With rising interest rates, we are borrowing longer and longer. To help families finance their dream home, ING Belgium offers a 30-year mortgage loan. This way, we can help as many families as possible to realize their dream home. For young people and single people, of which there are more and more, spreading the repayments over 30 years can make a big difference.
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To make their housing dreams come true, more and more borrowers are choosing to repay their loans over a longer period. While in 2020 only 20% of new ING mortgages were taken out with a term of 21 years or more, by 2023 this had risen to 31% (1). This trend is even stronger for the rest of the market. Indeed, figures from the National Bank show that the number of borrowers opting for a term of 21 years or longer rose from 57% in 2020 to 72% in the first half of 2023 (2).
"}},{"componentType":"sectionTitle","title":"Benefits: lower monthly payments and an extra budget for your renovation work"},{"componentType":"paragraph","richBody":{"value":"In response to the growing interest in longer maturities, ING Belgium is offering a 30-year mortgage loan. The main advantage is that repayment is spread over more years, which means lower monthly payments. Since the impact of the monthly payment on your monthly budget is smaller, your repayment capacity will increase. You will be more creditworthy, which is reassuring to a lender who decides to give you a loan. You may even be able to borrow a larger amount. Suppose you take out a 30-year loan instead of a 25-year one. At current market rates (May 2024), your borrowing capacity would increase by about 7%.
However, there is a downside to extending the loan repayment period. The longer the loan, the more interest you pay. But if your financial situation improves, you can always decide to repay the loan early. In that case, you usually pay a reinvestment fee that never exceeds three months of interest calculated on the capital repaid. Moreover, thanks to wage indexation and the evolution of your career, the impact of your monthly payment will decrease over time, especially if you have chosen a fixed interest rate. As a result, your ability to save should increase. In addition, by buying now, you will save several years of rent. That, too, can be a significant amount. According to figures from the real estate federation CIB, the average rent in Flanders in 2023 was €868 (3). In Wallonia and Brussels, the average rent in 2023 was €793 and €1249, respectively, according to figures from Federia (4).
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"},"alignedImage":{"position":"bottom","transformBaseUrl":"https://assets.ing.com/transform/a7994b00-8136-48bb-a16b-e9263134ef0a/HIGH-ANGLE-VIEW-OF-PEOPLE-ON-STAGE","original":"https://assets.ing.com/m/483d26283b0ef1c4/original/HIGH-ANGLE-VIEW-OF-PEOPLE-ON-STAGE.jpg","extension":"jpg"}},{"componentType":"sectionTitle","title":"Stricter renovation standards"},{"componentType":"paragraph","richBody":{"value":"In addition, extending the term and lowering the associated monthly financial charges can also free up additional money to finance any renovations. Obligations to renovate already apply to some homeowners and will become more stringent in the future, in addition to applying to everyone. Moreover, renovation costs have increased significantly due to the sharp rise in the price of building materials. So it's a good idea to take this into account when buying your home. A longer term can help you buy the home of your dreams while leaving you enough margin for renovation.
"},"alignedImage":{"position":"left"}},{"componentType":"sectionTitle","title":"More possibilities for limited budgets"},{"componentType":"paragraph","richBody":{"value":"By extending the duration of our loans, we can also offer loans that are better suited to households with smaller budgets. Especially for single people, this can make a difference, as they are hit extra hard by the rise in interest rates. In recent years, the share of mortgages granted to single people has increased slightly. In 2023, about 43% of ING's mortgage loans were granted to singles.
Spreading your mortgage loan over a longer term makes it easier to own your own home, which is very important in Belgium. Given the fairly low statutory pensions in our country, owning your own home when you are retired offers considerable financial peace of mind and comfort. This is not always the case when you still have to pay rent.
Sources :
1 ING Data / La division d’analyse économique et financière de ING Belgique S.A
2 Banque Nationale de Belgique
3 CIB
4 Federia
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