December, the month of Christmas and New Years'. Lots of celebrations meaning some bigger expenses. This wasn't any different this year even with corona. We just did it on our own and just handed over the gifts outside. We went a little wild with food but my income was higher so it balanced things out a little bit.
Last Updated on August 16, 2020 by Mr. FightToFIRE
Having gone through the process of buying my own home I wanted to share all the costs that came with this crazy adventure. There are a lot of costs associated with getting your first home, whether it’s a house or apartment. I was quite honestly a little surprised by all the paperwork and meetings that come with it. This overview should cover the majority of costs, both recurring and one-time for both the notary and the bank.
A small disclaimer: My rates and fees are not necessarily the rates you will get. It will differ for a second home and especially if you purchase a house outside of Belgium. These costs are not 1-1 transferable to other European countries. Some might not work with a notary, others don’t have limits for fees, or the limits are more or less strict.
I have divided my costs based on recurrence and the involved party. I wanted to be as complete as possible but if you notice I missed something, let me know in a comment or through mail.
The main recurring cost for my apartment is the 280,000 EUR mortgage at a rate of 1.47%. At the moment I only pay the interest as I can better manage the rent I still pay since the apartment is still under construction. Delaying the principal payment has the downside that the mortgage increases since the period and amount stays the same.
My mortgage: Two parts of one whole
While I talk about one large 280K mortgage, it consists of two parts. This is important for one-time costs. Depending on the how my mortgage got registered I had different one-time costs.
Mortgage power of attorney (MPoA)
Getting an MPoA has one huge benefit: it’s cheaper for me. Only a fixed amount of registration fees is due, namely 50 EUR. I don’t have to pay fees for the registration of the mortgage. After all, there is no mortgage loan. Of course, there is a big catch: if the bank deems me a bad payer, they can take the mortgage resulting in extra costs to get the mortgage registered resulting in notary and registration fees.
Technically, there is one more fiscal disadvantage but this is specific for mortgages in Flanders before 1 January 2020 and as I bought me an apartment in Brussels it doesn’t apply to me nor will it apply to anyone else as the so-called housing bonus got abolished.
It offers more security to my bank. If problems arise with the payments, they can immediately make use of the mortgage right. The costs are 0.30% of the amount of the registration, plus appurtenances. These are costs incurred by the bank to claim the remaining credit if the creditor can no longer pay off his loan.
These vary from bank to bank and are usually between 5-10%. I don’t have to repay these costs myself, but they do increase the costs of a mortgage deed.
If the mortgage I have to pay back was the only recurring cost I would be a happy camper. Unfortunately, it isn’t. There are a couple of extra costs that will keep following me around.
Now that the home is finally mine I can expect to pay this tax annually. Any real estate that I own or will own has this. It is calculated on the basis of the Cadastral Income (KI). This is the average income you would receive if you rented out the house on the basis of the reference year 1975. Weird, I know. Welcome to Belgium.
Because I bought an apartment, nice and cozy with many neighbors around me, I not only became the owner of my apartment but also co-owner of the building. This means that I have a say in decisions about anything related to the common areas of the apartment building, but also that if there are general costs, for example for the repair of the roof or the elevator, I will pay for it.
In my specific case, any costs made to the building are 148/10,000 for me when it comes to the building with an additional 20/10,000 for my car spot in the basement.
If I purchased a house, a syndicate wasn’t a worry. It would be all mine and I could do whatever I wanted. Within the confines of the law of course. It also means any costs to the house are also for me. A general rule of thumb for maintenance costs to a house is an average of 1% of the value per year.
One year can be more or less than the other but I believe it’s a good rule to follow and budget towards. For a 380,000 property that means 3,800 EUR/year on average. Recurring house costs can be: broken roof tiles, garden maintenance, boiler maintenance, etc.
Fire & family insurance
Fire insurance: fire insurance is not required by law, but is recommended. The fire insurance protects you against damage from fire, snow, storm, hail, and water. You can also include optional guarantees such as theft in your insurance.
Family insurance: this insurance protects you and your family against the most important forms of damage caused by someone in your family to third parties.
For my apartment under construction, this could be handled later but for my 65m² apartment, this will remain relatively low. The first estimation I received from the bank is 170 EUR for the family insurance.
Utilities (water, gas, electricity, internet and/or TV)
And last but not least: utilities such as water, gas, and electricity but also the, technically, luxury conveniences such as internet or TV. Although you also need these in a rental apartment I decided to add them to be complete.
The prices here depend on what you use and which energy supplier you are affiliated with.
One time costs
As you could read earlier, my mortgage, while a recurring cost, already contained certain one-time costs to actually get the mortgage. The first checks to determine where I would get my mortgage was still easy as an initial calculation could be done online. However, it didn’t stop with the repayment of capital and interest. There was a whole laundry list of additional costs that I had to take into account.
My notary prepared the deed of sale for the property. He also contacts the notary of the seller, in this case, the construction promoter. Since it’s a new apartment building there was also a base deed for the common area. He also collected the VAT of 21% for the land.
In this base deed, the notary will stipulate the history of the land, If there was remediation to do, whether the house or land I wanted to buy was not mortgaged and whether the seller was really the owner. The fee for the notary and his costs are laid down by law. You cannot get those costs back if you do not get the credit in the end.
Any costs made doing this was transferred to me, the buyer.
This amount isn’t determined by the law and can, therefore, vary from notary to notary. In addition, the complexity of the file and the rates in your region will also play a role. For my Brussels’ apartment, there was a soil certification needed, noise tests since it’s close to a railway station, and an environmental permit.
