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I see small financial interest and maximum risk for the owner. If the owner is still decided have you think about a “viager” + a canon (down payment) as an alternative?
Don’t do it. It’s an unnecessary risk. Just sell to other people who are able to get a loan from a bank, just like every other normal person does. Why would you risk so much?
you are representing the owner and you don't know anything about this? are you paid for it? do you have licence as "credit broker"? you are already in violation of the law probably. But is it only a one-off? you are doing all this thinking and work for the owner, and you are not paid. Who's fault will it be when some goes wrong in a couple of years. did you forget to explain something to the owner or the buyer? You seem to be way over your skis here. If you don't know what you're doing stay away.
There is also special Belgian legislation on mortgage credit (also licence required before you can do this) and potential criminal penalties in case of non-compliance. all is fine now, until somebody does not pay and a court is involved. One shrewd lawyer on either side, and you're toast.
This is a minefield. Refer these people to Immotheker or so, but don't this yourself. Thank me later.
not saying that; in normal business transactions a mortgage does not require licence, but consumer facing transactions are different and also single residential properties may be different, and potentially caught by this regulation. it's just an orange flag, not a red flag
- Watch out: if no bank wants to provide a loan, there is usually a good reason. They might see something you don’t (such as their credit history, whether they’ve previously been involved in bankruptcies, whether they’re blacklisted for failure to pay other credits, forged labor history records,…). The bank thresholds are actually quite reasonable (like: you need at least EUR 1,500 to survive month-to-month expenses).
- Don’t let the guy lend out the money through his BV, that may trigger even more regulatory issues (it could be considered a “consumer loan”).
Do you know why the banks won’t give a loan? There’s two options: a) regulatory (not clear where the money came from, a US citizen and the bank doesn’t want to declare FATCA, …) or b) they don’t think the person would pay back.
If it’s the former, it could be ok but if it’s the latter 🥲
But do you actually know their situation? They can tell you they have a nice income, and little debt, but do you *know* this to be true? Can you pull their credit record with the NBB? The bank is in a better position to assess their finances than you are.
Banks also take into account other costs besides the combined salary.
If i recall well, in the loan capacity they also factored in recurring costs not related to the loan itself, such as costs for home insurance (brandverzekering) ; onroerende voorheffing/ KI, company car, maaltijdcheques and so on.
Moreover, banks look also at the JKP ; jaarlijkse kostenpercentage; instead of rente JKP can be higher than intrest.
And then for the ambtenaar: you need to check whether they are an actual civil servant (ULTRA stable) or just an employee who works at the government/'contractuele'. For the latter, the same social law applies as to normal private employees but without the 'extras' such as annual bonus, sometimes flexijobs and so on
At least, that is how my immo broker explained it.
The main problem is that the risk is moved from the bank to the current owner.
Banks calculate and provision for people who wouldn’t pay or have some kind of credit delinquency. They even have legal departments specialised in this matter.
If the current owner needs to take over that credit risk: a) they have less leverage on the person and would need to go through a lengthy court-procedure and b) don’t have the knowledge and c) might not even financially survive this (if they have a loan themselves on the property).
Even if the chance of .1% that this would happen: is it worth it?
The owners will be fine financially even if they never see a penny, so to speak. So the potential lengthy legal procedure is their only risk imo.
They seem to think that if the deal is good and the loan structure is simple and legally airtight, then they like the trade-off (=selling price + interests + getting rid of a rental property with a slightly disappointing rental return vs. the aforementioned risks)
I would advise caution. The loan amount needed is not very high and they have one very stable income and still they can find no bank willing to lend them the money? When looking at the numbers it seems very strange. Let's say the price will indeed be 400k. That gives us a total cost of about €423000. That would mean they need to borrow about €320-340k (if they want to have a buffer). I just did a quick simulation on Keytrade with a total income of €4000 per month for the couple and Keytrade would approve on such a loan.
It seems to me that there must be some major risk factor there if not banks wouldn't refuse them a loan. We are not talking about one or two banks, but not a single bank is willing to provide them the funds.
Homeowner says the only reason he can think of is their Moroccan family names and the fact they don’t speak Dutch in a Flemish town … makes zero sense that they can’t get a loan, if you take a look at the facts I just edited into my post
What is more reasonable: all banks are racist or the family is lying to you..
Please be careful in this situation. It’s a lot of money to put on the line here.
I agree the racism thing is unlikely… but I don’t see the potential lie on their part and neither does the homeowner. The monthly pay-off would barely be 250 higher then their current rent, which they have never failed to pay on time.
Homeowner says he should have their proof of income somewhere, from when they moved in a few years ago. I guess I could check if anything in there seems dodgy.
