Materialise your property projects. All you need to know about mortgage loans for property purposes. ing.be/home

Transcription

1 Materialise your property projects All you need to know about mortgage loans for property purposes. ing.be/home 1

2 Introduction Buying a home or a plot of land, building a house or a flat often requires substantial sums of money. Before taking such a step, you need to thoroughly prepare your project and to gather all the necessary information. ING is happy to help you to realise your project. This brochure contains the answers to most of your questions on this subject. For any queries or a personalised simulation, please go to your ING branch or surf to ing.be. 2

3 Mortgage loans for property purposes, in concrete terms Before delving into details, let us first answer some general questions. Who can take out a mortgage loan? Any private individual usually domiciled in Belgium when the deed is signed and who is not acting mainly for professional purposes. Under certain conditions ING can also grant mortgage loans to non-residents (individuals who do not normally reside in Belgium). existing mortgage loan or to fund inheritance duties, donations, registrations, divisions, etc. if they relate to one or several properties. How much can you borrow? The maximum amount you can borrow depends firstly on your project and secondly on your repayment capacity. The minimum amount is 5,000 euros. What is the purpose of a mortgage loan? A mortgage loan for property purposes provides the funds required to buy a plot of land, or to acquire, build or renovate a property. It can also be used to repay an 3

4 Over how many years is the repayment of the loan spread? The length of a mortgage loan can range up to 30 years, according to your needs and the package you choose. Nonetheless it should be noted that the longer the term, the higher the total cost of the loan. How is the amount of the loan made available to you? When you buy a home, ING will release the total loan amount once the deed has been signed. If you are building or altering a home, ING will make the loan amount available through minimum instalments of 2,500 euros, as and when the works progress, on the basis of invoices and/ or supporting documents. This offers the advantage that you will only pay interest on the amounts you draw down. The drawdown period is a maximum of 24 months. As from the seventh month of the drawdown period, you will pay an indemnity on the amount not drawn down. The amount of such indemnity is indicated in the lists of charges. Pre-contractual information Thanks to the European Standard Information Sheet (ESIS) you have a clear overview of the terms and conditions of your loan. As all European banks use this same document, you can easily compare the offers of different banks. TIP: To be able to compare properly, check that all the elements of your loan application are the same. Annual Cost Percentage (ACP) The annual cost percentage (ACP) represents the total loan charges expressed as an annual percentage. In our lists of charges you can see all our current interest rates as well as the annual cost percentage, calculated each time on the basis of a representative example. The annual cost percentage is higher than the annual debit interest rate because the calculation of the annual cost percentage takes account of the various charges associated with your home loan. The APR includes: 1. The total amount of interest and the amount of the loan to be repaid 2. The charges which must only be paid once: The administration fees The survey charges for an expert to assess the value of your home The charges (not including fees) for arranging the mortgage collateral 3. The charges which must be paid regularly: The total of all outstanding balance insurance premiums until the loan matures The total of all home insurance premiums until the loan matures. The APR does not takes account of the following charges because they are not known and/or may not be included in the APR: The charges levied through the notary, including the fees, for the purchase of the property which is the subject of the loan contract The notary fees relating to the mortgage deed and/or the mortgage mandate deed Any additional premiums under the insurance and/or outstanding balance insurance The charges relating to cover for the insurance drawdown period/outstanding balance insurance Interim interest: as from the date of the drawdown until the last day of the month, interest is calculated at the debit rate of the loan The indemnity for provision of the funds (commitment fee) as the amount of the loan is assumed to be drawn down immediately and in full The charges for any services (e.g. account, payment card) which do not relate to the loan contract Survey fees (maximum 3 surveys) to check the progress of the building/renovation works, where deemed necessary by the lender, and at the rate in force at the time. 4

