Home loan review will soon become cheaper

In many cases, banks will no longer be able to charge customers reinvestment fees if they want to refinance their home loan. The federal government wants to take measures to reduce costs before the end of the legislature.

In recent years, thousands of Belgian homeowners have taken advantage of the historically low interest rates to negotiate better rates for their home loans with their banks.

But such a refinancing also involves additional costs. For example, customers must pay a reinvestment fee. That is a sum that corresponds to up to three months’ interest on the remaining amount of their loan, whether they change banks or not. The bank also charges file costs. And in many cases the intervention of a notary is required, which seriously increases the costs.

Federal Minister of Economy Pierre-Yves Dermagne (PS) now has a proposal ready to tackle those costs for refinancing. “Steps are being taken that will oblige banks to opt for a change to the mortgage loan when refinancing, rather than concluding a new credit agreement,” the Dermagne cabinet said.

The message is that such measures will make a big difference to your drink. Because if the mortgage loan is simply changed, customers do not have to pay a reinvestment fee or file costs. A visit to the notary is then no longer required.

Although the Minister of Economy’s proposals do not apply in all situations: anyone who wants to temporarily suspend interest repayments or change the amount of a loan, for example, will still have to conclude a new credit agreement.

The Dermagne cabinet is confident that the proposal to reduce refinancing costs will be approved this legislature. The proposal, on which there is political agreement within the federal government, is part of a so-called potpourri law, which includes the most diverse provisions. The law would be put through parliament in early May.

That law includes another proposal that extends the basic banking service for consumers to Belgians who reside outside the European Union. Due to stricter regulations, banks can now block the accounts of Belgian expats if information about them is missing. According to the proposal that is now on the table, banks will now have to provide guaranteed services to all Belgians, wherever they live in the world.

It is not the first time that Dermagne has focused on banking regulations. For example, last year it was decided that banks can no longer make any discount on their home loans dependent on the sale of fire or outstanding balance insurance. At the end of last month, the government also took steps to ensure that customers who open a savings account can no longer be obliged by their bank to also have a current account.