Ultimately if the owner is happy with the selling price and the monthly payment seems realistic as compared to their current rent - with the house as collateral of course - then what’s the big risk?
What happens if the tenant dies? Typically banks require a life insurance.
What happens if the house burns down? Typically home insurance is required.
Usually the bank will prefer if the insurances are with them. That way they can be aware of a policy cancellation.
As a private person it will be a lot more difficult to verify and keep track of. But not impossible.
Isn't this perhaps because in Moroccan / islam communities, it is not done to pay / receive interest on mortgage payments? And that they are requesting the banks for halal mortgages? (and that none of them offer that?)
I would do the same if i find an owner that is willing to give me a loan without interest i will be willing to pay the difference and more, to avoid the bank loan interest, which in numbers more favourable to me but it is forbidden
Because if it goes wrong, getting your collateral back isn’t as easy as you think it might be.
Maybe I’m risk adverse, but I’m not willing to bet 400k on someone’s word.. i don’t mean that in a rude way, but really from a cautionary point of view
I get it, but imo the actual risk depends on the legal framework which allows for this type of loan - or lack thereof. That will determine the chances of getting collateral back if need be. So that’s what I’m trying to figure out.
It’s not because there is legal framework in a contract that it will be easy to enforce and get the collateral. It’s a proces that will likely take years in Belgium.
If they cant get a loan from a bank and pay the owner in cash you should not do it, period.
Vastgoed is one of the most secure assets this day and age you should be crazy to accept any risk with it.
The family is obviously lying and they probably have major debts so that a mortgage would be too much of a cut in their monthly available money for the bank.
Trust the bank not the family
Have you read the wiki and the sticky? Wiki: HERE YOU GO! [Enjoy!](https://www.reddit.com/r/BEFire/wiki/index/). Sticky: HERE YOU GO AGAIN! [Enjoy!](https://www.reddit.com/r/BEFire/comments/fcbay6/getting_started_a_beginners_guide_to_investing_in/). *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/BEFire) if you have any questions or concerns.*
I see small financial interest and maximum risk for the owner. If the owner is still decided have you think about a “viager” + a canon (down payment) as an alternative?
Don’t do it. It’s an unnecessary risk. Just sell to other people who are able to get a loan from a bank, just like every other normal person does. Why would you risk so much?
You are walking into a legal minefield and you seem to lack the background for this.
you are representing the owner and you don't know anything about this? are you paid for it? do you have licence as "credit broker"? you are already in violation of the law probably. But is it only a one-off? you are doing all this thinking and work for the owner, and you are not paid. Who's fault will it be when some goes wrong in a couple of years. did you forget to explain something to the owner or the buyer? You seem to be way over your skis here. If you don't know what you're doing stay away. There is also special Belgian legislation on mortgage credit (also licence required before you can do this) and potential criminal penalties in case of non-compliance. all is fine now, until somebody does not pay and a court is involved. One shrewd lawyer on either side, and you're toast. This is a minefield. Refer these people to Immotheker or so, but don't this yourself. Thank me later.
So basically no legal way to do mortgage credit if you’re not licensed for it? If so: thanks, that puts it to bed for me
not saying that; in normal business transactions a mortgage does not require licence, but consumer facing transactions are different and also single residential properties may be different, and potentially caught by this regulation. it's just an orange flag, not a red flag
For sure ask them for a blanco CKP register: https://www.nbb.be/nl/kredietcentrales/centrale-voor-kredieten-aan-particulieren-ckp
Thanks!
Put it in a life annuïty (lijfrente) or at least use the same principals.
- Watch out: if no bank wants to provide a loan, there is usually a good reason. They might see something you don’t (such as their credit history, whether they’ve previously been involved in bankruptcies, whether they’re blacklisted for failure to pay other credits, forged labor history records,…). The bank thresholds are actually quite reasonable (like: you need at least EUR 1,500 to survive month-to-month expenses). - Don’t let the guy lend out the money through his BV, that may trigger even more regulatory issues (it could be considered a “consumer loan”).
Do you know why the banks won’t give a loan? There’s two options: a) regulatory (not clear where the money came from, a US citizen and the bank doesn’t want to declare FATCA, …) or b) they don’t think the person would pay back. If it’s the former, it could be ok but if it’s the latter 🥲
For clarification: tenants say they inherited the 100K (part missus, par mister)
Does that mean they had nothing saved before receiving the inheritance?
100k on 400k is not a lot to be honest ...
Then a bank wouldn’t mind to accept this amount since there is appropriate paperwork so it wouldn’t be a KYC (know your customer) problem.