5 Examples The above examples are based on hypotheses and the following amounts to calculate the annual cost 1. A fixed debit interest rate mortgage loan at the Combi-Rate (terms indicated in the list of charges): 2. For a bridge loan with a fixed debit interest rate at the basic rate: A borrowed amount of 170, euros repayable through 240 fixed monthly instalments The total amount of interest paid monthly (calculated at a periodical interest rate of 0.234% per month (2.85% on an annual basis) Administration fees of euros Survey fees of euros for the assessment of the value of your home by a surveyor Notary charges (other than fees) estimated at 4, euros to arrange a full mortgage registration for an amount of 170, euros The total of insurance/outstanding balance insurance premiums, average annual premium for a term of 20 years estimated at euros for two policyholders both in good health, non-smokers and aged 38, where the insured amount for each borrower is 85, euros The total premiums for home insurance as homeowners, average annual premium estimated at euros for a standard home with an average surface area for the main building of between 201 m 2 and 225 m 2 at the current ABEX index (see An amount borrowed of 170, euros repayable in one go at maturity after 12 months The total amount of interest paid monthly (calculated at a periodical interest rate of 0.283% per month (3.45% on an annual basis) Administration fees of euros Survey fees of euros for the assessment of the value of your home by a surveyor The notary charges (not including fees) estimated at 4, euros to arrange a full mortgage registration for an amount of 170, euros The total premiums for home insurance as homeowners, average annual premium estimated at euros for a standard home with an average surface area for the main building of between 201 m 2 and 225 m 2 at the current ABEX index (see The annual cost percentage for such a loan is 8.4%. The total cost of the loan amounts to 16, euros and the total amount to be paid by you is 186, euros. The annual cost percentage for such a loan is 3.8%. The total cost of the loan amounts to 69, euros and the total amount to be paid by you is 239, euros. 5

6 The various forms of mortgage loans The various forms of mortgage loans available from ING are summarised below. They are categorised according to, firstly, debit interest rate variability and, secondly, the repayment method. We also offer various specific packages to help you to optimise your project. Products based on debit interest rate variability Package with a fixed debit interest rate The debit interest rate cannot be changed throughout the entire lifetime of your loan. You will never have any unpleasant surprises. With this package, you opt for absolute security! Packages with a variable debit interest rate In addition to a fixed debit interest rate ING also offers various variable debit interest rate packages. With both packages, the maximum review frequency and interest rate fluctuations whereby the debit interest rate can be revised are important, as well as the reference index which applies to your loan. 6

7 In concrete terms, you can choose from the following packages: Formula Final Maximum rate fluctuation Per month Per year Annual revision Cap 3 / Infinite Floor A 0.083% 0.165% 0.247% 1% (1) 2% (2) 3% (3) Five-yearly revision First revision after 10 years, then five-yearly revision Cap 5 / Floor Cap 5 / Floor Cap 2 / Infinite Floor E 0.407% 5% E 0.407% 5% E 0.165% 2% (1) If revision the second year (2) If revision the third year (3) If revision as from the fourth year The CAP indicates the maximum rate fluctuation and determines the maximum variation, either upward or downward, in relation to the initial debit interest rate. In this way you are safe from a sharp rise in rates. Moreover the initial debit interest rate can double at most. In the case of packages with an infinite FLOOR, the rate can be revised downward without any limit (minimum 0%) each time rates are revised in a downward market. The debit interest rate is revised at the end of each review period, according to the following formula: New debit interest rate = initial debit interest rate + (new reference index initial reference index), where: Adjustment is only possible if, when applying the formula, the debit interest rate rises or falls by a minimum of 0.05% per annum against the previous debit interest rate. The calculations are based on the periodical interest rate. The debit interest rates, expressed on an annual basis, are communicated for information purposes. If you opt for a variable rate package, bear in mind that the amount of your repayments can either rise or fall. Ask for a simulation to know the maximum amount of your instalments in the event the interest rate fluctuates. the initial debit interest rate = the debit interest rate indicated in the loan offer the new reference index = will be that published in the Belgian Official Gazette in the calendar month before the date of the interest rate review. the initial debit interest rate = the index indicated in the loan offer, i.e. the index of the month before the date of the list of charges. 7

