Today, banks often ask for up to 20 percent of their own contribution when taking out a mortgage loan. It is often a challenge for young Flemish people to save these resources. Those who do not have sufficient resources of their own often do not receive a loan from the bank.
“By introducing a Flemish housing guarantee, we now ensure that more young buyers can effectively obtain a loan. We give young families and singles the opportunity to realize their housing dream,” says Flemish Minister of Housing Matthias Diependaele.
In concrete terms, this means that the Flemish government will guarantee the last ten percent of young buyers who do not have enough input to get a loan from the bank.
After all, there is a margin in which such buyers can obtain a loan, but this is not sufficiently used, the Flemish government reports. For example, banks can grant up to 35 percent of their loans within their risk margins to first buyers with an own contribution of less than 10 percent. But of that 35 percent margin, only 22 percent is filled.
“If we bridge that gap, we can use the Flemish guarantee to help up to 5,000 young Flemish people per year find their own home more quickly,” says Diependaele. The guarantee ensures that banks are given the opportunity to take out more loans for 100 percent of the value of the home.
The Flemish Housing Guarantee is only used for first-time buyers: only those who have never bought their own home before are eligible.
In addition, it is not the intention that existing loans are also guaranteed with little or no input. “We focus exclusively on the gap between the maximum margin that banks receive from the National Bank and what they already provide today. In this way we give first buyers the full potential of their own home,” said the minister.
The purchase value of homes that qualify for the guarantee will also be limited to 434,830 euros. Finally, the term of the guarantee will be limited to the first five years of the term of the loan.
Also positive influence on interest rate
The banks will be responsible for indicating for which loans they apply for the Flemish Housing Guarantee. The banks will provide a report on this to Flanders every six months.
In exchange for the guarantee from Flanders, the banks must pay a premium to Flanders. This premium covers the expected cost of the guarantee system.
The guarantee is now being translated into decree texts. The Flemish Parliament will then deal with this and the first guarantees can be provided from 1 January 2025.