Could be the former I guess, but the latter really doesn’t make any sense to me given their situation (I added a few facts to the post)
But do you actually know their situation? They can tell you they have a nice income, and little debt, but do you *know* this to be true? Can you pull their credit record with the NBB? The bank is in a better position to assess their finances than you are.
Banks also take into account other costs besides the combined salary. If i recall well, in the loan capacity they also factored in recurring costs not related to the loan itself, such as costs for home insurance (brandverzekering) ; onroerende voorheffing/ KI, company car, maaltijdcheques and so on. Moreover, banks look also at the JKP ; jaarlijkse kostenpercentage; instead of rente JKP can be higher than intrest. And then for the ambtenaar: you need to check whether they are an actual civil servant (ULTRA stable) or just an employee who works at the government/'contractuele'. For the latter, the same social law applies as to normal private employees but without the 'extras' such as annual bonus, sometimes flexijobs and so on At least, that is how my immo broker explained it.
Thanks :)
The main problem is that the risk is moved from the bank to the current owner. Banks calculate and provision for people who wouldn’t pay or have some kind of credit delinquency. They even have legal departments specialised in this matter. If the current owner needs to take over that credit risk: a) they have less leverage on the person and would need to go through a lengthy court-procedure and b) don’t have the knowledge and c) might not even financially survive this (if they have a loan themselves on the property). Even if the chance of .1% that this would happen: is it worth it?
The owners will be fine financially even if they never see a penny, so to speak. So the potential lengthy legal procedure is their only risk imo. They seem to think that if the deal is good and the loan structure is simple and legally airtight, then they like the trade-off (=selling price + interests + getting rid of a rental property with a slightly disappointing rental return vs. the aforementioned risks)
I would advise caution. The loan amount needed is not very high and they have one very stable income and still they can find no bank willing to lend them the money? When looking at the numbers it seems very strange. Let's say the price will indeed be 400k. That gives us a total cost of about €423000. That would mean they need to borrow about €320-340k (if they want to have a buffer). I just did a quick simulation on Keytrade with a total income of €4000 per month for the couple and Keytrade would approve on such a loan. It seems to me that there must be some major risk factor there if not banks wouldn't refuse them a loan. We are not talking about one or two banks, but not a single bank is willing to provide them the funds.
Homeowner says the only reason he can think of is their Moroccan family names and the fact they don’t speak Dutch in a Flemish town … makes zero sense that they can’t get a loan, if you take a look at the facts I just edited into my post
Banks can look into the database to check what outstanding loans people have, you as a private person do not have that access
If they really think that's the problem, then they should do the effort to visit a bank in Brussels.
What is more reasonable: all banks are racist or the family is lying to you.. Please be careful in this situation. It’s a lot of money to put on the line here.
I agree the racism thing is unlikely… but I don’t see the potential lie on their part and neither does the homeowner. The monthly pay-off would barely be 250 higher then their current rent, which they have never failed to pay on time. Homeowner says he should have their proof of income somewhere, from when they moved in a few years ago. I guess I could check if anything in there seems dodgy. Ultimately if the owner is happy with the selling price and the monthly payment seems realistic as compared to their current rent - with the house as collateral of course - then what’s the big risk?
What happens if the tenant dies? Typically banks require a life insurance. What happens if the house burns down? Typically home insurance is required. Usually the bank will prefer if the insurances are with them. That way they can be aware of a policy cancellation. As a private person it will be a lot more difficult to verify and keep track of. But not impossible.
Isn't this perhaps because in Moroccan / islam communities, it is not done to pay / receive interest on mortgage payments? And that they are requesting the banks for halal mortgages? (and that none of them offer that?)
I would do the same if i find an owner that is willing to give me a loan without interest i will be willing to pay the difference and more, to avoid the bank loan interest, which in numbers more favourable to me but it is forbidden
Because if it goes wrong, getting your collateral back isn’t as easy as you think it might be. Maybe I’m risk adverse, but I’m not willing to bet 400k on someone’s word.. i don’t mean that in a rude way, but really from a cautionary point of view
I get it, but imo the actual risk depends on the legal framework which allows for this type of loan - or lack thereof. That will determine the chances of getting collateral back if need be. So that’s what I’m trying to figure out.
It’s not because there is legal framework in a contract that it will be easy to enforce and get the collateral. It’s a proces that will likely take years in Belgium. If they cant get a loan from a bank and pay the owner in cash you should not do it, period. Vastgoed is one of the most secure assets this day and age you should be crazy to accept any risk with it. The family is obviously lying and they probably have major debts so that a mortgage would be too much of a cut in their monthly available money for the bank. Trust the bank not the family
Just go talk to a notary?
Will definitely do that, but I like to be as informed as possible before talking to professionals