Discover everything you need to know about getting a mortgage in Belgium, from rates and affordability to the different types of Belgian mortgages.
If you’re buying a home in Belgium as an expat, you’ll first have to get to grips with its mortgage system. While home loans aren’t radically differently to other European countries, there are some unique elements you’ll need to be aware of.
In this guide, expat finance expert Dave Deruytter of ING Belgium offers advice on mortgages for expats moving to Belgium.
With over 50 years of experience in advising expats on their finances, ING offers a range of banking, insurance and financial services to professionals moving to Belgium - from bank accounts to mortgages and advice on the Belgian pension system.
Mortgages in Belgium
Economists suggest that while mortgages in Belgium remain cheap, the climate of extremely low interest rates may now be coming to an end. Despite this, in the third quarter of 2018, residential mortgage lending in Belgium increased by 18% year-on-year, according to data from the European Mortgage Federation.
In February 2019, the National Bank of Belgium warned that lenders are offering too many loans at 90% or more of a property’s value, with a quarter of borrowers spending more than half of their monthly income on mortgage payments.
The National Bank Lending Rate in Belgium can have an effect on the cost of mortgages. This rate is the average interest charged on loans by commercial banks to private individuals and companies. In December 2018, the lending rate dropped to just 1.57%, the lowest level seen in the last decade.
Getting a mortgage as a foreigner in Belgium
There are no restrictions on foreigners buying properties in Belgium, though the tax rules do differ depending on whether or not you’re officially a resident or non-resident.
For more information on rules and regulations in the Belgian property market, check out our full guide on buying a property in Belgium.
How do mortgages work in Belgium?
Since the financial crash, it’s been more common for mortgages to have a fixed rate of interest for the full term of the loan (up to 30 years, but more commonly 20 years), rather than for an introductory period of two, three or five years, as is common in some other countries.
As you might expect, the best rates are only available to people with bigger deposits. Some banks will offer deals at a maximum of 85% loan-to-value, though an increasing number of loans are being granted for people with smaller deposits.
How to get a mortgage in Belgium
There are many mortgage lenders in Belgium, and it can be difficult to find the best deal, especially if you’ve only just moved to the country and are unfamiliar with how the process works.
Offering his advice, Dave Deruytter of ING Belgium says: “The most important thing is for expats to do their research on the mortgage market before rushing in.”
He adds, specifically, “first, speak to your current bank in Belgium, as they may be able to give you the most comprehensive advice. As an existing customer, you might also be able to access a better rate than their competitors.”
“It’s also worth speaking to other expats in the local community, as they may have already gone through the home-buying process and could provide you with advice or cautionary tales about their experiences.”
Types of mortgage in Belgium
Mortgages in Belgium tend to fit in to one of these three types:
Fixed-rate mortgages involve paying the same amount every month for the duration of your loan, protecting you against any changes in interest rates or the wider property market.
Variable rate mortgages
Variable rate mortgages go up and down in cost depending on the market, meaning you won’t necessarily pay the same amount every month. Variable-rate deals are more risky, but can work out cheaper for some borrowers.
Combined rate mortgages
Combined rate deals offer a reduction on the rates offered on other mortgages but can be subject to borrowers meeting certain conditions – such as opening a bank account with the lender or taking out mortgage insurance.
Repayment mortgages and bullet loans in Belgium
Many borrowers in Belgium opt for repayment mortgages, where you pay back the loan in instalments over a set period of up to 30 years. These deals involve paying off a chunk of the capital and the interest in one combined payment every month.
How the funds are released when you take out a repayment mortgage depends on the type of property. If you’re buying an existing home you’ll get the lump sum straight away, or if you’re building your own home the money will be released to you in instalments.
Alternatively, bullet loans are more akin to the interest-only mortgages offered in some other countries. These involve paying just the interest each month, and then paying the full capital amount back at the end of the mortgage term, which tends to be a maximum of 20 years.
Mortgage affordability in Belgium
Mortgages in Belgium are generally available up until the age of 65, though maximum ages can differ from lender to lender. To get a loan, borrowers must submit proof of income, which can often take the form of up to six months of payslips and bank statements.
“As a general rule, you’ll need to be able to show that the proposed mortgage repayments won’t exceed more than 35% of your monthly income” says Dave. “You should double check rates and conditions with a range of banks that offer mortgages to expats, as only by comparing the full market can you ensure you’re getting the best deal.”
Before banks will lend you money, you might need to obtain a valuation survey on the property, and this must be done by a surveyor approved by the mortgage company. This valuation survey won’t necessarily give you a full indication of any potential issues with the property, so it’s wise to also get a full survey.
How banks lend in Belgium
Since the financial crash, the mortgage market in Belgium has changed significantly, with some banks more reluctant to lend to borrowers without using other products for leverage.
Comparing mortgage deals like-for-like can therefore be difficult, as banks will attempt to add other stipulations, such as the need for you to have a current account with that lender and pay your salary in to it.
Other additions can include home contents insurance (fire insurance) and mortgage protection insurance – and the latter can add a significant sum to your expenses.
Belgian property refurbishment loans
Some lenders offer renovation loans for people improving their existing homes, which allow you to borrow a lump sum (from around €2,000) to make changes to your property.
Borrowers who are making energy efficient changes to their home – such as boiler maintenance, solar panel installation or fitting double glazing – can benefit from a lower interest rate on their loan.
Tax relief on mortgages in Belgium
Homeowners taking out a mortgage in Belgium are able to benefit from a law on tax deductibility on their loans.
Owner-occupiers in Belgium are given a deduction budget, comprising of interest, capital repayments and individual life insurance premiums. The maximum amount you can deduct each year is €2,560, though homeowners with three or more dependent children enjoy a €60 boost each year for the first decade.
Dave Deruytter is head of expatriates at ING Belgium and has first-hand experience of living as an expat around Europe. Dave boasts more than 30 years of experience in expat financial advice on everything from bank accounts to insurance and real estate.Explore mortgage options