year uninterrupted period.

Is it a new property or to be renovated?

You may have set your sights on a home that needs to be renovated. In this case, it is necessary to plan a renovation budget where to integrate these costs in a request for credits.

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If you buy a new apartment or building, beware: you will most likely have to pay 21% VAT rather than registration fees.

►►► To read also: Real estate: signing an online compromise is official and final

The seller can thus recover all the VAT paid upstream (on the construction or on the purchase price of the property). If this is the case, the seller will indicate it to the buyer and will mention it from the first writing (offer or compromise). Failing this, the purchaser will pay the registration fees.

Compulsory property valuation, how does it work?

From January 1, 2022, banks will have to have the property appraised before granting a mortgage loan. The amount loaned will be calculated according to the appraisal value and no longer the purchase price.

These experts will assess the value of the property. In this context, the intrinsic value of a property (a purely technical calculation based on land and materials) and the market value should not be mixed up. “Intrinsic value is generally lower than market value,” says Kristien Viaene.

"The price is mainly determined by the law of supply and demand. The risk is that the gap between the value entered in the expertise and the market value widens", warns the agency manager real estate. Imagine for example that the seller asks 300,000 euros for an apartment and that the expert assesses the value of the property at 250,000 euros. “If the price of a building is overvalued, the bank will certainly refuse the loan,” she adds.

For his part, the spokesperson for Febelfin sees another advantage in this expertise: "It is a measure which makes it possible to negotiate the price with the seller." Before adding: "It's a protective measure: it allows him to minimize the risks if he is forced into a forced resale, in the event of separation for example."

Have you consulted the property's energy certificate?

The Energy Performance Certificate for your Building (EPB) is a mandatory document in the event of the sale or rental of your property. This is the "Energy report" for your building. It gives you an idea of ​​what you will need to consume as energy, it also tells you what to improve to reduce your consumption.

►►► Also read: What is the PEB certificate for?

"The PEB certificate is mandatory as soon as the property is put up for sale. Potential buyers often do not really pay attention to it, yet this document is useful: when a property belongs to category F or G, this means that you will have to provide investments, whether in insulation, heating system, etc.", advises Rodolphe de Pierpont.

And the insurance on the balance due in all this?

At the bank, when we buy, we all want a low rate. But, staying focused only on the mortgage rate would not be a good idea. Often banks say they can give you a "favor" on the rate provided you take out outstanding balance insurance with the bank and/or fire insurance.

You can take out outstanding balance insurance in combination with a mortgage loan to buy your house or apartment. This insurance serves as a guarantee both for your family and for the bank in the event that you die before the maturity of the loan, because the remaining balance of the loan must, in fact, still be repaid.

►►► Also read: Outstanding balance insurance: where banks are catching up

Even if you are not obliged to take out your outstanding balance insurance with the bank granting you the loan, banks often give a discount on your mortgage loan if you take out your outstanding balance insurance through them.

Let's take a concrete example: a couple wants to borrow 400,000 euros to buy their house. At the rate of 1.50% (over 25 years), the total interest he will have to pay is 79,923 euros. At the rate of 1.70%, the total interest amounts to 91,281 euros. The couple say to themselves that with a difference of 11,358 euros, they are getting a good deal. But if we include the outstanding balance insurance in the calculation, the saving is only 2237 euros with the best rate...

The bank is also required to offer the borrower a document showing all the costs associated with this credit. And not just the rate she offers him.

Offer with or without suspension clause?

Who says real estate purchase, says three key steps. After a conclusive visit, the prospective buyer makes an offer to the seller, often with one or more suspensive clauses such as the granting of a loan by the bank. If the offer is accepted, you must then sign the sales agreement. The buyer is already firmly committed since he must pay the seller 10% of the value of the property. Finally, the last step is the signing of the deed of purchase.

But be careful: to make an offer without a suspensive clause, you must be certain that the bank will give the green light for your mortgage loan. If this is not the case and the offer is not honored, you will have to pay compensation to the person who thought he had sold his property.

"Prepare your file: what are your needs? It is better to discuss with your banker before and not after the submission. You will be able to see together what you can go for and under what conditions", advises Rodolphe de Pierpont.

I lack funds, is there any help?

Without the support of parents, taking the step of a first purchase is not always easy for young people. This is why aid exists. In Brussels, subject to certain conditions, Citydev offers new housing to individuals, subsidized by the Brussels region.

The mortgage loan from the Housing Fund of the Brussels-Capital Region can also grant mortgage loans to buy at more advantageous rates than the banks, again subject to certain conditions.

►►► To read also: Becoming an owner, an "old" privilege? The hassle of the first purchase

In Wallonia, several types of aid exist, for example via the Société Wallonne du Logement and the public service housing companies of Wallonia (SLSP).

To finance the costs of buying a first home (registration fees, notary fees, real estate agency commission, etc.), the Walloon Housing Fund offers a 0% loan.