February 2, 2024
February 2, 2024
By guaranteeing 10 percent of the loan, the Flemish government wants to support young people who buy a house. In return, the government asks the banks for a premium of 0.1 percent of the loan amount.
The Jambon government is creating the Flemish Housing Guarantee. She wants to give young buyers a boost who have to take out a heavy mortgage loan to purchase a house. The Flemish government would guarantee 10 percent of the loan amount, De Tijd learned from Minister of Housing Matthias Diependaele (N-VA).
Higher input from banks
With the guarantee, Diependaele wants to help banks give higher loans, in the best case for the full value of the home. ‘Nowadays banks often ask for up to 20 percent of their own contribution. It is often a challenge for young Flemish people to raise these resources. However, banks, with their risk margins, could give up to 35 percent of their loans to buyers who do not have a 10 percent own contribution,” says Diependaele. ‘The guarantee gives the banks an incentive to provide more loans for more than 90 percent of the purchase price.’
The home guarantee would come into effect on January 1, 2025, but is only available for those who have never bought a home before. In addition, this only applies to new loans, and not to existing ones. The purchase value of the home is limited to 434,830 euros. In addition, the term of the guarantee is limited to the first five years.
Premium to the government
In exchange for the guarantee, banks must pay Flanders a premium of 0.1 percent of the amount lent. The guarantee is given to the banks, which still have to make a ‘thorough assessment’ of the financial situation of the prospective borrowers. Only in exceptional cases is the guarantee likely to be activated, according to Diependaele. If the loan cannot be repaid and the bank ultimately sells the house at a loss, Flanders will pay out 90 percent of the deposit.
We note that for many young people their own input is a significant barrier to fulfilling their dream of living.
Flemish Minister of Housing
‘It is very important that we preserve the opportunity to buy our own home for current and future generations. Today we have established that for many young people their own input is a strong barrier to fulfilling their dream of living,’ says Diependaele.
Embuild, the construction sector organization, says that the measure is necessary to get housing construction out of the doldrums, now that the number of mortgage loans and the number of permit applications for new construction have fallen. ‘This makes your own energy-efficient home a lot more feasible. That is good for households and good for construction. The measure comes none too soon,” says director general Marc Dillen.