As an example, I will take the invoice for my apartment:
- MPoA: came in at 868.24 EUR:
- 226.23 EUR was salary, 450 EUR was for the deed, and registering it 50 EUR.
- Mortgage costs: were relatively low at 3203.73 EUR:
- 1019.20 EUR for salary, 800 EUR for the deed, and 1002.50 EUR for the registration.
- VAT and deposits: 21,069.40 EUR.
- This was too much because I already made a deposit of 16,625.00 EUR.
This brings my total notary costs to 26,169.87 EUR.
Let us break those numbers down.
Since my apartment is a turnkey project and had yet to be built I fell under the so-called VAT-system. This means that I pay 21% on the total purchase price of the apartment. Since the owner of the land is also the contractor, I pay 21% on everything.
I originally paid 21,069.40 EUR to cover the 21%. A couple of weeks later I got over 17K back because I already paid a deposit of 16,625 EUR for this and because the ‘abattement’ wasn’t deducted yet.
If it was an existing apartment I’d have to pay this for the building and the land. This sales tax or registration fee will ensure that the property I’d have in mind actually becomes my property.
the exact rate depends on the region and if it concerns the only family home, if this is the case:
- 6% with an exception of up to 80,000 EUR.
- With a house immediately linked with a thorough energy-saving renovation, the rate is 1% lower, i.e., 5%.
- Brussels: 12.5% with an exception for the first 175,000 EUR if you meet the requirements.
- 6% for up to ~160,000.00 EUR if all the following conditions apply:
- Cadastral income (hypothetical rent in 1975) is lower than 745 EUR (but higher when there are kids).
- Main residence within 3 years
- 12.5 in all other cases.
- 6% for up to ~160,000.00 EUR if all the following conditions apply:
I paid 50 EUR registration fees for the MPoA and 1002.50 EUR for the mortgage.
Notary fee (= their wage)
The registration rights are intended for the Flemish government. But the notary also needs his fair share for his work. The rates he can charge are set by law. He can’t go higher, but he also can’t go lower. There is a fixed percentage based on the mortgage amount. The higher the amount, the lower the percentage, aka degenerative.
The rates for 2020 are:
|Mortgage amount (EUR)||Percentage||Example for 280K (EUR)|
|0 – 7.500 euro||4,56||342.00|
|7.500 – 17.500 euro||2,85||285.00|
|17.500 – 30.000 euro||2,28||285.00|
|30.000 – 45.495 euro||1,71||264.96|
|45.495 – 64.095 euro||1,14||212.04|
|64.095 – 250.095 euro||0,57||1060.20|
|Boven 250.095 euro||0,057||17.05|
The fee for a loan of 280,000 euros is 2,466,25 EUR. On top of this you also pay a VAT of 21%.
For the MPoA I paid 226.23 EUR excl. VAT in salary and for the mortgage I paid 1019.20 EUR excl. VAT.
The notary must also carry out research work such as requesting cadastral data, urban planning information and soil certificates. He incurs costs for this, which he may recover from the buyers. For a house of 300,000 euros, that comes down to about 800 to 1,100 euros.
For my apartment the deed costs were 450 EUR for the MPoA and 1,002.50 EUR for the mortgage. With an additional 1028.50 EUR for the base deed. This last one is partly for me. The main notary was the one of the promoter.
The next costs are those that the bank charges. These can vary by bank and also depend on any potential extra requirements they give you to receive a certain mortgage interest rate.
It’s important to pay attention to these extra costs as it can mean that the perceived lower interest rate is actually higher due to these one-time costs.
In my case, my bank costs were relatively straightforward:
- A debt balance insurance: I choose to pay this as a one-time cost and paid2,975.08 EUR (mortgage) and 664.12 EUR (MPoA) = 3 639,20 EUR.
- File costs: a total of 500 EUR.
If you want a mortgage loan from the bank, it will prepare a file for this. She also charges file costs for this. There is a legal ceiling of 500 EUR. Rest assured banks will charge this max. It’s also what I paid at BNPPFortis for my mortgage.
Banks also require a guarantee if they leave you with a loan. With a home loan, this is often a mortgage. This means that the financial institution is given the right to have your home sold if you become past due to use the proceeds to settle the outstanding amount.
To maintain that guarantee, it is required that the house continues to exist. Therefore, the banks oblige borrowers to take out fire insurance during the term of the loan.
Debt balance insurance
This is a cost that can vary from bank to bank and can have an impact on your actual yearly cost percentage.
Outstanding balance insurance offers protection in case one of the borrowers dies before the end of the mortgage loan. In that case, the surviving partner or heirs no longer have to repay the part of the deceased.
The banks usually request that you take out such insurance. If the most important breadwinner in a family dies, this can be more easily taken care of. A note with this: while I put this as a one-time cost, there is a flavor for everyone’s situation and it can be a recurring cost.
To make sure that your property is worth enough if it has to be forced to sell later in the event of a default, the banks also have the value of your home determined by an estimator. This can also cost you several hundred euros.
Summary: what does a house really cost?
It’s clear that the list price of real estate on any real estate site isn’t the real cost of that house or apartment. On top of the listed price, you have a whole slew of extra recurring and one-time costs that you have to budget for. This is why banks expect you to have cash at hand when buying a house, these extra costs aren’t (usually) covered by the mortgage. A good rule of thumb that still applies and should get you a good rate is 20%.
For my Brussels’ apartment, the costs came in at 26,169.87 EUR for the notary and 3,639.20 EUR for the debt insurance with an additional 500 EUR for the file costs. This brings the total cost to 30,309.07 EUR.