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Published on 26 September 20266 min read
Mortgage rates in Belgium: fixed or variable?
The Immolytics editorial team
A mortgage rate in Belgium has two parts: a base rate the lender pays to raise money on the market, and a margin that fits your file. Your profile, the term, the amount and the security you offer all weigh in. Fixed or variable decides whether that rate is locked for the whole term or moves with the market.
How a mortgage rate is built up
A rate is the sum of a market rate and a risk margin. The market rate follows what the lender pays to raise funds. The margin tells you how much risk the lender reads in your file.
On a variable loan, the rate follows a reference index. That index is derived from the yield on Belgian government bonds and moves with the market. On a fixed loan, the lender works with the rate for the full term you choose. A fixed rate for twenty years therefore looks different from a fixed rate for ten years, even if you sign on the same day.
A margin is added on top. It covers the risk that you do not repay, the cost of handling the file, the lender's own margin and the security you bring. The more certainty the lender gets, the smaller that margin usually is. Mortgage credit in Belgium is governed by the Code of Economic Law, with rules on information, a reflection period and the offer you receive before you sign. If you want the concepts side by side, read the guide to mortgage credit in Belgium.
A rate never stands alone from the file. The same income and the same amount can give a different result at two lenders, because they read risk differently and because they want different files at that moment. So negotiating is part of it, as is the question of which type of mortgage credit fits your situation.
Fixed or variable: what suits your budget?
A fixed rate sets your monthly payment for the whole term. A variable rate follows an index and can go down or up. Which is better depends on how much room you have in your budget and how long you expect to stay in the property.
With a variable loan, the lender works with a revision formula. Sometimes the rate is revised every year. Sometimes there are successive periods in which the rate stays fixed and is then reviewed again, as with the classic three-year formulas. Limits come with that: a cap per revision and a maximum over the whole term. Those limits are in your contract, not in the brochure.
The advantage of variable is that the starting rate is often lower than a fixed rate. The downside is that your monthly payment can rise when market rates rise, even though nothing changes in your income. Choose fixed and you buy certainty, and you pay for that certainty in the rate.
Ask as well what happens on early repayment or refinancing. The lender can charge a reinvestment fee for that. How much it is depends on the formula and on the terms in your contract, so have it put in writing before you sign.
What factors set your rate?
Your rate follows from the amount, the term and the security you give. Two files with the same income can still get a different rate, because each of those elements is different.
- The amount borrowed against the value of the property.
- The term: a longer term usually means a higher rate.
- Your income, how stable it is, and your other credits or fixed costs.
- Your own contribution and your savings.
- The security: registering a mortgage, mortgage life insurance or buildings insurance can influence the rate.
- The type of property and its location.
- Whether you borrow alone or with two borrowers.
A mortgage broker compares several lenders. The broker is paid by the lender, by you, or by both, and that must be clear before you sign. Compare the broker's offer with what your own bank offers you directly.
The property itself: value, energy performance and costs
Your rate also depends on the collateral the bank receives. A property that sells quickly gives more certainty than a building in a difficult location or in poor condition. That is why a lender has the home valued. For registering the mortgage and the costs that come with it, there is a separate explanation of mortgage registration.
Energy performance weighs more and more, both in the value of the property and in the costs you expect after purchase. The rules differ by region. In Wallonia, the EPC certificate is required for the sale and the rental of a home, with no renovation deadline attached to it. In Flanders, a sale can trigger a renovation obligation. In Brussels, the region works with performance targets per dwelling, without tying them to a sale. The guide to the renovation obligation by region sets those situations side by side. What an EPC actually says is set out in the EPC explained and in the complete guide to the EPC.
Count the costs after purchase too. The renovation calculator and the energy comparison tool give an idea of what a poorly performing home will cost you later. If you buy an older building, renovating an older property covers the costs and the regional grants, while valuing real estate shows how to approach the price of the property itself.
A purchase also brings taxes and notary fees. The transfer duties depend on the region where the property sits and on your situation. Use the property tax calculator for an indication. You pay those costs from your own funds, and they therefore reduce the amount you can borrow without extra risk.
Comparing offers without surprises
Compare not only the rate but the full cost of the credit over the whole term. A lower rate with expensive compulsory insurance can work out dearer than a slightly higher rate with a sober package.
Before you sign, you receive a standardised information document in which the rate, the costs, the insurance and the conditions are presented in the same way, so that you can put offers side by side. Look at the file fees, the valuation fees, the cost of registering the mortgage, the compulsory insurance and the annual percentage rate of charge, which counts all those elements together. Ask as well what happens if you repay early, move or refinance.
And look at the property itself before you make an offer. Estimating the value of a home helps you negotiate the price, and for an apartment the rights and costs of co-ownership in Belgium come on top.
Frequently asked questions
Can my rate fall when market rates fall?
With a fixed rate your rate stays where it is for the whole term, even when market rates fall. With a variable rate your rate follows the reference index named in your contract, within the limits written there.
Do I have to take out mortgage life insurance for my loan?
Mortgage life insurance is not compulsory in every case, but many lenders link a more favourable rate to a policy that repays the balance if the borrower dies. Compare the whole package, not just the rate.
What is a reinvestment fee?
A reinvestment fee is an amount the lender can charge when you repay a mortgage early or refinance it. The amount depends on the formula, the remaining capital and the terms of your contract, so ask about it before you sign.
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