You are considering buying a new home and put your current home or apartment up for sale. Very quickly, a buyer shows up and says he is willing to pay the price you ask for. So everything is going for the best. And in the meantime, you are continuing your plan to buy a new home. But a week after signing the compromise for your new home, the buyer of your home tells you that he did not get a mortgage. Goodbye sale and hello financial problems…
No mortgage, no sale?
It does not even necessarily take a written agreement to deal with such a problem. Imagine that many buyers are interested in your home. So you think there will be one to pay the asking price. And in the meantime, you’re buying a new house. But how can you be sure that your prospective buyers will get a loan? Otherwise, you won’t have a sale and may have to sell your home in a hurry because you need money to buy your new home. And if you have to sell under financial pressure, chances are you’ll have to settle for a (well) lower price than you expected.
If you make a compromise, the buyer will often ask for a suspensive clause stipulating that the sale will not take place in the absence of a loan. You can have this clause added to this clause, especially if there are several prospective buyers, that compensation will have to be paid to you in this case. You can, of course, refer your buyer to an independent credit broker, hoping that he will find a solution.
Flexible bridge credit, the solution
A bridge credit will be recommended in such a case as it will allow you to buy time. You will have the budget to buy the house of your dreams while having enough time to sell your existing home at a decent price.
Flexible bridge credit: talk to an independent mortgage broker
You will be able to obtain bridge credit from your bank, but many banks only give a maximum of 6 months. This will give you some financial trouble if you can’t quickly sell your existing home. It is, therefore, il
How much more can you borrow to buy a house?
The National Bank of Belgium (BNB), the financial sector supervisor, urges insurers and banks selling mortgages to be more cautious in granting mortgages with a ‘loan-to-value’ ratio High. This is the value of mortgage credit relative to the value of the real estate. What does this mean in practice? How much can you still borrow to buy a house?
For years, the BNB has advised the sector not to provide mortgages too easily. It thus expressed its (justified) concern to protect the potential customer that you are against too much debt. As interest rates on mortgages have fallen sharply in recent years, banks sometimes provided higher quotities, or loan-to-values, which increased the risk of repayment problems.
What is the quantity?
The quantity is the ratio between the sum of your home loan and the value of your home. The percentage of the quota, therefore, indicates how much you can borrow for your home.
How is the quantity calculated?
It’s very easy. Build a fraction, the numerator of which is the amount of credit and the denominator the value of the home. Multiply this result by 100 and you get the percentage of your quantity.
Amount of credit – 100 – quantity expressed in percent
Value of your home
We will give an example: imagine that you want to apply for a loan of 180,000 euros for a house worth 200,000 euros. The quality is calculated as follows:
180,000 – 100 – 90%
A mortgage of up to 90% of the value of the home will become the rule
From January 1, 2020, you will only be able to borrow up to 90% of the value of your home, in principle. In other words, you will be forced to bring your own contribution when you want to buy a home or take out a mortgage for refinancing, for example. Very severe, it seems. Does this mean that many people will no longer be able to obtain mortgages because of this 10% personal contribution? No, not necessarily.
The BNB will evaluate the rule for the maximum quota at the level of the banks’ entire mortgage portfolio. In other words: individual exemptions will always be possible.
On the other hand, banks should adjust their acceptance criteria. Our specialists follow this evolution closely and know the conditions of acceptance by heart.
Make an appointment if you are looking for a mortgage. We will look for the best conditions for you.
The quota for buying a first home can be relaxed
The National Bank of Belgium (BNB) does not want to make young people unable to buy a house. Lenders can, therefore, be more flexible in granting a mortgage for a first purchase. The BNB stipulates that banks can spend up to 35% of their loan volume (the total amount of mortgages that banks can grant) on mortgages with a quota of more than 90%. Of this 35 %, up to 5% of credits may have a quota of more than 100%.
35 out of 100 mortgages can, therefore, have a quota of more than 90%.
Of these 35 families, only 1.75 (5%) can take out a loan with a quota of more than 100%.
Conclusion? It will be less obvious to be part of the selected group of people who borrow with a quota of more than 90%, even less than 100%. All the more reason to get help from real specialists. I agree to an appointment today to discuss your case.