Most of us have insufficient money in their bank account to buy a house just like that. Acquiring a home loan in one way or another is therefore a must, and it is not always easy to make a choice. With these tips you will be well prepared to take out the most advantageous mortgage loan or credit opening.
Mortgage loan versus credit opening
Both a loan and a credit facility are covered by the home loan. The most important difference is that a credit opening simply allows you to borrow extra money for example if you want to renovate over time without having to take out a new loan. It is not surprising that you find it cheaper than taking out an extra loan. But whether you go for a mortgage or a credit opening, with the tips below you will certainly benefit. You can choose the the best home loan solutions there.
Make a good estimate of your borrowing capacity
The borrowing capacity is, as the word suggests, the maximum amount that you can borrow. In general it is stated that your monthly payment may amount to one third of the net family income. Multiply that amount by the number of months you want to pay off, and you have theoretically calculated your borrowing capacity. In practice it is a bit more complicated. You can therefore visit your current bank for an estimate. They can estimate your maximum loan amount based on your fixed income:
- Professional income
- Income from immovable property
- Income from the home that you want to purchase with the home loan
- Income from movable property
- Other incomes
Compare different banks and start negotiating
Once you know your borrowing capacity, you can visit different banks to compare all the proposals. Don’t shy away from negotiating the interest on your home loan. If you consider that a mortgage loan is between 10 and 30 years old, an interest rate difference of 0.1% quickly saves you several euros. Also keep in mind that the duration and variability of your interest rate (if you do not opt for a fixed interest rate) have a major impact on the final cost.
Choose the right formula for your situation
Depending on your age, the amount you are going to borrow, the interest level and your financial situation, you can determine the term and the formula for your home loan. For example, you have to choose whether you want a fixed capital repayment , where the amounts to be repaid can vary from year to year (and are higher in the beginning), but where you pay less interest or fixed monthly payments. You must also determine a realistic duration. The lower the duration of your loan, the lower the monthly amount, but also the more interest you pay. Do not go over ice overnight before you make the decision and first inform yourself about all other possible formulas:
A home loan with deferred capital repayment: if you still have to build up financial stability, with this loan you can only pay interest and not pay off capital for a maximum period of 36 months.
An accordion credit: you pay a fixed monthly amount, but the interest rate varies, which means that the term of your loan can be extended or shortened.