Guide · Financing

Fixed or variable mortgage rate in Belgium

Fixed rate, variable rate, the legal limit that a variable rate can at most double, the cap and the APR (TAEG): what Wikifin says and how to compare offers.

Checked on against the official sources at the bottom of the page.

In short

With a fixed rate your rate is set when you sign and applies for the whole loan. With a variable rate it follows a reference index tied to market rates and is revised at set intervals, for example every year, every three years or every five years, depending on the formula. In Belgium the law limits a variable rate: according to Wikifin, it can at most double (a 2% rate can rise to 4%) and can fall to 0%. When comparing two offers, use the APR (TAEG), but remember it excludes notary fees and registration duties. The Wikifin pages I read give one set of rules for the whole of Belgium; the Regions differ in purchase duties, not in these loan rules.

The fixed rate

Wikifin: the rate “établi à la souscription du crédit, sera d’application pendant toute la durée de votre crédit”. The benefit is that you know your monthly payments for the whole term. The downside is that if market rates fall afterwards your rate does not follow; you can consider refinancing, but its costs are “loin d’être négligeables” (Wikifin). Wikifin adds that if you lock in a high rate you stay with it.

Mortgage loans typically run from 10 to 30 years. Wikifin’s example for €100,000 at a fixed 2% with constant monthly payments:

TermMonthly paymentTotal interest
10 years€919.32€10,318.89
20 years€505.03€21,206.35
30 years€368.71€32,737.36

A longer term lowers the monthly payment but increases total interest, and the cost of the outstanding-balance insurance also rises with the term (Wikifin).

The variable rate

The base rate fixed at signing is adjusted according to the movement of a reference index. It can go up or down several times during the loan, depending on the formula chosen. Wikifin says a variable rate usually starts lower than a fixed rate, but “Choisir un taux variable est plus risqué : s’il augmente vous devez rembourser plus chaque mois.”

Wikifin explains that the law requires a variable rate to be able to move both up and down, within limits:

  • upward, the rate “peut tout au plus doubler” whatever the market does: 2% can reach 4% at most;
  • downward, it can go down to 0%.

The “cap”

Some lenders offer a cap, a maximum limit different from the general rule. Wikifin’s example: with a “cap +2” and a 4% rate, the maximum after an upward revision is 6%. A cap is contractual: ask your lender what ceiling applies, up and down, and when the first revision happens.

What Wikifin suggests

  • When rates are low, prefer a fixed rate: you keep a favourable rate throughout the loan.
  • When rates are high, a variable rate may suit you. Ask your bank whether a system with a cap is worth it.

This is general information. The right choice depends on your margin of safety. A useful test is whether you could pay the monthly payment if the rate rose to the maximum allowed by your contract. Wikifin also suggests that monthly repayments should not exceed about one third of household income.

Public lending is different: the Brussels Housing Fund grants its loans at a fixed rate (fonds.brussels).

Comparing offers

  • Compare like with like: ask for the same type of simulation (fixed with fixed, variable with variable) at each lender (Wikifin).
  • A simulation is free and is not an offer; accepting an offer triggers file fees. Only sign an offer request with the lender you prefer.
  • The standard European information sheet (ESIS/FISE) is mandatory when an offer is made and makes comparison easier.
  • The TAEG gives the cost of the loan as a yearly percentage. It includes interest, most fees (file, commissions, valuation) and the cost of outstanding-balance and home insurance. It excludes notary fees and registration duties. It must be calculated on the conditions the lender actually grants you, not its “official” rates.

What it costs

Wikifin says a lender cannot charge more than €350 in file fees for a mortgage loan, and only if you accept the offer. Valuation is a separate cost. Refinancing is not free either: see the last question below. To see what a given rate means for your budget, use the borrowing capacity tool, and for the other purchase costs see purchase costs.

Which professional to consult

A credit broker can line up several offers of the same type side by side. Your banker provides the prospectus and ESIS sheet. A notary explains the deed costs but does not choose the type of rate for you. See the credit broker and mortgages for expats.

Frequently asked questions

Can a variable rate rise without limit?

According to Wikifin, no: it can at most double. A lender may also offer a lower cap. Check your offer.

Can the rate fall to zero?

Wikifin says a variable rate “pourra descendre jusqu’à 0 %”.

Is the TAEG enough to choose a loan?

No. It helps compare offers but excludes notary fees and registration duties and does not always reflect the real cost.

Can I change formula during the loan?

Wikifin advises talking to your current lender first, which may lower the rate. Otherwise you refinance elsewhere. Refinancing costs are, in its words, “loin d’être négligeables”: reinvestment indemnity (often about three months’ interest on the outstanding capital), cancellation fees on the old mortgage, new mortgage registration and notary fees, file fees and insurance adjustments.

Are the rules different in Brussels?

The sources I read give the same rules for all of Belgium. Regions only differ in registration duties: see registration duties.

More guides on financing

Sources

All guides · Payotte Belgium