Real estate loans: the different loans

The subsidised loan, the state-guaranteed loan, or the ordinary bank loan?

The subsidised loan and the state-guaranteed loan

The amount of these two loans is limited to 90% of the cost of the transaction and their interest rates vary depending on the lending institution within the limits of a regulated maximum rate (the PAS (subsidised loan) rate being lower than that of the state-guaranteed loan by 0.60%).
They require a down payment of 10% of the cost of the transaction and both open access to a personal housing benefit (APL). To be entitled to this type of loan, the cost of the property must not exceed a fixed fee ceiling per m² depending on the geographic area.
The subsidised loan is furthermore a means tested loan.

The ordinary bank loan

Ordinary bank loans require playing the different banks off against each other as much as possible and comparing the cost of the credit. The bigger the down payment, the easier negotiations with the bank will be.
The down payment: can include previous savings, an interest-free loan, loans from social welfare agencies, a homebuyer’s loan, or a 1% loan.

Additional loans

• The interest-free loan

The interest-free loan can be used to contribute to the purchase of an older home but is subject to the following three very strict conditions:
• you must not have owned your principal residence during the last two years
• the home must be over 20 years old
• you must make improvements that represent at least 54% of the home’s sale price (not including extra costs).
It is therefore particularly well-suited to the purchase of an older, very rundown home. The loan is means tested and subject to a ceiling. It is available through lending institutions that have signed an agreement with the state. The interest-free loan can under no circumstances be used as the main means of financing. It is repaid in regular monthly instalments. The repayment term consequently varies according to taxable income and in some cases you won’t start repaying it until all the other loans have expired.

• The homebuyer’s loan

It is granted after a period of savings, through either a special homebuyer’s savings account or a Home Savings Plan. The amount depends on the interest earned during the savings period as well as on the loan period. It’s interest rate is regulated. Home Savings Accounts and Plans can last from 2 to 15 years and be combined, as long as the total amount does not exceed € 92 000. You should also be aware that, under certain conditions, you can also apply the loan rights held by your close relatives for their own home savings, to revise your borrowing power upwards.

• The 1% loan or employer’s loan

This loan applies to employees of private sector firms with a workforce of more than 10. Its amount is regulated. It can be used to finance an older home with no improvements:
• when the borrower is buying a principal residence for the first time and has limited income
• when the borrower is forced to change his/her principal residence for reasons of job mobility
• when he/she buys a low-cost housing unit

It can be granted regardless of the borrower’s income, but the property must have been built over 20 years ago and any improvements must represent less than 25% of the purchase price.