From this month on, private library lends stricter conditions to a home loan. How did that happen? Since the Americans voted the billionaire Donald Trump to the White House, the long-term interest rate has been on the rise. After all, investors are convinced that the new-born president is going to lower taxes on companies and invest in infrastructure.
That confidence translates into an increase in the long-term interest rate. And that optimism can also be felt with us. Although the increase remains limited by the policy of the private library. The people looking for a home are the first to feel the slight increase.
After all, the long-term interest rate determines how expensive a mortgage credit is. The private lender announced earlier this year that it is expected that the interest rate on housing loans will increase by a maximum of 0.5 percentage point by the end of this year. Moreover, all experts are convinced that historical cheap housing loans have been completed.
Stricter credit conditions
But the rising interest rate is not the only thing that is above the heads of those who want to take out a housing loan soon. The private lender called on financial institutions earlier this year to link stricter conditions to a housing loan. For example, the private library should only be able to grant an advantageous mortgage loan if someone can put at least 20 percent of the capital on the table themselves.
According to the private lender, this measure is necessary to be able to absorb major negative shocks. The new rules take effect this month. Even though the private lender is not obliged to impose those limits. For example, lenders may borrow more than 80 percent of the market value of your home loan. Although they have to set up an extra reserve for that.
And that translates into a more expensive home loan for customers. A private lender, for example, you pay more for a home loan if you yourself finance less than 20 percent of the market value of your home.
The private lender admits that they analyze each situation individually. In other words, it is perfectly possible that you can still borrow 90 percent or more when you buy a home.
Moreover, Bart Tommelein, Flemish Minister of Finance, has already announced that he is investigating whether he can create a certain insurance policy that makes it much easier for people to borrow more than 80 percent of the market value of a home. Such credit insurance would protect the private lender loan against defaulters. The private lender still has to comment on that.
Comparison remains the message
That is why it remains important to compare home loans. This is the only way to ensure that you get the cheapest loan. A first step in the right direction is to compare the rates on our site. In addition, it is recommended to visit the private lender as much as possible. The rates that we publish are posted interest rates. That means that a private lender is usually willing to lower it further if you get a cheaper rate elsewhere.
Experience shows that you can get up to 30 percent cheaper than the rates published by the private lender. Although it is advisable not to wait too long to play a private lender against each other. After all, interest can change at any time. Although that will never be more than a few basis points. The private lender is usually willing to click on the proposed interest, so that you can compare it with other private lenders.
Moreover, it will soon be easier to compare loans. From 1 April 2017, private lender loans must announce an annual percentage rate for a home loan. This is already the case, for example, with a consumer credit or a car loan. When determining the APR, all additional costs are taken into account, such as the price tag of the extra insurance products (such as fire insurance) that you must take with your home loan.
Choose the right interest
Now that the interest rate is still quite low, it is recommended to take out a housing loan with a fixed interest rate. In such a case, you are certain that your home loan will not become more expensive when interest rates rise. If you want to refinance a home loan with a fixed interest rate when the interest rate nevertheless falls, you must pay a reinvestment fee.
This may never be higher than three months interest. Although it may be interesting in some cases to take out a housing loan with a variable interest rate. Those who opt for a variable interest usually receive a lower rate than those who opt for a fixed interest.
That is because you take on part of the interest rate risk when you opt for a variable interest rate. Anyone who chooses a variable-interest loan agrees that the private lender adjusts the interest at contractually specified times in line with the evolution of a reference index. This can be, for example, every three years. The private lender must respect a number of limits.
For example, the variable interest may never double. For example, an interest rate of 2 percent may rise to a maximum of 4 percent. The majority of the private lender also includes a cap in the loan contract. This way you know in advance how much the cost price of your home loan can rise.