Amira works for a European institution and has a high income, $ 10,000 per month. She lives with her three children in a family home in Brussels. In addition, she still has a return property in Brussels for which she receives rental income.
Amira has one large mortgage loan and wants to refinance it. She is willing to give the investment property as an additional guarantee.
Yet this does not appear to be obvious. Few creditors apparently want to refinance its high mortgage loan. The lending property with a restaurant at the bottom also appears to be difficult for many lenders. Yet she finds a solution
Why is it difficult to refinance a large mortgage loan?
Many lenders have a hard time refinancing a mortgage loan. Every credit application is always subjected to a thorough analysis to estimate the risk. One of the risks being looked at is the repayment capacity. Can the borrower repay the credit? Can the bank recover its money in the event of non-payment and possibly forced sale of the property guarantee.
In the case of Amira, the size of the loan amount was a problem for other lenders. Amira wants to refinance a mortgage loan of $ 786,000.
This high credit amount scares many. However, it has the necessary repayment capacity and the property guarantees are present.
What makes Amira’s request to refinance the mortgage loan so difficult?
Return property as an additional guarantee
On the one hand, the high credit amount for refinancing is too great a risk for certain lenders. On the other hand, the genre of real estate guarantee is also not obvious. The additional guarantee is an investment property. Although located in the heart of Brussels, many lenders are reluctant to do so.
A return property is in a certain sense risky. As an owner-landlord you naturally always risk that your tenants no longer (regularly) pay the rent. As owner-landlord of an investment property you must also be responsible for certain costs such as property tax, costs specific to the owner, etc.
In the case of Amira, this is an investment property in Brussels. On the ground floor there is a commercial space that was rented out until recently. Above this commercial area there are 5 apartments.
Why can Amira refinance her mortgage loan?
Amira’s credit application to refinance her mortgage loan is indeed no evidence. Yet there are enough elements to give her the opportunity to refinance her mortgage loan:
- Amira has a permanent position since 2007, which means there is professional stability
- There is the necessary repayment capacity to repay the mortgage loan
- The existing tenants pay regularly and the rent received increases the disposable income
- There is a very real chance that the commercial ground floor can be rented out in the short term.
- The location of the investment property is highly sought after both for rental and for purchase or sale
- The estimator acknowledges that the property is in good condition and states a rental value
- Amira is doing a good job in refinancing her mortgage loan
3 financially important benefits for Amira
Amira has made an appointment at the right time with her mortgage credit broker. She benefits from at least 3 major benefits in refinancing her mortgage loan:
- Amira shortens the term of her new mortgage loan for a few years. So she will have repaid everything faster.
- She receives a basic rate for her mortgage loan that is almost half the price of her previous interest rate.
- With the total cost of her new mortgage loan, Amira saves around $ 360,000 compared to her previous mortgage loan.
Regardless of the situation you are in, it is always worthwhile to make an appointment with a credit intermediary in mortgage credit. Do you want to meet one? Send us this form and we will get you in touch immediately.