8 Products based on the repayment method Fixed monthly repayment mortgage loans Each month you pay ING the same amount, consisting partly of interest and partly of capital. The portion of interest falls over time, whilst the portion of capital increases. You will repay the same amount throughout the lifetime of your loan or until the contractual debit interest rate review. Fixed capital repayment mortgage loans The capital repayments are constant. Each month you repay the same amount of capital. The interest will be calculated on the remaining balance ( outstanding balance ) and therefore decreases. The repayment burden is far heavier at the beginning of the loan yet it decreases over time. Bridge loans You want to buy or build a home and you would like to partly or totally fund it with the proceeds from the sale of another property. Unfortunately, you do not know the precise date of such sale, yet you do need the money to purchase or build your home. In concrete terms it is you who decides the term of the loan (from 3 months to a maximum of 12 months). During the lifetime of the loan you will pay the interest on the total amount of the loan monthly, quarterly, six-monthly or annually. Once the property has been sold you will repay the loan in one go. As such dates are imprecise, no reinvestment penalty is charged in the event of early repayment. The debit interest rate for an ING Bridge Loan is set for the entire lifetime of the loan. Mortgage loans without any interim capital repayments (bullet) In specific cases ING grants mortgage loans without any interim capital repayments for durations of up to 20 years. Throughout the lifetime of the loan you will pay only the interest on the total amount of the loan monthly, quarterly, six-monthly or annually. You will repay all the capital in one go at maturity. You can match the maturity date with the payment of a life insurance policy or a group insurance contract for instance. Such loans are available with the following variability options: 1 + 1, and a fixed debit interest rate. A Bullet loan can be combined with a conventional mortgage loan. 8

9 Collateral The granting of your loan will generally be subject to a mortgage registration or a mortgage mandate. The security will be taken on the property which is the subject of the mortgage loan. However it can be taken on any other property located in Belgium. It is possible to combine such collateral. Everything depends on the elements of your file. The value of the property Obviously an important element in your file is the value of the property which will serve as collateral for your mortgage loan. The market value 1 of the property is assessed by one of the real estate experts with whom ING works. In some cases the pre-sale agreement or other documents can suffice to establish the value of the property. Opening of a mortgage loan If your loan is (partly) covered by a mortgage, ING grants loans for the purpose of taking over a mortgage loan opening. The ensuing mortgage registration is valid for 30 years. This means that the capital you have repaid at a given time can, subject to ING's approval, be used again for a new loan without any supplementary notary charges 2. 1 The value of property on the free market. 2 Renewal charges are owed in some situations. 9

10 The charges The costs linked to the conclusion of a mortgage loan depend on various parameters. You will find below a synopsis of the types of charges. For the actual cost, your ING branch can help you to make a simulation. Administration fees The processing of a mortgage loan application entails certain costs. They are definitely due as from the time the loan offer is signed. Please read the list of charges for an overview of dossier fees, indemnities and survey charges. Survey charges A survey, by an independent surveyor approved by ING, is an evaluation of the property you want to buy, build or renovate, or which is the subject of collateral. It is based on various elements (surface area, location, number of rooms, etc.). 10

11 It is undeniably a useful document indicating the opinion of a professional with regard to the value of the property. If a survey is made you will pay the surveyor directly. Naturally you will receive a copy of the survey. A survey is not always required, in some cases the pre-sale agreement or other documents can suffice to establish the value of a property. Deed of purchase charges The purchase charges include the notary fees linked to the purchase, the fees for registering the purchase or V.A.T. if the property you are purchasing is new. Charges for a mortgage deed or mortgage mandate The costs of a deed with a mortgage registration include the fees for the registration of the mortgage deed, the mortgage fees as well as the charges and fees of the notary. They vary in particular according to the amount of the mortgage. Such re-investment penalty is not charged in the event of: Early repayment by the insurer through an outstanding balance insurance following the death of the credited party. An ING Bridge Loan. If you encounter difficulties in making your repayments contact us immediately to find possible solutions. Please note: As ING is required to report any non-payments to the Central Credit Office you may have greater difficulties in obtaining a loan in the future. In particular, non-payment can give rise to the charging of default interest, fines and to attachments. Under certain circumstances, a mortgage serving as collateral for the mortgage loan can be totally or partially replaced by a mandate to grant a mortgage. You must also pay the charges linked to the cancellation of the mortgage registration and, where appropriate, its renewal. Re-investment penalty You can repay the loan in full or in part at any time. If the amount repaid is lower than 10% of the capital, such repayment is only allowed once per calender year. If you make an early repayment, the re-investment penalty will amount to three months interest calculated at the debit interest rate of the loan. 11

