THE REMORTGAGE IS JUSTIFIED IF THE FOLLOWING CONDITIONS ARE MET:
- The difference between the interest rate for the outstanding loan and the market rate for an equivalent plan is greater than 1.5%
- The balance outstanding is greater than €24,789.35.
- There is sufficient time left to repay all the costs.
WHAT COSTS CAN BE EXPECTED?
- Early redemption charge: 3 or 6 months’ interest, calculated at the basic rate on the outstanding amount owing.
- Release of mortgage: Cost of cancellation of the existing mortgage registration calculated according to an official scale. This is calculated on the amount of the initial mortgage registration.
- Mortgage deed costs: They depend on the new loan amount and are allocated upon registration of the new loan with the Registrar of Mortgages.
- Administration fees: Their percentage varies depending on the finance company.
- Possible assessment costs: These vary between +/- €200 and €250 depending on the assessor, type of property, if work is anticipated etc.
Would you like to know if such an operation is viable in your case?
Do not hesitate to contact us. We will analyse your file and advise you with total objectivity!
Here is a repurchase calculation example:
|Current data||Data if repurchase after 48 months|
|Initial amount borrowed||
|3-month early redemption charge||€1,889.17|
|Period||240 months||Mortgage release fee||€514.55|
|First payment||There are 48 months||Administration fees||€220|
|Remaining period||16 years||Mortgage charges||€3,273.23|
|Type of repayment||Equal mthly repay.||
Outstanding balance owing
|Real annual rate||7.00%|
|Total to finance, including charges||€117,352.29|
|Proposal for a new mortgage loan of €117,352 equal monthly repayments|
|13 years||14 years||15 years||16 years||17 years|
|Proposal 1 – 5/5/5/ plan, annual rate of 4.35%|
|Proposal 2 – Half-fixed 10/5/5/plan, annual rate of 5.05%|
|This table is shown for information purposes. It does not in any way represent an offer of credit and is binding on none of the parties.|
What about taxation?
According to the current tax legislation, a remortgage can also be taken into account to apply the tax benefits provided for. If it satisfies all the conditions laid down, the remortgage can “take over” all the benefits of the existing mortgage credit, but never more than the existing benefits. A remortgage cannot “purely and simply” improve the borrower’s tax situation.
Accordingly, the initial restrictions imposed on the tax benefit will remain in force for the new loan.
- If for instance the amount borrowed is greater than the capital balance of the initial loan, the additional portion borrowed will not automatically enjoy a tax benefit.
- If the additional borrowed capital is used for the financing of alterations to a home, the additional borrowed capital will nevertheless be considered for a tax benefit.
- If the additional amount borrowed is used to finance the remortgage costs, no additional tax benefit is possible.
Here is a brief overview of the conditions to be met in order to enjoy tax benefits with regards to the new mortgage loan:
Reduced taxes on capital repayments
- The initial credit must have first been taken out to build, buy or transform a home located in Belgium.
- The new loan must be a mortgage loan.
- The period of the first loan and that of the remortgage loan, viewed together, must be at least 10 years.
Deduction of additional interest
- The initial loan must also give right to additional interest deduction.
- The initial loan as well as the new loan must both be mortgage loans.
- The period of the first loan and that of the remortgage loan, viewed together, must be 10 years.
Call us for a personalised assessment!
A remortgage is not always as simple and worthwhile as it first appears. It is necessary and desirable to always work out the benefit (or drawback) of the remortgage.
A remortgage assessment must always take into account the financial and tax aspects.