The impact of a second loan on your first home loan

If you would like to take out a loan for the purchase of a second home, it is possible without any problem to call on another bank.

This is also the case when the first loan has not yet been paid at that time. The only risk you run in this situation is that you will lose a part of the tax benefit of the first loan. That is, however, insurmountable, because you also had the same problem with the same bank.

The character of a mortgage

A mortgage must be provided because it offers a bank the opportunity to sell a property when the borrower (and thus owner) can no longer meet his financial obligations. The proceeds that the bank obtains through this sale can then be used to pay the outstanding loan. In practice, a mortgage is always linked to a concrete property. It makes no difference in that respect whether the loan has now been taken out for the building in question or for another copy. It is therefore perfectly possible to borrow for a home and as a guarantee to have the mortgage established or to subscribe to another property.

The above also means that in practice it is perfectly possible to have more than one mortgage established on the same property. The bank that comes first then has a mortgage in ‘first grade’. The bank that comes next has one in second rank, then in third grade and so on. The first bank will be fully paid first when there is a forced execution. Then follows the second bank, then the third. Naturally, this ensures in practice that the first bank always has the strongest guarantee.

Taking out a second mortgage

Do you already have a mortgage, but do you also plan to have the purchase of a second home financed? In that case, you have two different options. For example, you can have a mortgage in first grade on the new building, but you can also place a mortgage in second rank on the first house you have purchased. In the latter case, however, the bank will first conduct an investigation into whether the value of the house in question is sufficient to carry two mortgages. In addition, it is also possible that you are confronted with a higher rate. A real additional interest may be 0.25 or 0.50 percent.

Whether you choose to take out the second mortgage with the same bank or with another financial party does not make much difference in practice. In both cases it goes without saying that the party in question will investigate whether you have the necessary financial means to be able to repay the loan. For example, is sufficient income available to be able to pay off the loan and can sufficient guarantees be given in case of unexpected failure? They are certainly also factors that you would like to keep silent about.

The tax benefit on the first home./h2>

Tax matters are slightly different. For the property that you occupy as owner yourself, the right to a so-called home bonus of 1,520 euros applies in Flanders. During the first ten years, an amount of 760 euros will also be added, but only when it concerns your first home. Do you have at least three dependent children? Then another 80 euros will be added. In this way, the maximum tax benefit amounts to a sloppy 2,360 euros per person. The residential bonus ultimately provides for a tax reduction of 40 percent.

What about the tax benefit on the second home?

Is there a second home that you do not want to live in yourself in other words? In that case, there is no entitlement to a home bonus, but a substantial federal tax reduction. This is set at 30 percent and is calculated on the basis of an amount of 169.20 euros + 6 percent of the net taxable professional income. The global maximum is 2,310 euros. In the best possible case this means a saving of taxes of a beautiful 693 euros.

Limited loss when buying a second home

Lastly, keep in mind that there is a limited loss when you buy a second home. This is because you are no longer entitled to the increase of 760 euros for the Flemish home bonus for the first home. As stated earlier in this article, this only applies to the only property you own. From the moment you purchase a second property, you no longer meet this condition. In this way, the tax benefit of 760 x 40 percent (ie an amount of EUR 304) will disappear over a period of ten years.