INTEREST TO BE PAID DURING THE CONSTRUCTION PHASE OF A NEW PROPERTY

• Do you want to try the adventure of new real estate?

Do you dream of personalizing your apartment as desired, with finishes that fully meet your expectations? The possibilities are often unlimited at the start of a real estate project. In return, you will have to accept a longer delivery time.

In terms of financing, you will have to pay the balance in successive installments as the work progresses. However, if like many of our clients, you take out a mortgage, it is worthwhile to wonder about the cost of interest during this period of work.

First of all...

It is better to ideally have a personal contribution of about 20% of the price of the apartment (excluding taxes). Indeed, few banking institutions still accept these days to lend more than 100% of the price of the apartment to cover notary fees, possible registration fees, VAT, miscellaneous connection fees, etc.

Then, during construction, interest will be due only on the amounts to be released (the payment tranches). However, after a period generally of six months, interest will also be due on the “non

released ”but nevertheless“ blocked ”by the bank (which cannot do anything else with this money).

Finally, once the work is finished, the payment of the capital in addition to that of interest will begin.

It may therefore seem more judicious to buy at the end of the project, to the detriment of a crush or personalization, so as not to have to pay too much interest. But in reality, the amounts we are talking about remain very low.

Let's take a concrete example ...

A candidate purchases a property worth 250,000 euros and which will be delivered in 10 months. To do this, he has 50% of the sum in equity (savings).

At the signing of the compromise, he will pay 5% of the value of the apartment (excluding tax) with his own funds.

When signing the notarial deed, he will pay the land value, any registration fees, notary fees, participation in the basic deed and the work already done, always with his own funds.

The candidate then decides to take out a mortgage loan of 125,000 euros over 20 years at the fixed annual rate of 1.65%.

Every 4 to 6 weeks, for 4 and a half months, 5 installments of 5, 10 or 15% of the price of the apartment must be released (depending on the progress of the work).

In this case, the total amount of interest will be 375 euros between the signing of the deed and the delivery of the apartment (on average 37.50 euros / month).

Then, the mortgage loan will take a “classic” form corresponding to the chosen formula (fixed rate, variable, bullet, etc.)

The table below summarizes this simulation

Lecobel Vaneau
Place Brugmann 11, Ixelles 1050
Tel : +32 2 340 72 70
@ : lecobel@lecobel.be

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