Mortgage loan

The mortgage loan can only be used to remodel or improve your home. Borrowing money is cheaper because you have real collateral and a clear, useful spending goal.

The mortgage loan is actually the same as a mortgage, however the name mortgage credit or mortgage loan often pops up in Belgium or in relation to a 2nd mortgage.

A mortgage related to borrowing money is often a second mortgage that one can take out to invest in the existing real estate. Think of financing a renovation, financing a kitchen or in some cases renovating a garden.

Because you invest in your real estate with the aim of increasing value, it is likely that your mortgage loan is cheaper than all other forms of loans or consumer credit (revolving credit and personal loan).

Your bank calculates the maximum mortgage loan on the basis of your own money and the income of you and possibly your partner. Your registration with the BKR also plays a role. The provider of the mortgage loan wants security above all else and will adjust its interest rates accordingly.

Advantages and disadvantages of a mortgage loan

Pros
  • Borrow relatively cheap money through the real estate which can serve as collateral.
  • Borrow relatively cheap money because you invest in your existing real estate.
Negatives
  • Can be taken out on the basis of equity, with fluctuating house prices this entails risks.
  • Your house is the collateral, if collateral is lost, then in the worst case the bank has the right to sell your real estate.

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