12 Insurance To purchase or build a home is an ambitious project requiring the best possible protection. To that end two essential insurance packages are available to provide you with peace of mind: outstanding balance insurance and home insurance. You can take out such insurance policies with the insurer of your choice. Outstanding balance insurance Outstanding Balance insurance safeguards your next of kin from the bother of repaying your mortgage loan if you were to die. For the utmost security, ING recommends that you take out full cover for each credited party. In that way, in the event of death, the loan repayment will always be fully covered. Usually the premium is calculated according to the capital insured, the term of the contract, whether the credited party smokes and their actuarial age. The definite premiums will be set once the insured s state of health has been assessed and after financial acceptance, and will be confirmed in the contract. Anyone with a higher health risk can, under certain conditions, benefit from financial assistance on their outstanding balance insurance premium. Home insurance Home insurance covers any damage to your building in the event of fire, flooding, break-ins, natural disaster, etc. Generally home insurance can be built up with a number of options, depending on the needs of the customer and their family. Tip: By taking out the insurance linked to your mortgage loan with ING, under certain conditions, you will benefit from an advantageous interest rate. The terms and conditions are indicated in the lists of charges. Taxation A mortgage loan entitles you, under certain conditions, to a tax reduction. You can find information on the tax advantages relating to your loan and to your home, property or second residence on our website or that of the Federal Public Service. 12

13 In concrete terms Take your project to the ING branch of your choice where you will be offered the best packages for your loan according to your project, your situation and your expectations Our branches are equipped with tools which can compile loan estimates and give you a file with the data from the simulation made. If you opt for one of the simulations offered, you can file an official loan application. Make an appointment at an ING branch. Once you have transmitted all the documents required to complete your file, in most cases the ING branch can decide whether your application is receivable or not. features and terms of your mortgage loan, together with a repayment schedule as well as the general terms and conditions. You sign the loan offer in the month following its delivery. We will contact the notary of your choice and forward all the information needed to compile the deed. The mortgage loan is finalised once the notarised deed (where appropriate), or the loan offer if no new mortgage collateral has been stipulated, is signed at your notary. Congratulations on your new home! We wish you every success! ING must consult the Central Credit Office for Credit to Individuals before submitting a consumer credit contract or a mortgage loan contract subject to Book VII of the Economic Law Code, to obtain information on your financial situation and solvency, and more precisely the existence of any other loan contracts you may have taken out or non-payments. The Central Credit Office for Credit to Individuals is part of the National Bank of Belgium SA/nv, Boulevard de Berlaimont 5, B-1000 Brussels. Once we have reached an agreement on your loan application, we will give you a European Standard Information Sheet (ESIS), a loan offer confirming all the 13

14 Please do not hesitate to contact us if you require any further information. Surf to ing.be/home or go to your ING branch. Mortgage loan prospectus n 22, valid as from 1 April ING Belgium S.A./nv Bank/Lender Avenue Marnix 24, B-1000 Brussels Brussels RPM/RPR VAT BE BIC: BBRUBEBB IBAN: BE Insurance broker registered with the FSMA under n 12381A Publisher: Marie-Noëlle De Greef Cours Saint-Michel 60, B-1040 Brussels Editing Team & Graphic Studio Marketing ING Belgium E 03/17 14